An article published by Reuters on 24 October 2018 reports on recent research warning about reduced rare earth exports from China and the likelihood of higher prices for the critical rare earths Neodymium and Praseodymium (“Nd-Pr”), used in high strength permanent magnets for electric vehicles.

The Reuters article reports that “the Chinese government is limiting domestic production of rare earth minerals in the second half of the year, a move likely to crimp international exports and send prices for the critical materials higher, according to data from Adamas Intelligence.” China is proposing to reduce its rare earth domestic supply to 45,000 tonnes per year: a reduction of 36% to provide only enough supply to its domestic buyers. This is a very similar circumstance to 2009-10, when China abruptly imposed quotas on rare earths exports causing a supply crisis and a spike in prices.

The issue continues to be a concern in the US defense establishment, where a recent report from the Pentagon reiterated the need to create alternative supply chains for these critical elements. The report, entitled “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States,“” expressed concern about China’s control and dominance of the rare earths market, calling it a “significant and growing risk,” while, ironically, the John S. McCain National Defense Authorisation Act  (signed into law in August 2018) prevents the US military from purchasing Nd-Pr magnets from China, the major manufacturer of these components.

Compounding the supply risk for rare earths is the trade war rhetoric between the US and China and the imposition of tariffs on a range of products and services including, initially, rare earths. Although the US has since rescinded the tariffs on the rare earths from the final list of products, China has yet to respond. This risk is further complicated by the growing demand for Nd-Pr magnets in the motors for electric vehicles. While much has been written about the demand for lithium and cobalt in the batteries needed for electric vehicles, little has been written about the critical need for the high strength Nd-Pr permanent magnets to achieve the desired performance requirements of the motors in electric vehicles.

As disclosed in Avalon’s news release dated October 10, 2018, Avalon has re-activated its advanced Nechalacho Rare Earth Elements Project and is well positioned to bring a new supply of neodymium-praseodymium concentrates to the market in the medium term.

For more information, please visit the company’s website at www.AvalonAM.com; or, for questions or feedback, email Avalon at [email protected].