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Rare earth element prices to remain strong as demand exceeds supply: Ionic


Not many alternatives to rare earth elements

EV producers must pay up to secure supply

SerenTech acquisition offers lifecycle ownership

  • Author
  • Jacqueline Holman
  • Editor
  • Ankit Ajmera
  • Commodity
  • Electric Power Energy Transition Metals

Rare earth element, or REE, prices are likely to remain strong over the coming years, as demand is set increase faster than supply, Ionic Rare Earths Managing Director Tim Harrison told S&P Global Commodity Insights.

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"Where REE pricing is now, it's probably here for the long-term," he said. "As for prices to drop there'd have to be a fundamental change in either the supply or demand scenario and I just can't see where all the supply of rare earths is going to come from to change that dynamic."

REEs are an essential ingredient for energy transition, as they are used in permanent magnets in electric vehicle motors and in wind turbines.

Global plug-in light duty electric vehicle sales are expected to total 9.1 million units in 2022, up from 6.3 million units in 2021, according to S&P Global analysts. The sales are expected to reach 13.7 million units in 2025 and 26.8 million units in 2030.

Increasing demand has boosted critical mineral prices in general, with the price of 30% Co cobalt hydroxide assessed at $31.70/lb CIF China May 13 for spot cargoes aligned with the Platts methodology from S&P Global, loading 15-60 days out, up 15% since the start of 2022.

Ionic is developing the Makuutu project in Uganda, where it plans to complete a feasibility study by October and start REE production by 2024.

The company completed a scoping study for the project in April 2021. Since then, REE spot prices have risen 35%, while Ionic's forecast pricing for the end of the decade gained 50%, Harrison said.

"Beyond that, no one has a crystal ball to predict what REE prices are going to do, but just looking at demand and that supply relationship, there is a lot of [upward] pressure on rare earth prices," he said.

REE substitute

High REE prices would probably drive automakers to potentially look for substitutes, but Harrison said that there were not many other options as REEs were still the most efficient form of material for EV motors.

"There is a lot of work at various EV makers trying to find an alternative solution, but the reality is that this capacity is being built now ... I think it's going to take a long time to develop alternatives that are going to be better than permanent magnets," Harrison said.

While automakers are worried about high prices, he said permanent magnet motors provide substantial value relative to the cost of the whole EV and were still the most efficient way to get the right weight, range, and capacity.

If REEs become inaccessible, there'd have to be a trade-off between range and power intensity.

"The reality is there is only so much rare earth elements available, so if demand goes up and supply doesn't increase, it's logical that prices continue to increase," Harrison said.

The REE market was around $10 billion-$15 billion/year globally, Harrison said, but it has enabled somewhere between $10 trillion and $15 trillion of the EV industry.

"The Japanese call it the seeds of technology and that's a fitting analogy because if you don't have the REEs, you don't have the technology -- you don't need a lot of it, but without REEs you simply can't develop the products," Harrison said.


While China currently dominates mine production and processing of REEs and has significant global pricing influence, Harrison does not see a threat from Chinese producers undercutting the rest of the market.

"I think we're entering a very interesting time where everyone has to work toward net-zero carbon and delivering on that ultimately means paying more," Harrison said. "Nothing is free in this world, and I think the reality is that governments, populations are concerned about the environments, and they make conscious decisions to spend money to be part of the solution toward climate change and trying to do their part and preserve the environment for future generations."

There was a "tremendous amount" of capability that needed to be built and investments required as governments mandate a move toward EVs, Harrison said.

SerenTech acquisition

Ionic recently acquired UK-based Seren Technologies, which focuses on REE separation and refining technology from waste permanent magnets.

The company will integrate SerenTech over the next 12 months.

Ionic will start a new pilot plant program at the Queen's University and over the next six months build a new facility in Belfast, Northern Ireland that will upscale into a demonstration plant to separate and refine REEs, Harrison said.

The demo plant will process 30 mt/year of spent magnets and swarf to produce 10 mt/year of refined and separated magnet rare earths oxides, including neodymium, praseodymium, dysprosium, and terbium with purity exceeding 99.9%, Ionic said previously.