Rare Earth elements (REEs)The Geopolitics of Rare Earth Elements

The Covid-19 pandemic has exposed fragility in the global supply chains for not only pharmaceuticals and crucial medical supplies but also some critical minerals. Chief among them are rare Earth elements (REEs), which are necessary for clean energy equipment, advanced military gear, and consumer goods. About 80 percent of the world’s REEs are produced and refined in China.

Jane Nakano studied the geopolitics of REEs, and CSIS has issued her report, titled The Geopolitics of Critical Minerals Supply Chains. Here is the report’s Introduction:

Confronted with the rising threat of climate change, many governments around the world have launched efforts to electrify their energy system while decarbonizing their electric power supply. This trend has led to an increased demand for non-carbon-emitting sources of electricity and energy storage technologies, and in turn has grown the demand for these technologies’ component minerals and materials. According to a World Bank study, the demand for component minerals for electric storage batteries—such as aluminum, cobalt, lithium, manganese, and nickel—could rise by more than 450 percent by 2050 if clean energy technology is deployed at a level consistent with the Paris Climate Agreement goal of keeping the rise in atmospheric temperature to no more than 2 degrees Celsius.(1)

Clean energy technology components have different degrees of reliance on a range of minerals, which in turn have different criticality profiles informed by factors such as price volatility and the stability of the supplier country. Rare-earth elements, such as neodymium, dysprosium and praseodymium, are key ingredients of permanent magnets (powerful magnets that do not lose their magnetic fields), which are used in high-performance wind turbines.(2) Borates, gallium, germanium, and indium are also important ingredients in solar photovoltaics (PV), while cobalt and lithium are required for the lithium-ion batteries used in electric vehicles (EVs). Although these minerals are available globally, some are highly concentrated in a few countries. For example, about half the global supply of cobalt comes from the Democratic Republic of the Congo (DRC); over 80 percent of the global supply of lithium comes from Australia, Chile, and Argentina; and 60 percent of the global supply of manganese comes from South Africa, China, and Australia.(3) Most notably, over 85 percent of the global supply of rare-earth elements comes from China.