Modern Mining November 2024

Close up of PV panels, created with polycrystalline silicon.

Wind power farm.

in tandem due to their use in NdFeB magnets, which are a critical component of wind turbines. For this reason, there will be a sustained deficit in the market for these magnet metals going forward. This is worsened by the fact that most production and processing of REEs is concentrated in China. Given the low cost of Chinese production, investors have been hesitant to enter the market and compete with China on price, which has the potential to constrain Western based material availability in the long-term. The other element that needs to be considered with respect to REEs is that they are subject to the ‘basket problem’. Since REEs are mined together, the market can be slow to respond to spikes in demand for any one element. This tends to lead to a surplus in less sought-after elements and deficit in less abundant materials, such as the magnet metals required by wind turbines. Battery storage: The electrification of vehicles will similarly spur an increase in demand for batteries, with global requirements forecast to rise from 956 GWh in 2023 to 6 500 GWh by 2035. Consequently, demand for cathode raw materials such as lithium, graphite, nickel and manganese will similarly rise. However, the excess capacity that currently exists for these materials in China is subduing prices and, in turn, disincentivising new entrants to upstream production. Investors are also cautious of the fact that the rapidly evolving battery chemistries may reduce demand for some elements. We are already seeing cobalt demand growth slow due to a combination of thrifting and substitution with Ni-rich and LxFP batteries. These issues are compounded by the fact that some large mining companies can be less inclined to commit capital to greenfield critical raw material projects, instead preferentially focusing on developing metals and minerals projects with a high industry value such as iron ore, copper, zinc and aluminium. For context, the

Figure 2: Global REE demand from onshore and offshore wind manufacturing, kt/y, 2020-2028. SOURCE: CRU

in the adoption of wind generation in the coming years, with the share of global electricity production from offshore and onshore wind expected to collectively increase from ~8% to ~26% in 2040. Rare Earth Element (REE) demand, and specifically demand for neodymium, praseodymium, dysprosium and terbium (Nd, Pr, Dy and Tb), will rise

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