The Supply Chain of Rare Earth Metals

Rare earth metals are a group of 17 chemical elements that are found in small quantities in the earth’s crust. These elements are important for a variety of industrial and technological applications, and are considered critical to the global economy.

Classification of Rare Earth Metals — Source: UNCTAD — Commodities at a Glance — Special Issue

One of the main reasons why rare earth metals are so important is their role in the commodities market. These metals are used in a wide range of products, from smartphones and laptops to wind turbines and electric vehicles. As demand for these products continues to grow, so too does the demand for rare earth metals.

The existing geographic distribution of rare earth metals is highly concentrated, with China being the dominant producer. According to the US Geological Survey, China accounted for roughly 70% of global production in 2020. Other significant producers include the United States, Russia, and Australia.

Distribution of Rare Earth Reserves— Source: UNCTAD — Commodities at a Glance — Special Issue

Distribution of Rare Earth Metal Producing Countries — Source: UNCTAD — Commodities at a Glance — Special Issue

There are a number of sectors that are driving demand for rare earth metals. The high-tech industry, in particular, is a major consumer of these metals. They are used in the production of electronics, such as smartphones and laptops, as well as in renewable energy technologies, such as wind turbines and solar panels.

The defense industry is also a significant user of rare earth metals. These metals are used in a variety of military applications, including radar systems, guidance systems, and communication equipment.

In addition to the high-tech and defense industries, the automotive industry is also a major contributor to demand for rare earth metals. These metals are used in the production of electric and hybrid vehicles, as well as in the batteries that power these vehicles.

Main semi-final industries using Light Rare Earth Elements— Source: UNCTAD — Commodities at a Glance — Special Issue

Main semi-final industries using Heavy Rare Earth Elements— Source: UNCTAD — Commodities at a Glance — Special Issue

There are a number of challenges associated with the production and supply of rare earth metals. One of the main challenges is the environmental impact of mining and refining these metals. Many of the existing mining operations are located in environmentally sensitive areas, and the extraction and processing of these metals can have a significant impact on the surrounding ecosystem.

Another challenge is the concentration of production in a small number of countries, which can create vulnerabilities in the global supply chain. This has led to efforts to diversify production and reduce reliance on a single source.

In conclusion, rare earth metals play a vital role in the global economy, and are used in a wide range of products and industries. Their concentration in a small number of countries and the environmental impact of mining and refining these metals are important considerations for the long-term sustainability of the global supply chain.