In the first half of 2024, the rare earth market experienced significant volatility. The demand for rare earth elements from end applications such as electric vehicles and renewable energy technologies rose and then fell, which was reflected in price fluctuations. Overall, the global supply of rare earths, particularly outside China, struggled to meet the ever-growing demand. Early-stage rare earth projects in countries like the United States, South Korea, and India made positive progress but have not yet been sufficient to fill the widening supply gap.
Moreover, escalating geopolitical tensions are expected to continue impacting the rare earth market in the second half of this year.
In 2023, Mr. Roland Hill, the Manager Director of FYI Resources Ltd. (ASX: FYI; OTCQX: FYIRF, FSE: SDL), stated in an interview with “METALS 100” that FYI has made numerous exciting advancements. The company has optimized the commercialization phase of its flagship high-purity alumina (HPA) project. Additionally, FYI has ventured into downstream rare earths production through the acquisition of Minhub Operations Pty Ltd. Rare earths are widely used in many applications and components of devices in modern society, with the market revenue expected to grow from $7 billion in 2021 to $15.4 billion by 2030.
Discussing the global rare earth market inevitably involves China. In 2020, China produced 140,000 tons of rare earths, and by 2023, output soared to 240,000 tons, accounting for 68.75% of the global rare earth supply (350,000 tons) last year. This figure is likely to increase further this year. By 2030, China is expected to maintain its position as the world’s largest producer of magnet rare earths, but Australia’s share of global production is projected to rise to 18%, while the United States is expected to maintain a 7% share.
In February of this year, the Chinese government announced the first batch of 2024 production quotas for rare earth mining and smelting separation at 135,000 tons and 127,000 tons, respectively, with China Rare Earth Group and China North Rare Earth Corp receiving these quotas. Thus, the total mining output quota for 2024 is set at 270,000 tons, representing only a 6% year-over-year increase. This is expected to significantly improve the global supply-demand balance for rare earths in 2024.
Unlike copper or lithium, the major challenge in the rare earth market is not a significant supply-demand gap but rather the high geographic concentration of mining and refining projects, leading to substantial supply risks for the entire industry. To address this issue and increase domestic supply, the United States has implemented tariff measures: starting in 2026, a 25% tariff will be imposed on key minerals like natural graphite and permanent magnets imported from China. Previously, the U.S. government funded companies like MP Materials Corp (NYSE: MP) and E-Vac to accelerate the construction of rare earth magnet factories in the U.S.
China’s Bayan Obo mines in Inner Mongolia is the world’s largest rare earth mine, followed by Mount Weld in Australia and Mountain Pass in the United States.
