Rare Earths – Market Background

China is effectively the monopoly supplier of rare earth elements in the world today, and has been supplying 90 per cent or more of the world’s supply for over a decade. This wouldn’t necessarily be a cause for concern, but for the fact that China is also, by far, the largest consumer (72 per cent in 2012) of rare earths. It became the dominant supplier by producing and supplying rare earths in the 1990s and early 2000s at prices that western producers could not compete with.

There are five elements (neodymium, praseodymium, dysprosium, terbium and europium) which drive the economics of rare earth production called Critical Rare Earth Oxides (CREOs). CREOs are also referred to as the “Big 5”. The two demand sectors which consume the majority of these elements’ production are magnets and phosphors. The Industrial Mineral Corporation of Australia (IMCOA) sees demand for these sectors increasing rapidly over time due to constantly evolving technological requirements in the market place, which will help to support their prices while other elements – such as lanthanum and cerium – may be in oversupply.

global demand for the big 5

Source: IMCOA (2012)