China produces 85- 90% of the world’s REEs. China’s economic development strategy has logically leveraged its REE market dominance by offering price incentives to companies that relocate their downstream manufacturing to China. As a result, Chinese industry currently consumes 65-70% of the world's REEs and that percentage is growing. This reality and the environmental challenges associated with REE mining in China, had raised some international concern regarding China’s market dominance. This concern was brought to new levels in 2010 when a boundary dispute between Japan and China resulted in the slowing of REE exports to Japanese industry which skyrocketed prices internationally. While prices have fallen back to more normal levels, because of growing market demand and their importance in military and green economy applications, there remains a carry-over concern regarding strategic supply.
For Search Minerals, the most important market impacting the demand for our elements is the permanent magnet market, more specifically NdFeB magnets also now as neodymium magnets. Because these magnets are essential components in such things as next generation wind turbines, electric automobiles, and a wide variety of industrial and consumer electronics they are now fueling much of the greening of every economy.
In January 2017, Search purchased a report from Adamas Intelligence of Sudbury, Ontario Canada entitled, Rare Earth Market Outlook:Supply, Demand and pricing for 2016 to 2025. Following are just a few excepts from that report:
"After lengthy period of adjustment, the rare earth market is poised to boom again.”
"The outlook for rare earth demand from 2020 through 2022, and beyond, is exceptionally promising. This period reveals that for many of today's most publicized rare earth end uses, such as electric vehicles, wind turbines, and many others, the rate of annual demand growth is poised to rapidly accelerate from 2020 through 2025, steering global rare earth demand to unfathomable heights."
“Government-led initiatives will fuel over 50% of new demand growth through 2025”
"Looking ahead at the defining trends shaping global rare earth element demand, it is clear that the majority of new demand growth over the next ten years will stem from roots in government-led policy, regulations, mandates and initiatives. Specifically we forecast that over 50% of all new global rare earth demand growth over the the coming ten years will be directly or indirectly driven by government-led actions."
A more detailed full chapter summary of the Rare Earth Element Outlook from 2016 through 2025 can be found on the Adamas Intelligence website: http://www.adamasintel.com/store/product13.html
According to Industrial Minerals Company of Australia Pty Ltd (IMCOA) and the Curtin Graduate School of Business (CGSB) at Curtin University, Western Australia, magnet REE are 33% by volume and 80% by value in an overall REE market estimated to be worth between US$ 2-3B. They also state that the demand for the elements used in these magnets (Nd, Pr and Dy), is the primary driver of the imbalance between market supply and demand.
In their August 2016 report examining the permanent magnet market, Grandview Research noted that in a magnet market estimated to be worth US$13B in 2015, NdFeB magnets comprises 60% of that market. They also noted that looking at the drivers in key segments of the magnet market including: automotive, electronics, medical, aerospace, energy, and industrial, they project compounded annual growth rates (CAGR’s) greater than 9%.
A report released by Roskill Information Services in November 2016, stated “NdFeB permanent magnets are set to grow strongly with increasing uptake of electric vehicles. Rare earth producers will focus on maximising Nd yields but, even so, Nd prices will rise sharply as supply struggles to keep up with demand.”
The dynamic of supply and demand for critical rare earth elements are complex and forecasts offer a diversity of opinion on market drivers, growth and prices. Search Minerals has every reason to be optimistic about the future. What we can control are those variables that will enable us to become a strategic, low cost, environmentally responsible long-term supplier of critical rare earth elements . . . and that is our business focus.