Via AG Metal Miner
The Rare Earths MMI (Monthly MetalMiner Index) dropped drastically again this month, suffering a 15.5% decline. Despite this, downward price action began to slow down and flatten around March 16. As of March 30, prices began to rise again.
Further adding to the confusion was the fact that some components in the index traded flat. This included yttrium, samarium oxide and europium oxide. However, virtually every other part of the index dropped in price, some drastically. Ultimately, the ride between the beginning of March and April proved to be a roller coaster ride.
In last month's MMI, MetalMiner discussed Tesla's announcement that they will eliminate the use of rare earth elements in their engines. Instead, they plan to create a permanent magnet electric vehicle motor using zero rare earth elements. According to reports, Tesla's primary reason for the decision is to battle ongoing, problematic supply chain issues.
However, some theories have since arisen. Some believe that Tesla's shift away from rare earth metals could impact the automotive industry in multiple ways. For one, the race to develop alternatives for rare earth magnets, especially Chinese-sourced rare earths, could hasten dramatically. Unfortunately, China's monopoly on the whole rare earth chain of supply, production, and workers will make it difficult to reduce dependency on the country entirely. However, a cadre of countries and companies remain determined to ween off Chinese rare earths, Tesla being a prime example.
Still, rare earth suppliers remain concerned that Tesla's move could impact the rest of the EV industry. The main worry is that Tesla will influence other automotive companies relying on rare earths for their EV models to make a similar switch. Currently, the EV industry accounts for about 12% of global rare earth magnet use. Tesla's next-gen motor will utilize a new power train that uses 75% less silicon carbide to produce. This technological leap forward could inspire other EV manufacturers to seek similar solutions, significantly reducing dependency on China across the industry.
In other news, the U.S. has begun putting together its own rare earth supply chain network. The Biden administration considers rare earths to be a strategic, critical materials due to their necessity in many modern technologies. The U.S. government has established regulations to secure a "made in America" supply chain, and that includes commodities like rare earth minerals. The recent discovery of rare earths in southern Bitterroot Valley, Montana will contribute to this goal. Indeed, if the U.S. can continue to foster projects like this, a new domestic rare earths supply chain could arrive sooner than expected.
While the decisions to locate homegrown rare earths will likely prove the best option in the long run, the switch will not be easy. China currently supplies over 80% of the world's refined rare earth supply. Neodymium, for example, is one of the world's most commonly used rare earth types. Right now most neodymium is produced and exported by China. It could prove tricky to find enough non-Chinese neodymium to sustain the growing EV movement and power cell phones, headphones, and other electronics.
The U.S. also lacks many fully operational rare earth mines. Therefore, the focus should be on finding and developing more deposits like Bitterroot Valley, as such discoveries will prove crucial for developing a sustainable domestic supply chain.
By Jennifer Kary
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