At Natural Resource Stocks, we’re often asked why rare earth elements are important for technology. These 17 chemical elements play a crucial role in many modern devices and industries.
From smartphones to electric vehicles, rare earth elements are essential components in countless technological applications. Their unique properties make them indispensable for creating powerful magnets, efficient batteries, and advanced display technologies.
What Are Rare Earth Elements?
Definition and Characteristics
Rare earth elements (REEs) comprise a group of 17 metallic elements found in the Earth’s crust. Despite their name, these elements are relatively plentiful in the Earth’s crust, with cerium being the 25th-most-abundant element at 68 parts per million, more abundant than copper. However, they rarely occur in concentrated, economically viable deposits.
REEs share similar chemical properties, which makes their separation challenging. They typically appear as soft, silvery-white metals with high lustre. Their unique electronic and magnetic properties set them apart, making them invaluable in numerous high-tech applications.
Common Rare Earth Elements
The 17 rare earth elements include the 15 lanthanides (lanthanum to lutetium), plus scandium and yttrium. Some of the most frequently used REEs in technology are:
- Neodymium
- Praseodymium
- Dysprosium
- Terbium
These elements play a key role in creating powerful permanent magnets used in electric vehicles, wind turbines, and consumer electronics.
Natural Occurrence and Extraction
REEs occur in various minerals, but the most economically significant deposits are in bastnäsite, monazite, and ion adsorption clays. Almost 90% of global rare earths processing is now done in China, with the country producing 70 kilotons of refined rare earths in 2023.
The extraction and processing of REEs involve complex and often environmentally challenging procedures. The process typically includes:
- Mining the ore
- Crushing and grinding
- Physical separation methods
- Chemical processes to isolate individual rare earth elements
This complexity contributes to the strategic importance of REEs and drives ongoing efforts to develop more efficient and environmentally friendly extraction methods.
The intricacies of REE extraction and processing significantly impact the investment landscape in the natural resources sector. Investors who aim to capitalize on this critical technology-enabling resource must understand these complexities.
As we move forward, it’s essential to explore how these unique elements find their way into the technologies that shape our modern world. Let’s examine the wide-ranging applications of rare earth elements in various technological fields.
How Rare Earth Elements Power Modern Technology
Rare earth elements (REEs) are the backbone of modern technology, enabling everything from smartphones to electric vehicles. Their unique properties make them essential in a wide range of applications, driving innovation across multiple industries.
Magnets: The Core of Modern Electronics
One of the most significant applications of REEs is the production of powerful permanent magnets. Neodymium, iron, and boron (NdFeB) magnets are the strongest type of permanent magnets commercially available. These magnets are essential components in hard disk drives, electric motors, and wind turbine generators.
A typical electric vehicle contains neodymium, dysprosium, and praseodymium in its magnets, while a direct-drive wind turbine can use up to 600 kilograms of rare earth materials per megawatt of capacity. The demand for these magnets will likely grow significantly as the world transitions to cleaner energy sources.
Catalysts: Enabling Cleaner Technologies
REEs play a vital role in catalytic converters, which reduce harmful emissions from vehicles. Cerium, in particular, serves as a catalyst in self-cleaning ovens and oil refining processes. Lanthanum is used in catalysts for petroleum refining, helping to produce cleaner-burning fuels.
In the automotive industry, catalytic converters using REEs have significantly reduced emissions. According to the U.S. Environmental Protection Agency, modern vehicles are 98-99% cleaner for most tailpipe pollutants compared to the 1960s models.
Display Technologies: Illuminating Our Screens
Europium, terbium, and yttrium are key components in phosphors used in LED lights, flat-screen displays, and other visual technologies. These elements provide the vibrant colors we see in our smartphones, tablets, and televisions.
Europium produces red colors, terbium is used for green, and a combination of blue light with red and green phosphors creates the full spectrum of colors in LED screens. The global phosphor market (largely driven by REEs) was valued at $2.3 billion in 2020 and is projected to reach $3.1 billion by 2025.
Polishing Compounds: Perfecting Optical Surfaces
REEs (particularly cerium oxide) are used in polishing compounds for optical glasses and electronics. These compounds help achieve the ultra-smooth surfaces required for high-performance lenses, mirrors, and semiconductor wafers.
The applications of REEs in technology are vast and continue to expand. As we innovate and develop new technologies, the demand for these elements will likely increase. This presents both challenges and opportunities for investors in the natural resources sector.
The strategic importance of REEs extends beyond their technological applications. Their limited supply and geopolitical implications make them a critical resource in today’s global economy. Let’s explore the strategic significance of these elements and their impact on international relations and technological innovation.
The Strategic Importance of Rare Earth Elements
Global Supply Dynamics
The rare earth elements (REEs) market has become a focal point of international economic competition. China currently dominates global rare earth production, accounting for over 69% of worldwide output. This concentration of supply has raised concerns among other nations about potential disruptions and price manipulations.
In 2010, China briefly halted REE exports to Japan during a diplomatic dispute, sending shockwaves through global markets and highlighting the vulnerability of REE-dependent industries.
Diversification and New Market Players
In response to China’s market dominance, countries like the United States, Australia, and Japan have increased efforts to diversify their REE supply chains. The U.S. Mountain Pass mine in California, once the world’s largest REE producer, has resumed operations after years of inactivity. Australia’s Lynas Corporation has emerged as the largest non-Chinese REE producer, with significant operations in Malaysia.
Technological Innovation Impact
The availability and cost of REEs directly affect technological innovation across various sectors. The development of more efficient electric vehicles and wind turbines relies heavily on a stable supply of neodymium and dysprosium for their powerful magnets. Any disruption in the REE supply chain could potentially slow down advancements in green technologies, impacting global efforts to combat climate change.
National Security Considerations
REEs play a vital role in defense technologies, from precision-guided missiles to night-vision goggles. Rare earths and other critical materials are important to DOD because they have unique properties relative to other materials used to produce defense technologies. This recognition has led to increased government support for domestic REE production and processing capabilities.
Investment Landscape
The strategic importance of REEs, coupled with ongoing geopolitical tensions, has created a dynamic investment landscape in the natural resources sector. Investors interested in REE-related opportunities should stay informed about market trends and policy developments. As the global competition for REEs intensifies, understanding the complex interplay of geopolitics, technology, and resource management will prove essential for those looking to capitalize on this critical resource.
Final Thoughts
Rare earth elements have become essential in our modern technological landscape. Their unique properties enable advancements in renewable energy, electronics, and defense technologies, making them critical to economic growth and national security. The global shift towards clean energy solutions will drive increased consumption of neodymium, dysprosium, and other key rare earths.
The extraction and processing of rare earth elements present significant environmental challenges. We must focus on sustainable mining practices and innovative recycling methods to meet the growing demand while mitigating environmental impacts. These approaches will help create a more stable and resilient supply chain.
The strategic importance of rare earth elements extends beyond their technological applications, influencing global trade dynamics and geopolitical relationships. Natural Resource Stocks offers valuable insights to help investors navigate the complex landscape of rare earth elements (and other natural resources). Understanding why rare earth elements are important for technology is key to appreciating their role in shaping our future.
