Rare earth elements (REEs) are quietly reshaping industries, powering everything from smartphones to renewable energy technologies. As global demand for advanced electronics and green energy surges, these indispensable minerals are becoming a focal point in geopolitics and innovation. Despite being scattered across the globe, the race to secure their supply chains underscores their pivotal role in shaping the future.
Rare earth elements, a group of 17 critical materials, are not as rare as their name implies but are challenging to extract economically due to their dispersion in low concentrations. Their unique electronic and magnetic properties make them essential for a range of high-performance applications, from consumer gadgets to green energy solutions.
As the backbone of modern technology, rare earth elements fuel the performance of everyday devices. Smartphones, for instance, owe their sound quality, vibrational feedback, and screen functionality to REEs. With over 5.4 billion mobile users worldwide, the demand for these elements continues to soar. Electric vehicles (EVs), another technology revolution, rely heavily on rare earth magnets for motor efficiency, with each EV incorporating approximately 2.5 kilograms of these critical materials. The renewable energy sector, particularly wind turbines, also leans heavily on neodymium and dysprosium for high-strength magnets, with the global wind capacity rising by an impressive 93 GW in 2022.
Healthcare advancements are another arena where REEs shine. Diagnostic tools like MRI machines depend on their precision and reliability. Meanwhile, the International Energy Agency (IEA) projects that meeting climate goals could drive a sevenfold increase in REE demand by 2040, underlining their growing significance in sustainable technologies.
To meet escalating demand, countries are bolstering exploration, extraction, and recycling efforts. Australia’s Lynas Rare Earths, one of the largest producers outside China, boosted output by 16% in 2022, while the U.S. invested $30 million in California’s Mountain Pass Mine, a key contributor to global REE production. Recycling is gaining momentum as a sustainable alternative. For instance, Urban Mining Co. is pioneering techniques to recover neodymium and dysprosium from used magnets, aiming to supply up to 25% of Europe’s rare earth needs by 2030.
Technological advancements are also enhancing extraction methods. Bio-mining, which utilises microorganisms to extract metals, is emerging as a cost-effective and eco-friendly solution. A 2023 pilot project in Sweden demonstrated a 20% reduction in costs compared to traditional methods. Similarly, companies like Energy Fuels are implementing solvent extraction technologies to refine rare earths sustainably, diversifying supply chains while minimising environmental impact.
China’s dominance in rare earth production, accounting for 70% of output and 85% of processing, poses significant geopolitical risks. The U.S. imported 80% of its REEs from China as recently as 2020, leaving its supply chain vulnerable to disruptions. Incidents like China’s 2019 threat to restrict REE exports during the trade war underscored the critical need for diversification.
To mitigate these risks, nations are prioritising stockpiling and international collaboration. The U.S. has established a strategic reserve of REEs, while the Quadrilateral Security Dialogue (Quad) has made rare earth cooperation a priority. Partnerships like the U.S.-Australia initiative to expand Lynas Rare Earths facilities demonstrate the urgency to develop alternative sources.
This push for diversification is driving investments in new deposits across Africa, South America, and Australia, unlocking opportunities for growth and reducing reliance on a single dominant supplier. Meanwhile, eco-friendly extraction and processing technologies, coupled with supportive government policies, are paving the way for a more sustainable and secure future for rare earth production.
Rare earth elements are indispensable to advancing technology, sustainability, and global energy goals. By addressing supply chain vulnerabilities and embracing innovation, industries worldwide are poised to unlock their full potential while minimising environmental impacts.
Pensana plc (LON:PRE) explores and mines neodymium, praseodymium, and rare earth minerals. The Company’s flagship assets are the Saltend rare earth refinery project in the United Kingdom and Longonjo neodymium and praseodymium (NdPr) Project in Angola.
