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Key materials for energy transformation: rare earth elements

2022-06-12 21:00:26
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The International Renewable Energy Agency issued a report entitled "critical materials for the energy transition: rare earth elements". The summary is as follows:

Rare earth is composed of 17 chemical elements, several of which are crucial to energy transformation. Neodymium, praseodymium, dysprosium and terbium are the key to produce permanent magnets for electric vehicles (EV) and wind turbines. Neodymium is very important in terms of volume. Yttrium and scandium are used in some types of hydrogen electrolysis cells, while europium, terbium and yttrium are used for energy-saving fluorescent lighting. Traditional energy also relies on rare earth elements (REE), such as catalysts used to produce automobile exhaust.


Demand and market growth forecast


In 2020, the global rare earth production reached 240000 tons. In particular, the demand for permanent magnets is expected to increase significantly in the next few years. About 29-35% of rare earth materials are used for permanent magnets, of which less than 15% are used for electric vehicles. In 2020, electric vehicles used about 6000-9000 tons of neodymium, accounting for 15-20% of all permanent magnets used in 2020; About 10% of permanent magnets (4000 tons of neodymium) are used in wind turbines. In 2020, electric vehicles and wind turbines together accounted for about one-third of the use of magnets. Although wind turbine production is expected to double in the next decade, electric vehicle manufacturing is expected to grow by an order of magnitude.


Dysprosium and a small amount of terbium are added to the permanent magnet to improve thermal stability. Although the amount of dysprosium is small compared with neodymium, the resources of dysprosium are much less than neodymium. Therefore, dysprosium supply is a key factor in terms of rare earth element supply. The supply of permanent magnet materials will need to be greatly increased to meet the demand of the growing electric vehicle industry. According to the ambitious energy transformation plans of various countries, the total demand for permanent magnets and the rare earth elements contained in them by electric vehicles and wind energy may more than double between now and 2030.


Supply outlook


Although there are enough known rare earth resources to meet all the needs of energy transformation, the main challenge is to expand mining and processing capacity across the value chain according to demand growth. Natural rare earth deposits usually contain a mixture of rare earths. Neodymium accounts for about 20% of these deposits on average. However, the supply of each rare earth element needs to be assessed separately; The data value of the whole group is limited and cannot reflect the actual scarcity. Many deposits also contain radioactive substances such as uranium or thorium, which complicates tailings management. In fact, different rare earth elements are produced together, and their markets are dividing, which means that the supply of some rare earth elements is facing a shortage, while the supply of other rare earth elements is exceeding the demand. This situation will be further aggravated in the next few years. The key is to understand individual rare earth elements, rather than treat them as a whole.


Rare earth deposits are widely distributed. It is economically feasible to expand mining in many places, but processing capacity is not easy to expand, which depends on various factors, including know-how concentrated in certain countries. The increased mining industry also needs to be combined with the concept of circular economy, such as recycling and reuse, and innovation to reduce demand growth. Dysprosium has a high concentration in the ionic clay deposits in southern China and Myanmar. Other countries in the region, such as Vietnam, have similar resources to be developed.


In addition to natural resources, some residue streams, such as red mud (from aluminum production), coal-fired fly ash and gypsum (from coal-fired power generation), contain large amounts of recoverable rare earth elements. In addition, new offshore deposits have recently been discovered. However, these options are not yet economically feasible and may not meet the needs. Rare earth metallurgy, including separation, metal manufacturing, casting and magnet manufacturing, is technically challenging, which limits the entry of new suppliers.


Reduce supply chain risk


Rare earth element mining (accounting for 58% in 2020), purification (90%) and most permanent magnet production (90%) are concentrated in China. This concentration can cause supply problems. Processing costs and environmental problems outside China have restricted the development of production capacity and even led to production stoppage.


In recent years, due to environmental reasons, the Chinese government has also tried to limit the growth of rare earth mining. China's large rare earth deposits, favorable policy framework and long-term efforts to master relevant separation and processing technologies have promoted growth, while other countries have not invested in this value chain in the past 30 years. The rise of the electric vehicle industry has drawn people's attention to the necessity of supply diversification, and many measures aimed at achieving supply diversification and reducing supply chain risks are being implemented. In recent years, people have increasingly realized that it is not enough to focus on mining alone, and the entire supply chain must be considered.


China's market dominance has created a very competitive national supply chain. One exception is the market segment of sintered high-performance permanent magnets currently used in automobiles, which is a Japanese company with key original technology. However, in recent years, China and the United States have strengthened patent applications for bonded and sintered magnets, and more than 500 new related patent applications have been filed in the past decade.


This is an indicator of future market importance. Meanwhile, countries with electric vehicle expansion plans are seeking to reduce their dependence on Chinese exports. However, it is difficult to do this in the short term. Today, there are only 11 major mines and 7 major processing plants in the world; Six of the latter are in China, one in Malaysia and one smaller factory in Estonia. Australia, Canada, Norway, South Africa, the United States and several African countries are developing new mines and processing facilities. However, due to environmental problems and long development time, these projects have many disputes. For example, the Greenland parliament recently banned the local development of one of the world's largest undeveloped rare earth deposits.


Therefore, we need a multi-stage strategy to reduce the supply risk of the whole supply chain. In the foreseeable future, China will still be the main supplier of rare earth products. At the same time, China is increasingly dependent on the import of rare earth raw materials. While supply diversity is beneficial, a purely national approach to supply will be challenging in terms of economy and trade. Therefore, international dialogue between suppliers and users of rare earth elements should be strengthened. There is also a need for more dialogue and closer cooperation in the supply chain among technology developers, suppliers and decision makers.


Innovation to reduce dependence on rare earth


Automobile manufacturers have recognized the industry's dependence on rare earth elements and developed alternative motor designs that avoid the use of permanent magnets. However, the lower performance of these new technologies, especially the reduction in mileage, is a key factor.


Scientists also continue to search for new permanent magnetic materials to reduce dependence on rare earth elements. There are also alternatives in the design of wind turbines. How to limit or even eliminate the use of dysprosium in permanent magnets is the subject of current research and development. At the same time, scientists are developing new magnet processing technologies to reduce the dependence on sintered permanent magnets and reduce the demand for key rare earth elements.


Europe has established the European raw materials Alliance (Erma), which focused on rare earth elements at the beginning, including a list of 30 key raw materials. The US government assesses the vulnerability of key supply chains, including minerals, and strengthens their resilience, with a focus on rare earth elements. In addition, other major consumer countries such as China and Japan have also formulated relevant policies.




Source: International Energy small data



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