Most people are now aware of the essential ingredients in modern technology that without them they could not function at all. They are called 'Rare Earth Metals or Rare Metalic Elements
Rare earth metals (REM) are essential for the manufacture of almost everything in modern technology, from smart phones,computers, electric vehicles, microelectronics and laser equipment in fact pretty much everything.
Now China has long been the undisputed global leader in REM production, and its dominance in this sector has promptedg concerns in other countries.
Now Russia has considerable REM reserves in its subsoil, but the country inherited only two enterprises involved in the extraction of rare earth metals mining from the Soviet Union. They were recently nationalised.
So what is the future development plan for REM mining in Russia? What other options are there for REM mining in Russia? And most importantly, are they economically feasible?
Well as part of the state programme "Development of Industry and Increasing its Competitiveness", a comprehensive research and development programme has been initiated to develop cutting-edge technologies for processing rare earth raw materials and the production of specific types of REE-based products.. Furthermore, efforts were made to identify new sources of REE raw materials.
"Russia now has the raw materials and technologies in place, and the next stage is to construct the enterprises that will mine and process REE," the expert concludes. The first pilot plant for the separation of REE has already been constructed at the Rusredmet Group site, which acted as the contractor for its creation. SMZ plans to build the plant in 2026 and will begin production of the first batches of commercial products in 2027.
All of these efforts are coordinate by the Russian government holding Rosted that unites many companies across the sectors from defence to specialised metalurlgy but more of that later.
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The rare earth elements group comprises 17 metals , which are used in the automotive, electronics and military industries. The extraction of rare earth metals began at the end of the 18th century with the discovery of the mineral ytterbite by Swedish army lieutenant and amateur mineralogist Carl Arrhenius. After some time, the Finnish chemist Johann Gadolin isolated ytterium from it, which became the first rare earth metal known to science.
The term 'rare earths' is used primarily because these metals are almost never found in nature in a pure form. Typically, these metals are found in minerals that are mixed with other elements, which makes them challenging to separate. The addition of even a small amount of REE to alloys significantly enhances their properties, which is why rare earth metals are also known as the "vitamins of industry".
A number of studies indicate that the REE market will experience significant growth in the coming years. A recent review by the research company Verified Market Research (VMR) indicates that the global rare earth metals market reached a size of $4.84 billion in 2023. By 2030, it is projected to more than double, reaching $10.78 billion.
According to calculations by another research company, Research and Markets, the REE market size is expected to grow from $7.05 billion in 2023 to $7.62 billion in 2024, and to reach $9.38 billion in 2028. The review states that historically, China has held a dominant position in the rare earth metals industry, controlling a significant portion of the global capacity for extraction, processing, and refining. In order to reduce their dependence on China, a number of countries, including the United States, Australia, and Canada, have begun to invest in the extraction, exploration, and processing of raw materials containing REEs.
Prices for REEs vary significantly depending on the industry in which they are used.The Shanghai Metals Market reports that the most cost-effective REEs currently are lanthanum, employed in diverse catalysts for oil cracking, in phosphors and as an ingredient in corrosion-resistant and heat-resistant alloys, and cerium, utilized in the manufacture of light sources, catalysts, refractory materials, thermoelectric and abrasive products. The average price is 25,000 yuan (approximately $3,400) per ton.
The most expensive rare earth metal is scandium. There is a high demand for aluminium-scandium alloys in the aerospace industry, while scandium compounds are used in the production of lasers, magnetohydrodynamic generators for nuclear power plants, solar batteries, and X-ray mirrors. The price of scandium, which depends on purity, ranges from 26,500 to 33,500 yuan ($3,600–$4,600) per kilogram.
The VMR study identifies the factors driving the increasing demand for rare earth metals. These include the need for them in the production of LCD screens for smartphones, batteries for electric vehicles, solar panels, wind turbines, and various equipment for the defence industry. In other words, REEs are a vital component in high-tech and rapidly expanding industries.
Most industry analysts agree with this assessment. REEs are "vitamins of industry," according to Ruslan Dimukhamedov, head of the Solikamsk Magnesium Plant (SMZ) since 2023, as he explained . "REEs are consumed in small quantities, but they significantly enhance the quality characteristics of the materials in which they are used," he states.
"The global demand for individual REEs is highly volatile," states Alexey Kalachev, an analyst at Finam Investment Group. "The rapid evolution of technologies, particularly in the electronics sector, results in fluctuations in demand and pricing for certain rare metals, while demand for others remains relatively stable."
One of the most prevalent application of rare earth elements (REEs) is in the production of super-powerful permanent magnets, which are utilised in engine manufacturing. "Samarium-cobalt magnets are two to three times more powerful than traditional ferrite magnets, and neodymium-iron-boron magnets are five to ten times more powerful,".
The engines that use these magnets are significantly more powerful and compact than traditional engines. "The unmanned aerial vehicle (UAV) industry, which has emerged today, would be impossible without such magnets.
The analyst provides another example of the use of rare earth elements (REEs). "The fastest production car with an internal combustion engine, the Bugatti Veyron, can accelerate to 100 km/h in 2.5 seconds," The cprice of the Bugatti is approximately $2 million. However, the Tesla Model S Plaid electric car, which incorporates rare earth metals in its production, accelerates to 100 km/h in 2.1 seconds and has a price point that is 16 times lower, at $120,000.
China has been the dominant player in the global REE market for many years, with a significant influence on the industry. "A significant number of rare earth metal production facilities have been established in China thanks to government support,"
As a result, China has become the global market leader, producing 240,000 tons of REE (representing 69% of the world's total production of 350,000 tons) by the end of 2023.
It is clear that a dominant position offers significant advantages. China has long used REE as a bargaining chip to pressure the US, which regularly imposes various trade restrictions on it. When the Americans try to establish their own REE production, Beijing brings excess volumes to the market, thereby making mining unprofitable.
I do find it funny when the US reacts and responds to something it tends to get it wrong.
What are the practical implications of this situation? The volume of Chinese REE exports is dependent on the state-set quotas for extraction and production, which are revised two or three times a year. In February 2024, China published the first batch of quotas, according to S&P Global. These were 135,000 tons for extraction and 127,000 tons for production, representing an increase of 12.5% and 10.4%, respectively.
The industry portal Mining.com has predicted that demand for REEs will be lower this year than previously expected. This is due to the fact that Chinese quotas continue to grow, which will result in prices on the market falling. In the first four months of 2024 alone, China supplied almost 18,050 tons of REEs to the markets, which is 10% more than in the same period in 2023.
"At one time, due to price instability and a drop in consumption of rare earth metals, many countries that previously produced them curtailed their production, while China, on the contrary, made large investments in the extraction of a wide range of rare earth metals,"
"This allowed it to become the dominant force in global production, and now sets the market conditions that it deems appropriate. This has included the use of the issue as a bargaining chip in the ongoing trade war with the EU and US. Against this background, a number of developed countries are discussing the possibility of resuming production of certain rare earth metals.
Russia has one of the world's largest REE raw material bases, although there is no single estimate of the volumes. According to official data from 2017, Russia has 26.9 million tons of REE reserves (including rare earth metal trioxides), placing the country second in the world, behind only China. In 2024, the Federal Agency for Subsoil Use (Rosnedra) reported REE reserves of 28.7 million tons.
The Soviet Union had a robust rare earth industry, comprising mines and factories situated in various republics, Following the dissolution of the USSR, cooperative relationships between enterprises rapidly deteriorated. Currently, only two entities remain from the former industry's heyday: the Lovozero Mining and Processing Plant in the Murmansk Region and the Solikamsk Magnesium Plant (SMZ) in the Perm Region.
Until 2022, both enterprises were under the ownership of former billionaire Pyotr Kondrashev and his business partners. In 2022, the court ruled that the shares should be transferred to the state. In 2023, Rosimushchestvo transferred the enterprises to Rosatom.
Now the Lovozersky GOK extracts ore at the deposit and enriches it, obtaining the so-called loparite concentrate. The deposit is estimated to contain 2.6 million tons of ore with a rare earth oxide content of 2.6 million tons. The GOK has an annual capacity of approximately 8,000 tons of concentrate, with plans to increase this to 10,000-12,000 tons. Loparite concentrate is then transported to SMZ, where semi-finished products are manufactured from it, including carbonates of lanthanum, neodymium, cerium, promethium, gadolinium and europium. In the first half of 2023, SMZ produced 962 tons of rare earth carbonates.
"To extract the metals needed by industry, it is necessary to separate their individual oxides from minerals, and then build a chain: from oxides to metals, from metals to ligatures, from ligatures to products," says Boris Krasnozhenov, head of the securities market analytics department at Alfa Bank. “There are currently no Russian enterprises with the capacity to undertake this process on an industrial scale.”
Over the past 20 years, Russia has made several attempts to enter the REE market, but thus far, none have been successful. By way of illustration, the Tomtorskoye deposit in Yakutia is one of the largest in the world in terms of REE content, with estimated reserves of 3.2 million tons of oxides. Despite the postponement of the development schedule for the Tomtor deposit, in Khudalov from Vector X anticipates that mining will commence there. "I anticipate that the first ore will be produced between 2026 and 2028," he states.
That is because Rostec which is state owned is not under pressure to make profits from the production of rare earths as they are considered essential for the development of Russian industyr.
In 2016, fertilizer producer Acron initiated production of rare-earth metal oxides from apatite-nepheline ores enriched at its Oleniy Ruchey Mining and Processing Plant in the Murmansk Region, Veliky Novgorod.
Rosatom plans to invest 7.5 billion rubles in both enterprises over the next two years to build a new plant for the production of REE in pure form and in the form of oxides, rather than semi-finished products. The company has already received SMZ and Lovozersky GOK. Why has this only just come to fruition now?
"Previously, there was a prevailing opinion that it was possible to rely on foreign products in this segment. However, it has become evident that without its own solutions, the country becomes extremely vulnerable to external pressure," states Khudalov from Vector X. "China is a friendly country to us today, but Chinese companies are afraid of Western sanctions, which forces them to impose restrictions on supplies to Russia."
So as you have heard Russia continues to build its import substitution policies and maintain its sovereignty in development of its future.