The supply situation for rare earth elements is compounded by global political tensions, since the vast majority of these vital minerals are sourced in China.
The supply chain problems and price hikes that have frustrated the global electronics industry have focused primarily on semiconductors and have been well documented here.
But there is an equally significant problem that, arguably, is even more complicated for the electronics sector in the long term — that surrounding rare earth elements.
These complex compounds can impact the production of a whole range of goods ranging from batteries, mobile phones, laptops, hard drives, displays, lasers, electric vehicles, defence equipment, and medical diagnostic devices.
The supply situation for these vital minerals is compounded by global political tensions, since the vast majority of the 17 rare earth materials are sourced in China, which is the single country that has the end-to-end capabilities of mining, refining, and processing the elements and is believed to enjoy a 55% global share of the minerals, and an even higher 85% of the refining capacity.
Other major countries where many of them are mined include the unstable economy of Myanmar, Vietnam, Brazil, India, and the Democratic Republic of Congo — where China is far the biggest source of financing the operations.
The most important rare earths for the electronics and battery manufacturing sectors include praseodymium, terbium oxide, neodymium, yttrium, dysprosium, erbium, and lanthanum. Over the past year, the prices for such materials have increased by between 65 and 100%.
It needs to be stressed, though, that in one sense, their name is a misnomer — some of these rare earths are relatively abundant. The issue is more that the deposits of the elements are difficult to exploit on a commercial basis.
Recent estimates suggest that in the past year, the U.S. imported 80% of rare earth minerals from China, while Europe relies on 98% of its supplies for these vital minerals.
Indeed, the strategic position of China in the supply and prices for the rare earths is that for many years, it has applied strict, and some say politically influenced, quotas. The country’s Ministry of Industry and Information Technology recently said it would increase the quota for this year by 20%, the highest on record to 168,000 tonnes, in an attempt to ease the extremely tight supply situation.
But China has shown that it can also use its dominant position in less benign ways. For instance, last year, it imposed a temporary ban on exports to Japan when the countries were at loggerheads over the territorial integrity of the disputed Senkaku Islands.
China has also tried to politicise the supply situation as part of its trade war with the US. As a riposte, the Biden Administration has recently started taking steps to protect the supply of some rare earths but has acknowledged this will take many years to create anything resembling a domestic supply chain.
Little wonder than that these materials — while they are generally used in small quantities in most of the applications noted above — have become another plank in the on-going trade rivalry between the US and China.
Some have likened the situation over rare earths as the opposite to the kind of stranglehold the US has over China in semiconductor supply and technology. In some respects, this is valid. But the reality is that China is not able to meet its own demands for rare earths. Indeed, recent estimates suggest that over the past few years, China has significantly scaled back its exports, putting great strains on the global supply chain.
The sector that is feeling the most exposed to the current situation is electric vehicles and indeed other green technologies, notably wind power generators.
To illustrate just how crucial some of these elements can be in the sector, take the example of erbium. This is a vital ingredient in the optical communications sector: Without it, optical fibres could not operate. This is because for long-distance links, you need to amplify the signals, and erbium plays a crucial part in enabling the necessary transmission.
The material is embedded inside short section of the fibre, and excitable ions of the element are pushed into a high energy state by irradiating them using a laser. The signals of light moving down the fibre stimulate the erbium ions to release their stored energy as additional light of exactly the same wavelength needed to amplify the signals.
In the semiconductors sector, hafnium, in its oxide form, acts as a crucial electrical insulator. In some cases, it can significantly improve on the performance of the standard transistor material, silicon dioxide, lowering the leakage current and at the same time, increasing switching speeds.
In consumer electronics, indium, in one of its alloy forms, indium tin oxide, is a vital ingredient in achieving great electrical conductivity and optical transparency, so is widely used in flat screen displays and televisions.
Dysprosium has become a rare earth element vital for making magnets. For instance, when mixed with iron and terbium, it forms the alloy Terfenol D, which can change shape in response to a magnetic field. Importantly, it is also capable of handling high temperatures, making it a very useful material for magnets deployed in turbines and hard disk drives.
As already noted, Europe is in a very poor supply situation when it comes to rare earths. The only country in the region that has any meaningful deposits worth exploiting is Greenland, which last year is estimated to have produced 1.3% of the global market, and has reserves of some 1.5 million tons, representing 1.3% of global total reserves.
The European Commission has also proposed funding for the sector, as well as sales quotas, prompted by the European Raw Materials Alliance, which was formed last year.
And Thierry Breton, the EU Commissioner responsible for the Internal Market recently noted that the EU is far too dependent on others — mainly China — for the import of permanent magnets, as well as the rare earths of which they are made. He was responding to the Association’s call for €1.7 billion to be made available to support the sector.
“The commission’s in-depth review of critical supply chains and key technologies has highlighted the EU’s high level of foreign dependency on inputs required for our green and digital transition,” said Breton.
The report called for the construction of rare earth recycling capacity in the region, as well as more cooperation with resource rich countries.
Breton might have a point here. It seems strange that, despite their clear importance, there has been almost no effort to try and recycle them. There is a thriving business globally in recycling other metals, such as tin, lead, and aluminium.
Last month, Mariah Chuprinski, of Pennsylvania State University, penned an excellent article that highlighted on how rare earths could be salvaged from electronic waste.
This article was originally published on EE Times Europe.