Rare earth metal prices have risen sharply over the past year while growing adoption of new technologies like electric vehicles is likely to send costs even higher, according to analysts.

In the 12 months through September, the price of lithium carbonate—used in batteries, mobile devices, and spacecraft—surged 150 percent; the price of holmium oxide—used in magnets and sensors—rose 109.4 percent; and the price of praseodymium-neodymium oxide—used in magnets, motors, and wind turbines—vaulted 73.7 percent, according to Shanghai Metals Markets (SMM) data cited by Nikkei Asia.

“Demand for new energy vehicles and wind power has continued to increase this year, boosting demand for rare earth,” SMM analysts wrote in a recent note, predicting that “demand for rare earth functional materials, especially rare earth magnetic materials, will grow significantly,” driven by the push to decarbonize economies.

The Biden administration in February ordered a review of key domestic supply chains, including of critical minerals and materials, with a June report (pdf) noting that demand for rare earths is set to skyrocket.

“Demand for many of these metals is projected to surge over the next two decades, particularly as the world moves to eliminate net carbon emissions by 2050. For example, global demand for lithium and graphite, two of the most important materials for electric vehicle batteries, is estimated to grow by more than 4,000 percent by 2040 in a scenario where the world achieves its climate goals, with graphite projected to grow nearly 2,500 percent,” the report said.

The U.S. Department of the Interior will lead a task force to identify sites in the United States where the 17 rare earth metals used in products ranging from cellphones to electric vehicles could be produced and processed, according to the report.

Analysts say the drive to adopt new technologies is likely to pressure prices going forward.

“Future electric vehicles will also consume more rare earth materials, including praseodymium and neodymium and others,” Hou Jinchen, an analyst with SMM, told Nikkei Asia. “There will still be fluctuations, but generally the higher price of all kinds of basic key materials could become a new normal for the future.”

The global rare earth metals market was valued at around $8.1 billion in 2018, according to Zion Market Research, which estimated in October 2020 that the market is set to grow to around $14.4 billion by 2025.

Rare earths play a vital role in many industries including consumer electronics, green technologies, medical tools, and defense. These critical minerals are also key to the production of weapon guidance systems, jet engines, sonar devices, and laser weapons. The elements are abundant and easy to mine; they are called “rare” because they are difficult to separate and refine into a usable form.

In the 1980s, the United States was the world leader in the production of these elements, and almost all U.S. production was coming from the mine operated near Mountain Pass, California, which was closed in the 1990s. The mine was reopened in 2013 after China restricted supplies.

In recent decades, China has gradually become the dominant power in both the mining and the refining of these elements. In 2020, China was estimated to control about 55 percent of global rare earth mining capacity and 85 percent of rare earth refining, according to the Biden administration’s supply chain report.

Alice Sun and Emel Akan contributed to this report.

Tom Ozimek


Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he’s ever heard is from Roy Peter Clark: ‘Hit your target’ and ‘leave the best for last.’

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