Geopolitical Troubles Are Changing the World’s Rare Earth Market | OilPrice.com

The world’s exotic market remains in a regional supply chain, encouraged by the West’s efforts to reduce reliance on China from the backdrop of growing demand, focusing on ts national security, and the strategic importance of resources. In the last ten years, the world’s annual crude supply has tripled, setting world production records almost every year – from 142,000 tons per 2013 to 359,000 tons of rare earth-equivalent oxide mined last year.

The global exotic market is in a state of flux, finding itself at the crossroads of technological development and political tension. China’s long-term dominance remains strong but is slowly waning as its share of global production fell from 98% in 2010 to 78% in 2015 and down to 67% last year as manufacturers in Australia and the US, they are supported by a large government support. high performance.

China still dominates, although its market share is declining

Despite the decline in China’s market share in the upstream mining sector, its total output is rising. More importantly, its control across the complex watershed to the lower operational and production levels remains elusive. Although earth is relatively abundant, rare earth is considered a rare commodity because it is difficult to extract and separate the ore from the oxides required for use in manufacturing. This makes economical deposits rare. China’s unified state-controlled market is at the forefront of industrial and technological innovation that is associated with unprecedented global activity. Last year in December, China imposed technology export controls for rare earth extraction, separation, refining and magnet production, which could limit new development abroad. Continued financial support will be needed from Western governments to reduce China’s power and increase its market share throughout the world’s unconventional supply chain.

Regional strategy to strengthen the global supply chain

The US encourages the development of its rare earth series through research funding and project funding through the Affordable Care Act. Australia has long supported unconventional global projects through tax incentives, while Europe is committed to building supply through local provisions for supply quotas through its Critical Raw Materials Act. In May this year, the United States and Australia announced strategies to combat competition from China. Australia has announced an extension of incentives in the 2024-2025 budget plan with a 10% production tax credit and project funding available for all precious minerals, including rare earths. At the same time, the Biden administration in the United States imposed a 25% tariff on rare earth magnets from China, effective from 2026.

There are few countries that have the world’s most rare earth resources, and with world reserves of about 115 million tons, the world has enough to last for years more than 300, according to last year’s production figure. With so many opportunities to discover, lack of resources is not a real issue.

Although small in volume compared to the more than 3 billion tons of iron ore mined each year, rare earth elements are important to society, and their unique properties have proven to be difficult much to replace it. The demand for 17 white shiny metals has increased recently due to their important role in energy transition sectors, as well as high-tech defense equipment, artificial intelligence and electronics. of customers. Permanent magnets, required for any device related to electric motion such as wind turbines and electric vehicle (EV) motors, are the largest application for the world ‘rare’, making the rare earth elements neodymium, praseodymium, dysprosium and samarium among the most sought after. strange worlds are very important. We expect that the world of rare earth magnets will remain a priority, driven by technological progress and electrification.

The race between China and the West will continue

A dramatic increase in supply has outstripped demand in the past few years, which has led to an oversupply of the world’s rare commodities. This has created an unstable low-cost environment where many manufacturers are operating at a loss. Global commodity prices are notoriously volatile and difficult to predict, in part because of the high vulnerability to environmental risk and ongoing trade conflicts around the world. width. Uncertain price levels are challenging start-up efforts launched by a growing number of retailers looking to capitalize on the booming global economy.

The alien world has become an important battleground in the ongoing technological and economic competition between China and the West as the race continues to dominate to ensure its reliable supply.

By Rystad Energy

More top information from Oilprice.com