Rare earth elements (REEs) have gained tremendous significance as the demand for electronics, and electric vehicles (EVs) keeps rising. REEs are essential for producing cell phones, wind turbines, and electric cars. Moreover, rare earths are crucial for both commercial and national security uses. Powerful magnets are required for devices like electric vehicle motors and cell phones to vibrate, and REEs play an essential role in their production. Yet, because China has a stronghold on world supply, there are significant issues with the REE supply chain. This is of particular concern due to the need for REEs by the military. The typical F-35 fighter contains nearly 1,000 pounds of rare earths. Before Chinese REE producers, the United States was a significant producer of REEs.

Nevertheless, Chinese REE producers steadily forced U.S. miners out of business, and China today controls more than 80% of global production and virtually every phase of the global REE supply chain. The reliance on China threatens American national security, and EV manufacturers are concerned about rising demand. While efforts are being made to remedy the imbalance, Energy Fuels Inc (NYSE: UUUU) (Profile) is leading the charge to tip the balance back to American shores. UUUU has presented a new concept for producing rare earths considering the supply chains for crucial materials in North America and Europe. Energy Fuels has all the technical know-how, permits, production facilities, production capacity, and financial resources required to return REEs production to the United States. Several heavy mineral sand operations export monazite sands to China's rare earth sector, including those in the United States, Australia, Africa, and other places. For manufacturers whose production of all-electric vehicles is quickly shifting, this new non-Chinese supply chain must come sooner. The most well-known EV manufacturer in the world, Tesla Inc. (NASDAQ: TSLA), has switched to a neodymium-based magnetic motor in its Model 3 Long Range vehicle, putting more strain on the market for rare earth metals. By 2035, General Motors Company (NYSE: GM) intends to stop producing its internal combustion engine automobiles and only sell electric vehicles. Ford (NYSE: F) has promised that by 2030, all of its vehicles sold in Europe will be electric, and it is expanding its line-up of EVs in the United States. Following a similar electric-powered route, Honda Motor Company Ltd. (NYSE: HMC) plans to electrify two-thirds of worldwide auto unit sales in 2030 and is developing a global electric vehicle platform for larger EVs in a few key international markets. These automakers represent just the tip of the iceberg for the future demand for REEs.

The rarity of Non-Chinese Rare Earth Elements

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Although rare earths are common in the Earth's crust, finding rare earth supply chains that China does not control is incredibly difficult. A significant increase in demand is anticipated for the $14.4 billion rare earth magnet market recorded globally in 2021. Neodymium and dysprosium are two essential rare earth elements for the motors used in electric vehicles. Beyond EVs, other industries are experiencing a surge in demand for REEs.Many high-tech products rely on rare earths as essential components, including cellphones, cameras, computer hard drives, fluorescent and LED lights, batteries, flat-screen Televisions, computer displays, and more. Certain REEs are also essential for clean energy and defense technology in large numbers.

According to Julie Klinger, the author of "Rare Earth Frontiers," the demand for REEs now exceeds supply by around 3,000 tonnes annually. Since the EV market alone is anticipated to grow roughly tenfold over the next 10 years, demand will likely accelerate further and strain access. Exacerbating the situation, the prices of all significant Chinese-sourced rare earths have recently spiked, especially those used in permanent magnets.

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Bringing It Home

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"Canada has some of the largest known reserves and resources of rare earths in the world," says Rebecca Gotto, manager of government relations at the Saskatchewan Research Council.

The research council is working to build the first facility to process rare earths in North America in Saskatoon. Canada is projected to have 14 million tonnes of rare earth oxides by 2021. Some provinces and the federal government are attempting to take advantage of this new source of income. Ottawa had previously announced that it would spend up to $3.8 billion in 2022 on a vital minerals plan that involves finding, mining, and processing rare earth elements.

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There are currently 21 rare earth mining projects in Canada at various development phases, from resource estimation through exploration. According to Natural Resources Canada, they can be found in the Northwest Territories, Quebec, Ontario, Newfoundland, Labrador, Alberta, and Saskatchewan.

Canada's first step into mining rare earths

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The Nechalacho Project of Vital Metals (ASX: VML), Canada's first and North America's second rare earths miner, started mining in 2021. The company wants to be the first in the world to manufacture light and heavy rare earths commercially.
As part of Vital's Stage 1 production strategy, its initial mining campaign at Nechalacho's North T Zone is finished. Before transporting the ore to its Saskatoon rare earths extraction facility, the business crushes and sorts the ore at Nechalacho.Vital Metals intends to develop the Tardiff deposit as part of its Stage 2 plans at Nechalacho to construct a more extensive, longer-lasting rare earths project.
By developing one of the highest-grade rare earth deposits in the world and the only rare earth project capable of beneficiation purely by ore sorting, Vital Metals hopes to become the lowest-cost producer of mixed rare earth oxide outside of China.
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Bottom Line

While China detains the main world’s market share, occidental countries led by the USA and Canada seek to become China-independent. While EVs are more popular thanks to car manufacturers and governments working alongside them, it will be crucial not to be outpaced by a potential lack of supply. The REEs rush commenced, and it will just be the very beginning.