Rare earth elements (REE), a group of 17 metals, are crucial to the production of everything from semiconductors to smartphones and electric vehicles. They also play a key role in the manufacture of fighter jets and other defense industry products. These minerals are integral to the future of the global economy, spurring countries around the world to boost production and secure sufficient supplies.
China was responsible for 90% of all rare earth exports in 2019, with the US relying heavily on global trade for its supplies. However, with geopolitical tensions rising, the US will now attempt to revive its domestic rare earths industry, recently banning defense contractors from purchasing REE metals from China. The US has just one rare earth mine and no processing technology at present, underscoring the need for a new wave of investment.
Related ETF: VanEck Rare Earth/Strategic Metals ETF (REMX)
Rare Earths Crucial to Advancement of Green Economy, Defense Systems
Rare earth elements (REE), which consist of a group of seventeen metals, are some of the most important minerals on earth that are used to manufacture several products key to the future of the modern world.
Rare earths are used in the production of smartphones and semiconductors, both of which are expected see increased demand throughout the coming years as the world shifts online and becomes more and more reliant on technology.
MRP has recently highlighted the importance of semiconductors amid the ongoing shortage and a permanent shift in behavior due to a global digital transformation. As that transformation accelerates, the role of rare earths will also rise.
These metals are also an integral part of the renewable energy transition sweeping across the globe. According to a report from the International Energy Agency (IEA), the amount of minerals necessary for a new unit of power generation have increased by 50% since 2010 and that number is likely to rise as the United States continues to embrace clean energy.
Wind energy is especially dependent on rare earth metals. According to Lynas Rare Earths, the wind turbine market is expected to account for approximately 30% of the global growth in the use of rare earth magnets by 2025.
Last week, MRP highlighted the growing demand for battery metals due to the rising number of electric vehicles hitting the road. Demand for rare earths is also expected to increase due to those lofty EV goals currently set by the Biden administration. Per a September report from Forbes, the United States needs more than ten times its current rare earth supplies to reach Biden’s goal of having 50% of cars sold in 2030 be zero-emission electric vehicles.
To meet the burgeoning needs of the rapidly expanding green economy, the US will need more than 20 to 25 times its current supply as investment into electric vehicles, wind power and other renewable technologies climb through the decade.
These minerals are also imperative in the production of many defense applications. In the industry, two rare earth metals, neodymium and samarium, are used to create magnets that are resilient to high temperatures which is important for…
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