Published August 2016
The production and consumption of rare earth minerals constitute a relatively small, but diverse and dynamic segment of the industrial minerals, metallurgical, electronic, and chemical industries. In 2015, global consumption of rare earth minerals was about 4% lower than global production. This difference illustrates a unique feature of this industry: consumption is stronger for some rare earths than for others that are coproduced, a situation that leads to stockpiling of the less desired products. Losses of as much as 10–15% can occur in processing rare earth minerals.
The majority of the world’s rare earth mineral production has been concentrated in China for the last 20 years. If viewed as a single entity, the state-owned rare earth–producing mining companies of China are the dominant world supplier. China alone accounted for 83% of world production in 2015, a slightly lower share than the 86% in 2012. The ramping up of production at the Lynas mine in Mount Weld, Australia, and at the Molycorp mine in California, United States has led to this reduction of China's share of rare earth production in 2015.
The following pie chart shows consumption of rare earth products by major region.
The various markets for rare earths, as mixtures, individual elements, or compounds, have developed in a very sporadic manner. Several markets have developed that initially promised to consume major amounts of rare earths, only to have the rare earths displaced by less costly alternatives. Rare earth–exchanged FCC catalysts continue to be a major market for rare earths, with the introduction of reformulated gasolines. Newer markets are growing for individual high-purity rare earths, particularly for neodymium for use in high-performance permanent magnets. As a result of these changes, the REO industry has developed into a two-tiered industry. Mixed REOs, which formerly constituted the bulk of the business, show stagnant demand, while purified, specialized REOs show strength and good prospects. Special, relatively small-volume applications have shown vigorous growth over the last 10 years, with corresponding price fluctuations.
Recently, there have been fears of a fundamental supply problem in the industry, as during the last 15 years the production of rare earth minerals and refined products, and their final end-market use, has largely moved to China. Over the last five years, prices have been unpredictable and supply to countries like Japan has been interrupted. Like Western Europe, Japan has no domestic source of rare earth minerals; all supplies are imported. Formerly, Japan was the world’s largest rare earth–based permanent magnet producer, but over the last 12 years it has been steadily overtaken by China.
The series of rare earth elements is diverse, and the differing properties of the various elements are exploited in the numerous end-use applications. The largest market for rare earth metals is currently in magnets. These rely mainly on the rare earth elements neodymium, samarium, and dysprosium for the production of high-performance, lightweight NdFeB and SmCo permanent magnets.
Polishing powders are the next-largest end-use market for rare earths in 2015, using cerium oxide compounds almost exclusively. Fluid cracking catalysts (FCC) used in petroleum refining are the next-most-important market in terms of volume, and mainly lanthanum is utilized in this application. Emission control catalysts are fitted to most new vehicles that use cerium oxide in the washcoat of the three-way catalytic converter. The hydrogen storage alloy used in nickel metal hydride rechargeable batteries is predominantly lanthanum. Rare earth-containing phosphor is the only major application that relies on yttrium, and the heavy rare earth elements terbium and gadolinium. Defense applications require the whole range of rare earth elements, from avionic high-luminescence display, which uses terbium-doped gadolinium oxysulfide, to yttrium-gadolinium garnets used in radar systems. They are very important, but not high-volume consumption applications.
Overall, consumption of rare earth products in the major regions will grow at an average annual rate of 2.4%.