By Eric Onstad
LONDON (Reuters) – Western efforts to develop a home-grown magnet supply chain to reduce its reliance on China, led by massive U.S. support for Nevada-based MP Materials, are facing a critical problem: shortages of the so-called heavy rare earth elements.
The United States and allies have been working to create an alternative supply chain to produce the ultra-strong rare-earth magnets that are vital components in everything from defense technology and electric vehicles to electronics and wind turbines.
MP Materials aims to integrate the entire supply chain, from rare earth mining to magnet production, and has ambitious plans to produce magnets within a few years, boosted by July. deal involving billions of dollars in US government support.
Earlier this month, it rode its luck, increasing its processing of two light rare-earth metals by 51% this quarter.
But the shortage of the heavy elements dysprosium and terbium could become an Achilles’ heel for MP Materials and the Western campaign to distance the magnet industry from geopolitical unrest that has limited supplies from China, analysts said.
The MP Mountain Pass mine in California contains only trace amounts of those two elements, which are used in small amounts in magnets but are vitally important. Dysprosis and terbium help magnets maintain their magnetic properties at high temperatures, such as in EV motors.
“MP Materials can have a huge challenge,” said Ilya Epikhin, senior director with consultants Arthur D. Little. “They will have to go to Brazil, Malaysia or some African countries to find those resources, but that can take a long time.
November 6 on an analyst conference call, chief operating officer Michael Rosenthal said MP is “actively engaged” with a number of potential raw material suppliers to produce heavy cargo, but did not name them.
Another source of raw material will be Apple-supplied recycled materials that contain heavy rare-earth metals according to 500 million. USD deal for MP to supply magnets to the tech giant.
“We think we’re in a very good position,” MP Matt Sloustcher, executive vice president of corporate affairs, told Reuters.
MP is a famous example of the impact of heavy processing of rare earths by the West’s dependence on China. According to the consulting company Benchmark Mineral Intelligence, by 2030 The West will still rely on China to meet 91% of its heavy rare earth needs, down only slightly from 99% in 2024.
China’s export restrictions imposed in April on heavy rare-earth magnets have in some cases halted activity at auto plants and prompted the West to take action. October 30 Beijing has agreed to delay new controls under a US-China deal.
DIRECTION TO GATHER Heavy
The proportion of heavy rare-earth metals in deposits is much lower than that of other elements used in magnets, and the relative ratio of heavy rare-earth metals in global mines is only half of the relative ratio in permanent magnets.
According to data provider Fastmarkets, the shortage of heavy rare-earth metals outside China is evident with the price of dysprosium oxide in Rotterdam at $900 per kilogram, more than triple China’s $255.
“If you’re talking about the most important resources, it’s really heavy, heavy, heavy – we’ll get the rest,” said Erik Eschen, CEO of Germany’s Vacuumschmelze (VAC), one of the few producers of rare-earth magnets outside of China.
VAC has been busy inking deals with heavy rare earth miners to supply the recently opened new US plant in South Carolina.
VAC has agreed heavy rare earth supply deals with Canadian private Torngat Metals for the Strange Lake project in Quebec and Aclara Resources for the Carina project in Brazil.
“Even with limited capacity in the West, we manage to secure the capacity we need,” Eschen said.
Magnet production capacity outside of China and Japan is expected to increase by 2030. will reach 70,000 metric tons per year, requiring 1,650 tons of dysprosium oxide per year, according to critical minerals consultancy Adamas Intelligence.
“Heavy is definitely the next piece of the puzzle that needs to be solved to unlock widespread Western magnet production,” said Ryan Castilloux, CEO of Adam.
Despite recent deals and rhetoric in the West, mines outside of China are forecast to run out of gas by 2035, according to London-based commodities consultancy CRU. will account for only 29% of the heavy rare earth metals consumed outside of China in the automotive and wind sectors.
“Filling this gap will require more mine supply at a higher cost than the current supply base,” said Piyush Goel of CRU.
PROJECTS WILL LAST A YEAR
Various companies are announcing new projects and processing facilities for heavy rare earth metals, but most will take years to come to fruition.
The two largest Western companies in the sector, MP Materials and Lynas Rare Earths of Australia, are looking for additional ore for processing because their own mines do not have enough heavy elements.
Lynas began heavy rare earth separation in Malaysia earlier this year, becoming the world’s first such producer outside of China.
The Australian group said last month it would increase heavy rare-earth metals production to 250 metric tons of dysprosium and 50 tons of terbium a year, but did not give a timeframe, saying it would depend on regulatory approvals.
CEO Amanda Lacaze told analysts on Oct. 30. called that Lyn plans to source heavy rare earth metals from both his Mt. Weld mines in Australia and from Malaysia, where its processing plant is located.
“We have a team whose job is to work with various Malaysian partners in this development process.
This contrasts with the global supply-demand deficit for dysprosium and terbium oxides that CRU predicts by 2035. – 2,920 tons.
Another Australian company, Iluka Resources, is building a refinery at Eneabba in Western Australia that will eventually be able to process up to 750 tonnes of heavy rare earths per year. It is expected to be operational in 2027.
The company told Reuters it has small amounts of heavy rare earth metals in its material and has entered into an agreement with Northern Minerals to supply heavy rare earth metals from its new mine in Western Australia, which is expected to start operations in 2028.
THE MP MATERIALS MINE WAS LOW IN HEAVY MATERIALS
MP Materials, which owns the only US rare earth mine, aims to eventually increase magnet production to 10,000 metric tons per year.
Next year, it plans to start up a heavy-duty rare-earth separation unit that will eventually be able to produce 200 tons of dysprosium and terbium per year.
However, the MP Materials mine produces mainly light rare earths with less than 1.8% medium and heavy rare earths in the deposit.
MP said it has stockpiled several hundred tons of medium to heavy rare earth concentrate in preparation for magnet production, but it contains only 4% dysprosium and terbium, according to the company’s website.
ENVIRONMENTAL INSTRUCTIONS REDUCED AS A DISTURBANCE
Brazil is emerging as a major exporter of heavy rare earth (HREE) ore, but the real challenge is processing capacity, said Neha Mukherjee, rare earth analyst at Benchmark Mineral Intelligence.
“While HREE refining technology is expected to be available globally by 2029, costs outside China remain 5-7 times higher,” Mukherjee said.
Higher amounts of heavy rare-earth metals are found in ion clay mines, where the standard extraction technique involves leaching the deposit with chemicals, which has contaminated water supplies and destroyed forests in Myanmar.
Western miners say they use environmentally friendly extraction methods, but they sometimes face local skepticism and opposition to mine plans.
The extraction of rare earth deposits from monazite ore involves the radioactive elements uranium and thorium, which can be difficult to remove safely.
“The main obstacle to new production will be the increased negative impact of heavy rare earth mining and processing on the local environment,” CRU spokesman Goel said.
Some companies, including VAC, have produced magnets without heavy rare-earth elements, but they have limited applications, such as slow-moving wind turbines, Eschen said.
“When you move to other applications, like an electric car motor, which spins really fast, goes up to 120, 140 degrees Celsius, then you’re going to need heavy-duty ones.
(Additional reporting by Melanie Burton in Melbourne and Ernest Scheyder in Houston; Editing by Veronica Brown and Claudia Parsons)
