Rare earth elements (REEs) are a group of 17 special metallic elements, including the 15 lanthanides (lanthanum, cerium, praseodymium, neodymium, etc.) as well as scandium and yttrium. Although the term "rare" is part of their name, their abundance in the Earth's crust is not extremely low. What truly makes them precious is their high extraction difficulty and irreplaceable applications.
Why Are Rare Earths Difficult to Extract?
Rare earth elements are well dispersed in the Earth's crust but hardly ever occur in high-purity deposits. They usually occur in association with other minerals, such as monazite and bastnäsite, usually in low concentration, leading to extremely high mining expenses. While rare earth projects exist all over the world, China is the most dominant country in the industry, with 70% of the production in 2023, followed by the U.S. (14%), Australia, Myanmar, etc.
In addition, the process of extracting rare earths is complex and ecologically destructive. Rare earth ores also include radioactive elements like thorium and uranium. Separation and purification require acid and alkali, and high-temperature processing, leading to a huge amount of toxic wastewater and radioactive waste. Due to strict environmental regulations, nations are not prepared to bear the ecological burden of producing rare earths, adding to supply constraints.
Applications of Rare Earths: Why Are They Irreplaceable?
Applications of Rare Earths: What Makes Them Irreplaceable?
Rare earth elements are basic materials in high-tech industries due to their inherent magnetic, optical, and catalytic characteristics. Almost everything in modern society relies on them—smartphones, missiles, wind turbines, and pacemakers all contain rare earth elements.
1. The Backbone of High-Tech Industries
Rare earths are used in most of the high-tech gadgets of modern civilization. Everyday commodities such as smartphones, tablets, and laser printers use enormous quantities of rare earth elements, whose stability and performance are directly dependent on them. For example, neodymium-iron-boron (NdFeB) magnetsÌýhave widespread applications in electric motors and wind turbines. As the world is going green and adopting renewable sources, the demand for rare earths will increase even more.
2. A Strategic Asset for Military and National Defense
Rare earths are not just economic drivers but are also very important to national defense. Many military technologies, such as missile guidance systems, stealth fighters, and drones, depend on rare earth materials. Clearly, rare earths have a role that is indispensable in national defense, and that's why more countries are taking steps to secure their supply chains.
3. The Most Important Contribution of Rare Earths to EV Batteries
As global demand for environmental protection and low-carbon living continues to rise, the new energy vehicle market is growing rapidly. Rare earths play an unrivaled role in electric vehicle batteries, particularly for permanent magnet motors. The strongest permanent magnets used today are NdFeB magnets. For instance, just one motor per Tesla Model 3 requires approximately 1 kg of neodymium. Large-scale application of EVs will make rare earths' demand extremely large, impacting the overall supply-demand ratio of the industry as a whole.
Future Challenges
Under evolving world economic circumstances, rare earth exploration and trade are faced with a series of challenges. Issues ranging from environmental protection to resources sustainable utilization need to be addressed. In the meantime, with the shift in global geopolitics, countries have come to place strategic hoarding of rare earth resources high on their agendas.
For investors, the rare earth sector also presents new opportunities. As technology advances, the cost of refining and utilizing rare earths will gradually decrease, encouraging the growth of emerging markets. Driven by renewable energy sectors such as wind and solar energy, the future of rare earths remains bright.
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