The Market For The "Not-So-Rare" Rare Earth Elements

Abstract

This paper examines the market for the Rare earth elements. These are comprised of 17 elements of the periodic table which include 15 elements from the group known as lanthanides and two additional elements known as scandium and yttrium. The metals are often found combined together in ores and must be separated into its individual elements. The fact is that rare earth metals are not rare in terms of the quantity present in the earths crust. However, the metals are less concentrated than other more common metals and the extraction and separation processes necessitate high research and development costs and large capital outlays.

The various applications of rare earth elements can be broadly classified into four major categories, namely: High Technology Consumer Products, Environmentally Friendly Products, Industrial and Medical Devices, and National Defense Systems. The demand for such high technology products is rapidly increasing causing a simultaneous upsurge in the demand for rare earth metals as well.

On the supply side, China dominates the production rare earth elements, mining approximately 97% of total world production. Consequently, most countries must rely on imports of these REEs to facilitate production of the various systems and products that are dependent on the rare earth metals as raw materials. This near-monopoly imposes several supply-chain risks on the importing nations which are exploring ways to mitigate the potential economic harm associated with these risks.