What Are Rare Earth Elements?
Rare earth elements (REEs) — a group of 17 metals — are essential to the performance, efficiency, and miniaturization of high-tech devices. They enable:
MAGNETS & MOTOR METALS
Permanent magnets for EV motors, wind turbines, aircraft actuators, naval propulsion, and precision guided weapons.
OPTICS, LASERS & PHOSPHORS
Phosphors for displays/LEDs, laser targeting, optical fiber amplification, night vision systems.
CATALYSTS & INDUSTRIAL ADDITIVES
Petroleum refining catalysts, alloy strengthening, glass polishing, ceramics.
NUCLEAR & MEDICAL SPECIALTY
MRI contrast agents, neutron shielding, nuclear control rods, cancer therapy isotopes.
NICHE/ RESEARCH GRADE
Radioisotope power sources, limited to specialized scientific/space uses.
Rare Earth Elements
Not All Are Created Equal
Light vs. Heavy REEs: Different Roles, Different Values:
LIGHT RARE EARTH ELEMENTS (LREE)
| Abundance: | More common & found in higher concentrations |
| Extraction Cost: | Easier & cheaper to extract |
| Market Price: | Generally lower because supply is more plentiful |
| Applications: | Permanent magnets, catalytic converters, glass polishing |
| Market Size: | Larger market volume due to broader availability |
HEAVY RARE EARTH ELEMENTS (HREE)
| Abundance: | Far less common and often in lower concentrations |
| Extraction Cost: | More complex and costly to extract, often requiring additional processing |
| Market Price: | Higher prices due to scarcity and critical applications |
| Applications: | High-performance magnets, military tech, EV drivetrains |
| Market Size: | Smaller market volume but appreciably higher per-unit value |
What’s Driving REE Demand and Growth?
Many mission-critical defense and technology applications are dependent on REE’s:
DEFENSE & AEROSPACE APPLICATIONS
REEs are critical for precision-guided munitions, radar systems, jet engines, sonar, and satellite communications – all areas where performance and reliability are national security priorities.
HIGH-PERFORMANCE ELECTRONICS
Smartphones, laptops, fiber-optic cables, and advanced semiconductors rely on REEs for miniaturization, heat resistance, and signal clarity.
INDUSTRIAL MOTORS & AUTOMATION
Robotics, factory automation, and high-efficiency motors in manufacturing use REE-based permanent magnets for torque and durability.
OIL & GAS REFINING CATALYSTS
Lanthanum and Cerium are used in fluid catalytic cracking to improve fuel yields, making them essential to petroleum refining.
MEDICAL IMAGING & DIAGNOSTICS
MRI machines, X-ray systems, and certain cancer treatments use REEs for their magnetic and luminescent properties.
STRATEGIC SUPPLY CHAIN SECURITY
Governments and corporations are building reserves to hedge against geopolitical supply disruptions, especially given China’s dominance in refining.
Global Supply Fundamentals
China’s Rare Earth Metals Dominance
China currently accounts for over two-thirds of global production
- The U.S. has made a big comeback in rare earth metal production, particularly from 2017 onwards, indicating efforts to reduce reliance on Chinese supplies and boost domestic production
- The world is mining more rare earth metals than ever. Production has jumped from 75.7 kt in 1995 to over 350 kt in 2023, reflecting the growing demand for these metals in high-tech applications
Price Volatility
How China’s Dominance Impacts Pricing & Supply
China’s Export Restrictions
Duration: ~18 months, Price Impact: +800% Nd/Dy/Tb (2010–2011), ~8x increase
China’s Environmental Crackdowns
Duration: ~12 months, Price Impact: +50% Dy, +20% Nd
U.S.-China Trade War
Duration: ~6 months, Price Impact: +30% NdPr basket, +30% cumulative
COVID-19 Supply Disruptions
Duration: ~6 months, Price Impact: +16.5% REE basket, +16.5% cumulative
Myanmar Coup (heavy REE supply disruptionn)
Duration: ~9 months, Price Impact: +63.5% REE basket (3M); +128% (6M)
Russia–Ukraine (critical mineral policy shift}
Duration: ~9-12 months, Price Impact: +8.1% REE basket (3M); +451% vs 2018 base
Sources: Mining.com. (2025, April 24). CHARTS: Rare earth export restrictions, price spikes and the risks of demand destruction. https://www.mining.com/featured-article/charts-rare-earth-export-restrictions-price-spikes-and-the-risks-of-demand-destruction/, Nasdaq. (2015, March 11). The ‘REE Basket Price’ Deception And The Clarity Of Opex. https://www.nasdaq.com/articles/ree-basket-price-deception-and-clarity-opex-2015-03-12, Acadian Asset. (2024, October 28). Measuring Macro Event Risks to Active Equity Portfolios. https://www.acadian-asset.com/investment-insights/geopolitics-and-macro/measuring-macro-event-risks-to-active-equity-portfolios, Ibid. (Acadian Asset, 2024) — Events and impacts Q1 2020 onward sourced from the same document.
Government REsponse
Geopolitical Landscape & US Administration Focus
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