Rare Earth Elements Prices 101 (Updated 2024)

What is China's role in rare earths pricing?

First and foremost, it’s important to know that China is the main driver when it comes to REE prices and the rare earths market as a whole. The country is the world’s leading rare earths producer by a wide margin, and despite efforts elsewhere also controls about 87 percent of global rare earths refining capacity.

China has such a monopoly on the sector that REE prices spiked in 2010 and 2011 when the country cut exports. That sparked a boom for rare earths companies and mining projects around the world, as they sought to create reliable sources of rare earths supply outside of China. However, many failed to thrive when REE prices fell again.

In 2014, the World Trade Organization ruled against Chinese export quotas for rare earths, and China removed its industry caps in January 2015. The country also eliminated its export tariffs for rare earths in May 2015, leading to a further fall in REE prices. More recently, it banned the export of technology to make rare earth magnets.

The ongoing trade war between the US and China adds a layer of complication to the rare earth metals sector. Recognizing China's key place in the market, the US is undertaking various efforts to build its own supply.

In February 2021, US President Joe Biden signed an executive order aimed at reviewing shortcomings in the nation's domestic supply chains for rare earths, medical devices, computer chips and other critical resources. The next month, the US Department of Energy announced a US$30 million initiative to research and secure domestic supply chains for rare earths, along with battery metals such as cobalt and lithium.

In June 2022, Biden went even further, invoking the Defense Product Act to increase the domestic production of critical minerals such as rare earths, as well as to fund feasibility studies and expand existing resources. Furthermore, in September 2022, the Biden government announced US$156 million in funding to support the creation of "first-of-a-kind facility to extract and separate REEs and critical minerals from unconventional sources like mining waste."

Later, in July 2023, the Department of Energy put up US$32 million to build facilities for the production of REEs and other critical minerals from domestic coal-based resources.

Even with these efforts, China remains the heavyweight for now, so it’s important that investors interested in the rare earths space keep track of what the country is up to in terms of production.

Which rare earths are the most important?

Rare earths are used in a range of different technologies, and demand is higher for some than others. They can be divided into “heavy” and “light” categories based on atomic weight, with heavy often being more sought after.

That said, light rare earths can be important too. Neodymium and praseodymium, used in rare earth magnets, fall into the light category. These and other elements used in rare earth permanent magnets, such as dysprosium, can be quite expensive. Neodymium and praseodymium have also been in the spotlight due to electric vehicles.

The concentration of different rare earths varies within each given deposit, but usually a deposit is dominated by either heavy or light rare earths, with some elements being much more abundant. Cerium, for example, is the most abundant rare earth, and is more plentiful in the Earth’s crust than copper.

Both cerium and lanthanum, used in things such as alloys in steelmaking and industrial catalysts, are oversupplied. As a result, they are priced quite a bit lower than most rare earth magnet materials.

Another group of rare earths to consider is those used in phosphors, or phosphorescent materials, which are the active component that adds color in fluorescent light bulbs and other lighting applications. Yttrium is fairly inexpensive when compared to more rare and therefore more expensive metals such as europium and terbium.