The rare earth paradox concerns numerous of specialized metals, which are also classified as critical raw materials.
In regards of the Chinese predominance in the production of rare earth concentrate and metals (85% of market share), the following question may arise:
Is our clean future dependent of China water contamination, black market or public health issues?
That is the question, but to the difference of other metals as base metals or precious metals; technology metals have gained attention of end users due to their smart role in green energy, high tech items and smartphones. This new 'exposure' has a significant impact on the perception of the role of the supply chain in our day-to-day life and the concept of metal life cycle.
During the last five years, the supply chain gains responsible considerations in the way to handle ESG criteria in order to reduce any severe impact to the socio-environmental sphere.
Lynas Corp has succeeded in bringing its Processing facility (LAMP) compliant to the latest International environmental regulations. Moreover, the company has established an efficient and pro-active communication with communities about its operating activities.
China has been pushed by a popular discontent to consolidate its RE industry in order to solve severe pollution issues in the producing regions. Air, water and soil pollutions in China have killed thousands of citizens and threat many others with pathogen’s anomalies. The problem is serious and the Chinese government have taken measures to control and to reduce environmental impacts generated by its industry.
Today six major groups control the production of REE. All these companies are Chinese state owned companies and five of them are listed. The effort has been supported by subsidies which are disappearing progressively. The Chinese REE industry are facing profitability challenges and the environmental cost will be integrated in the production cost. The successive quinquennial plans have always aimed to reinforce the Chinese RE domestic market and the Chinese market share; however, the sustainability concept present in the COP 21 and in the 'Made in China 2015' will have some new impacts on the supply/demand and on reaching a sustainable price for rare earth raw materials.
The COP 21 in Paris has given also some baselines to keep the schedule to limit the global warming. 'Made in China 2025' policy has listed 10 priority sectors which need rare earths. Both initiatives will favor the increasing share of renewable energy in all developed and emerging countries, and consequently will push the demand for REE (neodymium, praseodymium, terbium, dysprosium, and lanthanum oxides) and other specialty metals such as Li, Co, Cg, V, Mn, Ti, etc.
Apple, Xiaomi, Samsung, Siemens, Vestas, LG, and others are starting to acknowledge their role in this supply chain which includes toxicity risks. Apple Inc. has attended the Roskill Rare Earth Conference in Hong Kong in November last year to learn more about the future perspectives of the REE market and the Chinese domestic market.
More and more partnership between the downstream industry and raw material producers are occurring with the objective to secure a sustainable supply (volume and quality) including appropriate CSR considerations. We are not yet observing a proper vertical integration as innovations and materials are evolving rapidly.
Among big names we might mentioned: Siemens, which have concluded offtake agreement with Lynas Corp several years ago and accepted a premium for the quality of the REO concentrates. Other advanced projects outside of China have attracted the interest of industrial groups and trading companies from Europe, Japan and China. In the Li-ion battery industry, Tesla has signed preliminary supply agreement with exploration company (Pure Energy Minerals Limited), but the company has also revealed its impact over potential future graphite suppliers by requesting CSR type reporting.
These observations suggest the following perspectives:
CSR: Corporate Social Responsibility
RE: Rare Earths
REE: Rare Earth Elements
REO: Rare Earth Oxides
Li: Lithium ; Co : Cobalt ; Cg: Carbone Graphite; V: Vanadium; Mn : Manganese; Ti: Titanium