Costs of Rare Earth Metals for Cleantech Applications to Reach $1.2 Billion by 2017

In testimony before Congress on September 21, Mark Smith, CEO of rare earth mining concern Molycorp, said that China, which now controls some 97% of the world’s supply of rare earth metals, will continue to limit exports of the valuable elements, restricting its supply largely to domestic customers.

"China is clearly warning that they will consume more of their own rare earths and export less," said Smith, "and that they see tight supplies of rare earths as representing an ‘irreversible’ trend." That means that companies like Molycorp, which owns the Mountain Pass rare earth mine in California, must ramp up supply to meet demand from non-Chinese manufacturers, and that prices for elements like cerium, lanthanum, and neodymium will remain high.

According to a recent report from Pike Research, demand for rare earths in the cleantech industry will reach 12,920 tons per year by 2017, up from approximately 9,000 tons annually in 2011, which could place an increased strain on global supply for these emerging applications. Supply uncertainties will drive the cost of rare earth metals to makers of cleantech applications to at least $1.2 billion by 2017, says the cleantech market intelligence firm.

In a high-price scenario, under tighter supply conditions, those costs could reach $2.5 billion. Supply constraints will be felt most acutely in the lighting sector, where demand for rare earth metals for high-efficiency lighting phosphors will surpass 8,000 tons in the next five years.

"Demand for rare earth metals across cleantech applications like wind turbines, electric vehicles, solid oxide fuel cells, and energy-efficient lighting is expected to increase significantly by 2017," says research director Kerry-Ann Adamson. "While prices have moderated somewhat in recent days, we believe that China’s moves to strictly limit, or even eliminate, exports of rare earths presents these sectors with a notable degree of risk."

Among the eight rare earth metals covered in Pike Research’s analysis, the firm forecasts that demand will be greatest for yttrium (6,088 tons annually by 2017), followed by cerium (2,441 tons) and lanthanum (1,867 tons).

Pike Research’s report, "Rare Earth Metals in the Cleantech Industry", provides a comprehensive analysis of supply and demand dynamics, assessment of risk, and pricing scenarios for the utilization of rare earth metals in cleantech applications. The study includes profiles of key industry players and their strategies to address the need for rare earth metals in the cleantech industry. Detailed demand forecasts, segmented by rare earth metal, application, and world region, are provided through 2017. An Executive Summary of the report is available for free download on the firm’s website.