#RareEarths: Will future supply be able to meet future demand?
This 2016 article by MIT is highly relevant – mandatory reading. “Cost of Inaction” sums it all up. Even at Argus low CAGR forecast of <5% supply gets really rather tight. Ignore at your peril. @GITI_SG
Cost of Inaction:
If nothing is done to either increase supply or reduce demand for REEs, the entire world will face high costs. Lack of REEs will cause large fluctuations in prices for many sectors of the global economy. In fact, the world is already paying for insufficient supply. For example, Dysprosium increased in price by almost 800% from 2006 to 2011 (Moss et al, 2011). This is an extremely large increase for a five-year period. In late 2011 and early 2012, the price dropped down significantly due to a decrease in demand (Onstad, 2012). The decrease in demand was mainly due to cost-saving substitutions of Nd-Dy magnets with more traditional non-REE magnets. Despite the uncertainty in prices, prices are generally expected to grow with time.
As the result, development and integration of green tech (especially green energy production) will be severely limited by cost factors. An average wind turbine can use up to 500 kg of neodymium and dysprosium per kilowatt generated (Department of Energy, 2011). The large amounts of rare earths used in green energy mean that significant price increases in REEs would result in large price increases in green tech. Due to use of REEs in many major manufacturing techniques, and their presence in many consumer electronics, it is certain that decrease in supply would affect prices across a wide range of sectors.
In summary, the problem of projected inequality of supply and demand in the REE market is a major concern. Although total REE demand and total supply are approximately equal (and are expected to remain so for some time), supply for individual elements such as neodymium and dysprosium will soon fall behind global demands. This will result in large price instabilities for many sectors of the economy, and will have negative effects on the integration and development of new technologies. The costs of this problem are simply too great to be ignored. Supply and demand inequality for rare earth elements needs to be addressed as soon as possible.