Critical Mineral Outlook 2025

https://iea.blob.core.windows.net/assets/a33abe2e-f799-4787-b09b-2484a6f5a8e4/GlobalCriticalMineralsOutlook2025.pdf

Comprehensive dive into Critical Minerals.

Outlook for Rare Earths from P161

ASM gets a few mentions.

GROK bullet point:

• Supply Risks for Magnet Rare Earth Elements (REEs):
  • Elements: Neodymium (Nd), praseodymium (Pr), dysprosium (Dy), terbium (Tb).
  • 2024 outlook: Initially sufficient supply to meet demand.
  • Emerging threats (2024–early 2025): Geopolitical tensions and domestic governance issues in a major supplier.
• Myanmar’s Role and Disruptions:
  • Supplies ~45% of global heavy REEs (dysprosium, terbium) from Kachin State.
  • November 2024: Kachin Independence Army took control of mining region, halting operations and closing borders.
  • March 2025: Limited flow of existing inventories to China resumed; border remains tightly controlled.
  • Challenges: Disrupted supply of chemicals, electricity, and water for mining.
• Impact on China’s Supply Chain:
  • China relies on Myanmar for raw materials for processing/refining.
  • During border closure: China used domestic mines, imports from Lao PDR and Brazil, and existing inventories.
  • Prolonged conflict risks shortages of heavy REE feedstocks (ionic adsorption clay-based) at Chinese processors.
• Demand Outlook:
  • Growing demand for magnet REEs in EVs, wind turbines, industrial motors, and robotics.
  • Demand growth slightly slower in some sectors.
• Potential Market Impacts:
  • Continued Myanmar conflict could increase prices for medium and heavy REEs

• China’s Role in Rare Earths:
  • World’s largest supplier of rare earth elements (REEs) across mining, refining, and recycling.
  • Chinese quotas for domestic mining and refining significantly influence global supply and prices.
• 2024 Market Dynamics:
  • Demand growth for REEs (driven by EVs and wind power) slowed in 2024.
  • Factors: Slowing energy technology deployment and global economic uncertainty.
  • Result: Overall weak REE market.
• China’s Rare Earth Quota Adjustments:
  • 2024 mining quota: Increased by less than 6%, compared to over 20% in previous years.
  • 2025 outlook: Downstream demand expected to grow, supported by anticipated interest rate reductions.
  • Risk: If 2025 quota remains unchanged and Myanmar conflict persists, heavy REE market could face significant pressure.
• Rare Earth Management Regulations (April 2024):
  • Introduced rules for REE exploitation, management, and use in China.
  • Key feature: Establishment of a “rare earth product traceability system” supervised by China’s Ministry of Industry and Information Technology (MIIT).
• Traceability System Developments:
  • February 2025: MIIT issued draft regulation for public comment to implement the traceability system.
  • Objectives:
    • Track illegally mined or smelted REEs.
    • Enhance control over supply and pricing.
    • Improve effectiveness of Chinese sanctions by monitoring REE-containing product flows.
• Export Controls:
  • April 4, 2025: China implemented export controls on seven medium and heavy REE-related products.

China’s Export Controls on Medium and Heavy Rare Earths (April 2025)

• Announcement Overview:
  • Date: April 4, 2025.
  • Authorities: Ministry of Commerce and General Administration of Customs.
  • Effective: Immediately.
  • Affected elements: Samarium (Sm), gadolinium (Gd), terbium (Tb), dysprosium (Dy), lutetium (Lu), scandium (Sc), yttrium (Y).
• Export Control Regulations:
  • Exporters must obtain permits from the Ministry of Commerce under the Export Control Law and dual-use item regulations.
  • Requirements: Enhanced product identification and customs declarations specifying restricted items.
• Applications of Affected Elements:
  • Dysprosium and terbium: Critical for neodymium iron boron (NdFeB) magnets used in EVs and wind turbines.
  • Samarium, gadolinium, lutetium, scandium, yttrium: Used in ceramics, phosphors, steel, optical glass/fibers, and aerospace (e.g., samarium-cobalt or SmCo magnets).
  • Magnet manufacturing: Accounted for 55–95% of demand for Sm, Gd, Tb, and Dy in 2024.
• Demand Distribution (2024):
  • China: Largest demand center for all seven elements.
  • Europe and North America: 20–35% of demand for magnet-related elements (Sm, Gd, Tb, Dy).
• Market Impact:
  • No immediate price surge due to well-supplied markets and no outright export bans.
  • Potential risks: Price increases or supply chain disruptions if export approvals are delayed or restricted.
  • Complicates efforts to diversify magnet manufacturing supply chains, especially with 2023 ban on REE magnet tech/equipment exports.
• Geopolitical Context:
  • May 2025: 90-day pause on higher U.S.-China tariffs may relax export license processes, but impacts unclear.
• Mitigation Strategies:
  • Short-term: Monitor export control enforcement and license approvals.
  • Long-term: Develop diversified supply chains beyond dominant producers.
  • Alternative approaches: Promote non-rare earth-based technologies to reduce dependency.

Australia’s Financing Efforts for Rare Earth Supply Chains

• National Reconstruction Fund (NRFC):
  • Established: 2023, with AUD 15 billion (USD 9.5 billion).
  • Allocated: AUD 1 billion for resource value addition, including critical minerals.
• Arafura Rare Earths Investments:
  • January 2025: AUD 200 million (USD 126 million) equity investment from NRFC.
  • Purpose: Develop mine and processing facility in Northern Territory.
  • Additional support: AUD 840 million (USD 554 million) in loans and grants over time.
• Iluka Resources Funding:
  • December 2024: AUD 1.7 billion (USD 1.1 billion) from AUD 4 billion (USD 2.5 billion) Critical Minerals Facility.
  • Goal: Build Australia’s first fully integrated rare earths refinery.
• Lynas Rare Earths Projects:
  • November 2024: Opened Kalgoorlie Rare Earths Processing Facility in Western Australia.
    • Capacity: 68 kilotonnes per annum (ktpa) of mixed rare earth carbonate.
    • Milestone: Australia’s first rare earth processing facility.
  • U.S. initiative: Plans for light and heavy rare earths separation facility using Mt. Weld mine feedstock.
    • Funding: USD 258 million from U.S. government; AUD 20 million (USD 14 million) from Australian Modern Manufacturing Initiative (2023).
• U.S. Support for Rare Earth Projects:
  • MP Materials:
    • Operating light REE (LREE) separation facility at Mountain Pass mine since late 2023.
    • Developing heavy REE (HREE) separation plant and metal/magnet plant in Texas.
    • Supported by U.S. Department of Defense (DOD) grants.
  • Australian projects:
    • 2024: U.S. Export-Import Bank issued USD 600 million non-binding Letter of Interest for Australian Strategic Materials’ Dubbo project (New South Wales).
    • USD 250 million preliminary support for Meteoric Resources’ project in Brazil.
• Challenges and Considerations:
  • Complexities: Rare earth separation requires high technical standards and significant R&D investment.
  • China’s advantage: Leads in rare earth separation technology, creating a gap for other countries.
  • Cost competitiveness: Uncertain if new diversified sources can compete with established suppliers.

Impacts of U.S. Tariffs on Chinese Rare Earth Products (2025)

• U.S. Tariff Announcements:
  • February 4, 2025: Tariffs on Chinese rare earth products:
    • NdFeB magnets and alloys: 12.1%.
    • NdPr, dysprosium (Dy), terbium (Tb) oxides: 10%.
    • Rare earth metals: 15%.
    • Added to existing tariffs: 2.1% on NdFeB magnets/alloys, 5% on rare earth metals from non-U.S. countries.
  • April 2025: Tariffs up to 145% on Chinese goods, including permanent magnets (raw minerals largely excluded).
    • May 2025: Tariffs reduced to 30% for 90-day truce; post-truce tariff levels unclear, but 25–30% base tariff on magnets expected.
• China’s Retaliatory Measures:
  • December 2023: Banned exports of rare earth magnet technology and equipment.
  • April 4, 2025: Export controls on seven medium/heavy rare earths (Sm, Gd, Tb, Dy, Lu, Sc, Y), requiring licenses.
    • Shipments halted pending license approvals, disrupting supply.
  • April 12, 2025: 125% retaliatory tariff on U.S. imports, pausing MP Materials’ rare earth concentrate exports to Chinese refiners.
• Impact on U.S. Supply Chains:
  • Dependency: U.S. relies on China for ~70% of rare earth imports, ~90% of global processing.
  • Disruptions: Halts in Dy and Tb exports threaten NdFeB magnet production for EVs, wind turbines, and defense (e.g., F-35 jets, drones).
  • Defense Sector: Limited U.S. HREE processing capacity; stockpiles insufficient for long-term needs.
  • Automotive Industry: Increased costs for EV manufacturers; General Motors secured U.S. magnet supply from E-Vac and MP Materials.
• Global Market Effects:
  • Short-Term: No immediate price surge due to inventories, but license delays could cause shortages and price hikes.
  • Long-Term: Tariffs may support U.S. and allied projects (e.g., EU, Japan, Thailand, Korea, India), but China’s processing dominance limits diversification.
  • Volatility: Tariffs and export controls increase costs for electronics, automotive, and clean energy sectors.
• Mitigation Efforts:
  • U.S. Investments: DOD provided >$439 million since 2020 for domestic mine-to-magnet supply chains (e.g., MP Materials’ Mountain Pass, Texas facilities).
  • Allied Projects: U.S. financing Australian projects:
    • USD 600 million for Australian Strategic Materials’ Dubbo project.
    • USD 250 million for Meteoric Resources’ Brazil project.
  • Technological Progress: January 2025, USA Rare Earths produced 99.1% pure dysprosium oxide sample, but commercial scale lags.
• Challenges:
  • Technological Gap: China’s lead in HREE separation technology hinders U.S. and allied self-sufficiency.
  • Cost Competitiveness: New projects may struggle against China’s economies of scale and subsidies.
  • Geopolitical Leverage: China’s export controls strengthen its position in trade disputes, impacting U.S. military and tech goals.
  • 90-Day Truce (May 2025): Temporary tariff reduction may facilitate talks, but long-term policy uncertain.
• Recycling Focus:
  • Growing priority: “Long-loop” recycling of permanent magnets to recover rare earth oxides (e.g., Dy, Tb).
  • Challenge: Scaling recycling requires significant investment to reduce reliance on primary sources.

Impacts of U.S. Tariffs on Chinese Rare Earth Products and Recycling Efforts (2025)

• U.S. Tariff Announcements:
  • February 4, 2025: Tariffs on Chinese rare earth products:
    • NdFeB magnets and alloys: 12.1%.
    • NdPr, dysprosium (Dy), terbium (Tb) oxides: 10%.
    • Rare earth metals: 15%.
    • Added to existing tariffs: 2.1% on NdFeB magnets/alloys, 5% on rare earth metals from non-U.S. countries.
  • April 2025: Tariffs up to 145% on Chinese goods, including permanent magnets (raw minerals largely excluded).
    • May 2025: Reduced to 30% for 90-day truce; post-truce tariffs unclear, but 25–30% base tariff on magnets expected.
  • Objective: Reduce U.S. reliance on Chinese rare earth imports (~70% of supply).
  • Potential Benefits: Boost competitiveness of U.S. projects and magnet-producing regions (e.g., EU: Germany, Estonia; Japan, Thailand, Korea, India).
  • Industry Response: General Motors signed long-term U.S. magnet supply agreements with E-Vac and MP Materials for EVs.
• China’s Countermeasures:
  • December 2023: Banned exports of rare earth magnet technology and equipment.
  • April 4, 2025: Export controls on seven medium/heavy rare earths (Sm, Gd, Tb, Dy, Lu, Sc, Y), halting shipments pending licenses.
  • April 12, 2025: 125% retaliatory tariff on U.S. imports, stopping MP Materials’ rare earth concentrate exports to Chinese refiners.
  • Impact: Disrupts global supply of heavy rare earths (HREEs) like dysprosium and terbium, critical for NdFeB magnets, as China dominates HREE processing.
• Supply Chain and Market Impacts:
  • U.S. Vulnerability: Limited domestic HREE processing capacity; reliance on China for ~90% of global refined HREEs.
  • Defense Risks: Disruptions threaten NdFeB magnet supply for F-35 jets, drones, and other defense applications.
  • Market Dynamics: No immediate price spikes due to inventories, but license delays could lead to shortages and higher costs.
  • Diversification Challenges: China’s export controls and tariffs hinder U.S. and allied efforts to build independent magnet supply chains.
  • Geopolitical Context: May 12, 2025, 90-day U.S.-China tariff truce may facilitate dialogue, but long-term trade policy uncertain.
• Recycling as a Strategic Response:
  • Importance: Recycling permanent magnets prioritized to create secondary supply and reduce reliance on concentrated primary sources.
  • Traditional “Long-Loop” Recycling:
    • Process: Breaks down magnets into rare earth oxides, then converts to metals, alloys, and magnet powder.
    • Challenges: Energy-intensive, costly, and complex.
  • Innovative “Short-Loop” Recycling:
    • Hydrogen Processing of Magnet Scrap (HPMS):
      • Used by HyProMag (UK, Germany) and MagREEsource (France).
      • Process: Uses hydrogen to separate magnets from waste into alloy powder, directly compacted into sintered magnets.
      • Benefits: No heat required, faster, lower CO2 emissions and water use compared to mined magnets from China.
    • Other Innovations:
      • ReElement Technologies (U.S.), Cyclic Materials (Canada, USD 2 million from Jaguar/Land Rover in 2025), and Ionic Technologies (Belfast pilot) advancing recycling tech.
  • Industry Support: Vattenfall (Europe) committed to 100% circular magnet outflow from decommissioned wind farms by 2030, boosting recycling scalability.
• Broader Implications:
  • Technological Gap: China’s lead in HREE separation technology challenges U.S. and allied self-sufficiency.
  • Cost Competitiveness: New recycling and production projects may struggle against China’s economies of scale.
  • Geopolitical Leverage: China’s export controls strengthen its trade war position, impacting U.S. clean energy and defense goals.
  • Mitigation Needs: Scaling recycling, investing in domestic processing, and fostering international partnerships critical for resilient supply chains.

Demand Trends for Magnet Rare Earth Elements (REEs) and Permanent Magnets

• Global Demand Growth for Magnet REEs (Nd, Pr, Dy, Tb):
  • 2015–2024: Demand nearly doubled, reaching >90 kt in 2024.
  • Clean Energy Contribution: Share from clean energy technologies (EVs, wind turbines) rose from 8% in 2015 to >20% in 2024.
  • Projections (IEA Scenarios):
    • STEPS (Stated Policies Scenario): Demand to reach 120 kt by 2030, 180 kt by 2050.
    • APS (Announced Pledges Scenario): Demand to hit 130 kt by 2030.
    • NZE (Net Zero Emissions Scenario): Demand to reach 145 kt by 2030.
  • EV Motors: Share grows from 9% in 2024 to 22% (STEPS) or ~25% (APS, NZE) by 2050.
  • Permanent Magnets: Drive majority of demand growth, rising from 60% in 2024 to ~70% by 2050 across all scenarios.
  • Other Uses: Industrial equipment, glass, ceramics, microchips, catalysts, robotics (post-2040) account for remaining demand.
• Regional Demand Trends:
  • China:
    • 2024: ~57% of global magnet REE demand.
    • 2050: Share expected to decline to ~50% as other regions expand magnet manufacturing and non-magnet REE uses grow.
    • Dominates NdFeB magnet production: 94% of sintered magnets, 80% of bonded magnets in 2024 (up from 50% and 45% in 2005).
    • 2024 Exports: Increased 28% for magnets, 15% for rare earth compounds year-over-year.
    • Other REE industries: Major hub for catalysts, microchips, glass, ceramics.
  • Japan: Second-largest producer of sintered magnets in 2024 (~5% of global production, down from ~50% in 2005).
  • Other Producers: Germany, Russia, India, Korea, Vietnam, Thailand focus on smaller, bonded magnets for appliances/electronics.
• Global Production Capacity Outlook:
  • China: Leads new NdFeB magnet production capacity, projected to reach ~300 ktpa by 2030.
  • European Union:
    • Projected to reach ~15 ktpa by 2030.
    • Key projects:
      • Neo Performance Materials (Estonia): Mine-to-magnet facility starting 2025.
      • Solvay (France) and GKN Powder Metallurgy (Germany): Additional capacity by 2030.
  • United States:
    • Emerging as a major sintered NdFeB magnet producer, reaching ~20 ktpa by 2030.
    • Driven by new projects and supportive policies, becoming second-largest magnet manufacturing country by next decade.
• Key Drivers and Implications:
  • Demand Drivers: Growth in EVs, wind turbines, and industrial applications fuels magnet REE demand.
  • Supply Chain Challenges: China’s dominance in production and processing creates risks, especially with export controls (April 2025).
  • Diversification Efforts: U.S. and EU investments aim to reduce reliance on China, but scaling production and competing on cost remain challenges.

Supply Trends for Magnet Rare Earth Elements (REEs)

• Geographic Concentration (2024):
  • Mining:
    • Top three producers: 86% of global mined REE production.
    • China: 60% of global mined production, with Bayan Obo mines contributing 45% of total REE output.
    • Other key sites: Mountain Pass (MP Materials, U.S.), Mount Weld (Lynas, Australia).
    • Growth leaders (2014–2024):
      • Myanmar: Share rose from 0.2% to 16%.
      • U.S.: Share increased from 1% to 9%.
  • Refining:
    • Top three countries: 97% of refined output.
    • China: 91% of global refined REE output.
    • Other producers: Lynas (Malaysia), MP Materials (U.S.), Viet Nam Rare Earth JSC (Vietnam), Neo Performance Materials (Estonia, Silmet).
• Mining Supply Outlook:
  • Base Case: Mined magnet REE supply to increase >50% from 2024 levels, reaching ~110 kt by 2040.
  • High Production Case: Including early-stage projects, supply could reach 123 kt by 2040.
  • Shifts in Production Share:
    • Top three producers’ share: Declines from 86% in 2024 to 76% in 2040 due to slower growth in China and Myanmar.
    • Australia: Becomes a top-three producer within a decade, driven by projects from Iluka, Astron Energy Fuels, and Arafura Rare Earths.
    • China and Myanmar: Remain leading producers but with reduced growth rates.
• Refining Supply Outlook:
  • Base Case:
    • Refined supply: 106 kt by 2030, 115 kt by 2040.
    • Top three countries’ share: Drops slightly from 97% in 2024 to 92% in 2030.
    • China’s share: Falls from 91% in 2024 to 75% in 2040.
  • High Production Case:
    • China’s share: Further declines to 73% by 2040 if non-Chinese projects (e.g., Tronox, Energy Fuels in U.S.; Lynas in Malaysia) come online as planned.
  • Non-Chinese Refineries:
    • Lynas (Malaysia): Expanding capacity.
    • MP Materials (U.S.): Operating and developing facilities.
    • Viet Nam Rare Earth JSC: Facing judicial challenges since 2023.
    • Neo Performance Materials (Estonia): Industrial-scale production at Silmet plant.
• Key Observations:
  • China’s Dominance: Remains strong but gradually erodes as diversified projects emerge.
  • Diversification Efforts: Australia, U.S., and others scaling up mining and refining, but technological and cost challenges persist.
  • Supply Risks: Myanmar’s instability and China’s export controls (April 2025) could disrupt supply, especially for heavy REEs like dysprosium and terbium.

Implications for Secure Rare Earth Supplies

• Demand-Supply Balance:
  • Current Status (2024): Operating projects meet global magnet REE demand (neodymium, praseodymium, dysprosium, terbium).
  • Short-Term Risk (2025): Myanmar’s ongoing conflict may deplete ionic adsorption clay (IAC) feedstock inventories for heavy REEs (HREEs) at Chinese refineries, potentially disrupting supply.
  • Long-Term Outlook (2025–2040):
    • Base Case: Projected supply from operating and announced projects (~110 kt by 2040) meets primary supply requirements in STEPS (Stated Policies Scenario) to 2040.
    • APS (Announced Pledges Scenario) and NZE (Net Zero Emissions Scenario): Supply gaps emerge post-2035 (APS) and post-2030 (NZE), requiring additional projects from high production case.
  • Primary Concern: High geographical concentration of supply (China: 60% mining, 91% refining in 2024) increases price volatility and supply risks.
• Secondary Supply from Recycling:
  • Growth Potential: Recycling of manufacturing scrap and end-of-life magnets to reduce primary supply needs.
    • 2035 (STEPS): ~38 kt (27% of total magnet REE demand) from secondary sources.
    • 2050 (STEPS): >30% of demand met by secondary supply.
    • APS and NZE (2050): Secondary supply rises to 35% and 39%, respectively.
  • Key Factors for Success:
    • Synergies with magnet producers or primary miners/refiners.
    • Supportive policies: Standardized labeling, extended producer responsibility, material-specific recycling targets, incentives for recycled material use.
  • Regional Focus: EU leading recycling efforts due to low resource endowment; examples include HyProMag (UK/Germany) and MagREEsource (France) using Hydrogen Processing of Magnet Scrap (HPMS).
• Challenges to Diversification:
  • Upstream (Mining):
    • Limited large-scale mines outside China/Myanmar (e.g., U.S.: Mountain Pass; Australia: Mount Weld; Vietnam; Brazil).
    • Long lead times: ~8 years for new projects to scale production.
  • Downstream (Refining):
    • Highly concentrated: China controls 91% of refined output (2024); non-Chinese refineries limited to Lynas (Malaysia), MP Materials (U.S.), Neo Performance Materials (Estonia), Viet Nam Rare Earth JSC.
    • Complex separation processes require significant technological and financial investment.
  • Environmental Concerns:
    • Magnet REEs often sourced from heavy sands (monazite) containing radioactive uranium/thorium.
    • Only 17% of rare earth miners align with Global Industry Standard on Tailings Management, risking environmental contamination without proper storage.
• Prospects for Diversified Supplies:
  • Emerging Projects:
    • Australia: Iluka Resources, Arafura Rare Earths, Lynas expanding mining and refining capacity.
    • U.S.: MP Materials, Tronox, Energy Fuels developing refining facilities.
    • EU: Neo Performance Materials (Estonia), Solvay (France), GKN Powder Metallurgy (Germany) scaling up.
    • International Partnerships: France-Japan Caremag project (EUR 110 million Japanese investment, long-term HREE oxide offtake).
  • China’s Advantage: Technological and cost leadership in refining; non-Chinese projects face challenges in matching efficiency and scale.
  • Policy and Innovation Needs:
    • Increase financial support to de-risk new projects.
    • Promote R&D for advanced separation and recycling technologies.
    • Strengthen waste management standards to handle radioactive byproducts.
• Strategic Recommendations:
  • Diversification: Accelerate investment in mining and refining projects in diverse regions (U.S., Australia, EU, Vietnam, Brazil).
  • Recycling Scale-Up: Expand “short-loop” recycling (e.g., HPMS) and support policies to enhance collection and processing of scrap magnets.
  • Global Cooperation: Foster international partnerships to share technology, financing, and offtake agreements.
  • Environmental Safeguards: Enforce tailings management standards to ensure sustainable scaling of rare earth supply chains.