UBS Report Confirms 2021 NdPr Shortfall; Shortages To Impact EV Automotive and Wind Power Sectors

In late July 2018, UBS (the largest Swiss banking institution) released their own bullish report on rare earths elements (REEs) – specifically neodymium and praseodymium(NdPr).

In the July 2018 market report, UBS confirmed the rare earth element deficiency trend is continuing – fueled by the massive rise of permanent batteries and their role in electric motors. . .

Below are some graphs from the USB report.  In addition to the robust EV forecast, Figure 29 shows the supply deficit for NdPr expected in 2021.  In light of the trend for rapid growth of EVs and other devices utilizing permanent magnets coupled with global supply (and material source) deficiencies, analysts believe NdPr will experience price inflation.

This narrative’s further emphasized by the huge growth of wind turbines – which also use NdPr magnets. . .

 

As of today – China produces over 85% of the World’s rare earths.

They control nearly the entire world’s supply – and with trade wars looming between the U.S and China, this is a huge advantage for them.

This gives China substantial power over a world that is moving from fossil fuels to new technology clean energy sources.  Regardless of geopolitical trends, further industrialization of China and infrastructure projects will require increasingly larger rare earth elements.  It is becoming clear that natural forces (e.g, internal growth) will likely reduce levels of NdPr other important rare earth elements for the rest of the world.  The impact of continued trade disputes may prove to be a less decisive factor in the end.

The only other major sources of ‘rare earth oxides’ (REO),  are from Australian- based producer, Lynas Corporation, Ltd., and the Mountain Pass mine – which’s located in California.  the Mountain Pass mine is rumored to be slow with its relaunch of REOs.  Sources indicate the billion dollar REEs separation plant at Mountain Pass is woefully inadequate and may never be restarted.  Perhaps the most novel solution would involve USA-China cooperation whereby the government of China would license new REEs separation technology.  While this is hard to imagine in the current political climate, it could come to pass in the future.  There is also reason to think that coal-based REEs could become an important contributor of REOs.

Due to the political risks of China, and the minimal production from other sources, UBS predicts a supply deficit for NdPr beginning in 2021.

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