Rare Earth Prices Skyrocket, Spells Disaster for Electric Cars and Consumer Electronics
The price of Neodymium, the strongest permanent magnet material discovered on the planet, is looking mighty pricy at a five year high. Since the beginning of 2021, Neodymium has increased in price by 14.06%.
Neodymium magnets are in your headphones, cellphone, speakers, computer hard disks, and electric motors like the Tesla’s Model 3.
If you work in tech, consumer electronics, or want to buy any of these products in the future, you should be concerned about this.
Here’s a look at the price of Neodymium over the past 365 days:
Speculation on why the sudden price surge?
- Consumer product demand and future demand for EV cars (GreenCarCongress)
- Delays in other rare earth refinery options outside of China like the processing plant in Malaysia (NYTimes)
- Speculation that China is restricting exports to conserve its own supply to meet demands (NYTimes)
Neodymium is found in only select regions of the planet, including China, the United States, Brazil, India, Sri Lanka, and Australia. However, the majority of these countries cannot process the raw material into the magnet used in end products. Historically China has produced more than 95% of rare earth elements and produced about 76% of the world’s total rare-earth magnets (Wiki).
Currently, there are only two companies in the world that have rare earth processing capacity outside of China. Others need to foster contracts within China or face the billions required to build out processing capacities. If you’d like to know who the companies are and dig deeper, check out this full report by Frederick Kozak.
More recently there have been efforts to open rare earth plants in other areas of the world, like in Malaysia. However, there have been significant delays in its construction, government approvals, and protests about its opening.
This isn’t the first time the price of Neodymium has skyrocketed. It did back in 2010 and since then, the World Trade Organization stepped in to impose a ban on export restrictions.
Here’s a look at the price of Neodymium over the past five years:
Yet, here we are again, a few years later in a similar situation. Consumer product demand doesn’t seem to be going anywhere, especially with many folks stuck at home due to Covid. The future of electric cars is in the pipeline of almost every major automotive manufacturer in the next 5–20 years. Amidst it all, China continues to be the king of the castle as the only country with a steady and reliable ability to supply rare earth.
Is there anything that we can do?