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Electric vehicles (EVs): EV motors rely on high-performance magnets to work properly. Manufacturers use the REEs dysprosium and neodymium to produce these magnets for high efficiency and heat resistance.
Wind turbines: In the energy industry, rare earth elements are essential for maximizing the power output of wind turbines. Manufacturers use terbium, dysprosium, praseodymium, and neodymium in their production processes.
Smartphones: Rare earth elements are critical for making the magnets and displays used in smartphones. For example, dysprosium and terbium are found in backlighting systems, while yttrium is used to produce screen colors. Smartphone speakers use magnets made from gadolinium, neodymium, and praseodymium.
Defense applications: The defense industry relies on REEs for the production of weapons, vehicles, and aircraft, and advanced defense technologies, including missile-guidance systems, radar, sonar, fighter jets, and submarines. They all contain at least one REE with indispensable magnetic and electronic properties.
Top producers of rare earths While China and the United States lead global production of REEs, several other countries also have sizeable deposits. Mining occurs in multiple regions, but China continues to dominate the refining stage — accounting for an estimated 99% of global refining capacity as of 2023.
Refining, the process of separating rare earth elements from other mined materials, is a critical and resource-intensive step that determines the global supply chain. Below is a brief overview of REE production and reserves in seven major producing countries, based on the latest data from the U.S. Geological Survey’s Mineral Commodity Summary.
China
Annual production: 270,000 metric tons
Known reserves: 44 million metric tons
Geopolitical and environmental factors. China’s government views REEs as a critical resource, so it uses state-controlled enterprises for all production and refining activities. Due to the environmental effects of rare earth operations, the Chinese government has also taken steps to shut down illegal mining operations and punish refining companies that don’t comply with environmental regulations.
United States
Annual production: 45,000 metric tons
Known reserves: 1.8 million metric tons
Geopolitical and environmental factors. The United States is heavily dependent on China for rare-earth refining, as China controls almost all global refining capacity. Due to the importance of rare-earth materials for defense, the U.S. government offers incentives to domestic producers. However, U.S. companies have to contend with environmental regulations.
Australia
Annual production: 18,000 metric tons
Known reserves: 5.7 million metric tons
Geopolitical and environmental factors. Australia has a Critical Minerals Facility, giving private companies access to funding and other resources for rare-earth mineral projects. The Australian government has also partnered with the United States, Japan, and the European Union to reduce reliance on China. Australia has strict environmental laws, so the national government is investing in green chemistry techniques and other methods for reducing the pollution associated with rare earth mining and processing.
Thailand
Annual production: 7,100 metric tons
Known reserves: 4,500 metric tons
Geopolitical and environmental factors. Thailand has limited reserves, but it’s located near several countries known for their electronics and EV production, enhancing its strategic importance. From an environmental perspective, mining and processing companies need to know that rare-earth deposits are often found in areas with sensitive ecosystems.
Vietnam
Annual production: 600 metric tons
Known reserves: 22 million metric tons
Geopolitical and environmental factors. The Vietnamese government has finalized memoranda of understanding with Australia and other countries, opening up new opportunities for trade and investment. Government officials are also working on updating the country’s laws to align with the current demand for rare-earth mining and refining. Like Thailand, Vietnam has some ecologically sensitive regions, so government agencies and private companies must be aware of the increased risk of deforestation, soil erosion, and other types of environmental damage.
Brazil
Annual production: 80 metric tons
Known reserves: 21 million metric tons
Geopolitical and environmental factors. Although its annual production is quite low, Brazil has some of the largest untapped reserves in the world. With proper investment, it could offer other countries a valuable opportunity to diversify away from China. However, Brazil doesn’t have much refining capacity, and its permitting process is rather complicated. Many mining operations are also located near the Amazon rainforest and other sensitive areas.
Russia
Annual production: 2,600 metric tons
Known reserves: 10 million metric tons
Geopolitical and environmental factors. Like China, Russia uses several state-controlled firms to mine for rare-earth elements. However, due to sanctions from multiple countries, Russia isn’t well-integrated into the global supply chain, limiting export opportunities. Minerals mined in Russia are also likely to contain radioactive materials, increasing the risk of harm.
Why country-level rare earth control matters
Control over rare earth elements gives countries significant economic, technological, and geopolitical power. Nations with large deposits can use this advantage to gain leverage in trade disputes and other political matters. For example, China uses export controls to ensure domestic companies have enough REEs to meet their production goals before other countries can import what they need.
REEs are also critical for national defense and technology development. Countries with large reserves have more options when it comes to producing missiles, military vehicles, and other defense equipment. Rare earth metals are found in almost every electronic item on the market, so they can also make or break a country’s economy.
The global supply chain is also relatively fragile. Few countries have economically viable deposits, so even minor issues can result in reduced supply for months or even years. For example, a refining facility in Vietnam had to shut down due to tax problems, leading to reduced global refining capabilities.
Finally, China controls much of the refining activity, making it difficult for companies in other countries to estimate annual supply. If China implements additional restrictions or shuts down some of its state-owned enterprises, the global supply of purified REEs could dwindle.
What’s next for rare earths?
Global demand for rare earths continues to rise, driven by the growing need for advanced technology, clean energy, and electric vehicles. To meet this demand, nations with viable deposits should focus on adding mining and refining capacity.
Circular solutions focus on reusing and recycling rare-earth elements along with reducing their consumption whenever possible. This minimizes waste and reduces demand for new rare-earth materials. Strategic alliances and trade agreements are also essential, especially for countries with lower reserves or limited production capabilities.
The environmental impact of mining rare earth elements will always be a concern. For example, refining can cause heavy metals to build up in the water supply, increasing the risk of health problems. Production and refining also require large amounts of water.
Mining and refining companies can’t completely eliminate these problems, but buyers can help by focusing on ethical sourcing — choosing suppliers that reduce water use, limit pollution, and uphold environmental standards.
“Source: QZ.com”
