Will Permanent Magnets Save the Rare-Earth Industry?
The permanent magnet and catalyst sectors will continue to provide the largest markets for rare earths in the next ten years to 2026. Catalysts will continue to drive growth in the light rare earth elements lanthanum and cerium, while permanent magnets will lead growth in neodymium, praseodymium and dysprosium.
Supply of some rare earths is far greater than that of others as a result of production methods and there is a discontinuity between supply and demand across the different elements. Despite growth in catalyst (and, to a lesser extent, polishing and nickel metal hydride battery) demand, cerium and lanthanum will remain in substantial surplus to 2026. Demand for neodymium, however, is beginning to outstrip supply.
Rapid growth expected from permanent magnets, but will it be short-lived?
In the short-term to 2021, neodymium-iron-boron (NdFeB) magnet demand is forecast to grow strongly. The traditional consumer electronics and automotive sectors account for the majority of NdFeB demand, but these magnets will experience strong growth from the emerging green technologies of wind turbines and new energy vehicles (NEVs).
Between 2016 and 2021, global NdFeB magnet production is forecast to grow by 4-5%py. Global NEV production could rise by 3.5-4.0M vehicles, while global wind power installations could increase by 0.4M MW according to Roskill's new rare earth report. Chinese NEV consumption will see high growth rates as these vehicles are exempt from city number plate lotteries. The Chinese government is also offering a range of tax cuts and purchasing incentives to encourage the uptake of NEVs.
As a result of increasing consumption, neodymium is expected to fall into deficit in 2016, although demand will initially be met by the drawdown of stocks. The deficit is forecast to increase to 2021, making continued growth of NdFeB magnets unsustainable, despite efforts by rare earth producers to increase neodymium supply.
The neodymium price will rise towards the point of inflection, above which, magnet consumers will begin to replace NdFeB magnet technologies with substitutes. The green energy sector is the most vulnerable to price rises because of the large size of magnets used. Technologies already in use in this industry as an alternative to permanent magnet motors include induction motors in NEVs and induction/synchronous generators in wind turbines.
By 2021, it is expected that the high price of neodymium and concerns over supply availability will make projected growth rates of NdFeB demand unsustainable and demand for NdFeB magnets will fall rapidly from 2022, before stabilising at a much lower growth rate. Overall, NdFeB magnet growth between 2021 and 2026 is forecast to be flat, possibly falling by up to -1%py.
Demand for dysprosium will also grow from the use of magnets in high temperature applications (including NEVs) but manufacturers are actively trying to reduce dysprosium-containing magnet consumption wherever possible and to develop new ways to reduce intensity of dysprosium use. Little to zero dysprosium is consumed in wind turbines; maximising airflow allows for a lower operating temperature in this application.
Neodymium prices rising but other rare earth prices will see little excitement
The price of neodymium (and, to a lesser extent praseodymium and dysprosium) will rise with increasing NdFeB magnet demand to 2026. The price for most other rare earth elements, however, will decline over this period. Lanthanum and cerium prices will be limited by surplus supply. Prices for europium and terbium will fall considerably as demand from the phosphors industry continues to decline rapidly. These two elements were previously perceived to be critical because of their high use and low availability. The recent shift in the lighting industry, from fluorescent to LED lamps, however, has reduced demand for rare earth phosphors by around two thirds since 2011.
China still dominates and this isn't about to change
China dominates global rare earth supply, accounting for an estimated 88% in 2016. China's position weakened slightly in the 2010s as ROW production increased with the start of mining by Lynas in Australia and by Molycorp in the USA. Molycorp has since declared bankruptcy and closed its operations in 2015.
Low prices for most rare earths to 2026 will discourage investment in new projects and the rare-earth industry in the ROW is not expected to see a significant injection of new capacity. Current producers may expand where possible to serve increasing neodymium demand.
Illegal mining remains one of the main threats to rare earth prices going forward. The Chinese government has committed to reduce illegally sourced material by introducing a raw material tracing system and granting great powers to raid and prosecute illegal miners, separators and distributors. Mining from unofficial sources accounts for 25-30% of global rare earth supply in 2016 and is mainly carried out in the south of China where a large number of companies extract small quantities of heavy rare earths.
The Chinese system of export quotas and taxes was scrapped in 2015 after China lost an appeal with the WTO. Chinese exports of rare earth compounds, metals and alloys are expected to rise by 17,100t in 2016 but are unlikely to see a significant increase in future years as the vast majority of consumption takes place in China. The Chinese government continues to encourage downstream processing and the export of manufactured goods over raw materials. Some of the increase in 2016 may be a result of China filling the void left by Molycorp's closure.
Rare earths: Market Outlook to 2026, 16th Edition, 2016 is now available from Roskill Information Services Ltd
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Get in touch with our editor Dale Benton at [email protected]
Axora: driving safety, sustainability and efficiency
“Axora was conceived to bring collaboration and industrial digital innovation to the next level,” pledges CEO Ritz Steytler. “We spoke with the heads of innovation and the operations leaders of oil & gas and metals & mining organisations. We understand the intense pressure they face to modernise their operations. We’re focused on offering solutions to support mining companies with the three biggest challenges they face: safety, sustainability and efficiency."
Safety, Sustainability & Efficiency
"We can help with everything from discovering the right solutions to solve specific problems, to evaluating physical innovation and then supporting the end to end process for actually getting that technology to deliver business value," continues Steytler. That’s realised through our support of the procurement cycle and helping companies with the deployment and maintenance of their chosen solutions to ensure they continue to deliver value where it’s needed most.”
Axora hosts over 150 innovative solutions from sector leaders to start-ups, universities, and consultancies. Examples include machine vision technology that identifies mineral ore contaminants three times faster than the human eye, and predictive modelling for oil rigs which uses built-in sensors and AI to maximise production. Axora's proven digital solutions help to reduce wasted investment, avoid duplication and accelerate business growth.
The World Economic Forum estimates digitalisation can create value to the tune of $400bn across the coming decade. However, the emergence of ‘digital mines’ isn’t just about the numbers. Digitalisation can transform mining into a far more sustainable enterprise by mitigating some of the big risks the industry faces. A digital mine can optimise operations, unleashing the power of data to understand and implement changes in the business.
With the right solutions it’s possible to effect radical changes in a process that is understood better. Solutions that have been road-tested across the oil and gas industry can deliver real benefits for mining companies, including early adopters like Glencore, explains Axora’s Mining Innovation Director Joe Carr: “Opex Group are using Machine Learning with an AI algorithm to pull in all the available sensor data to monitor a processing plant. Its solutions analyse output and look across all the pumps and motors to offer exact data on where to tweak them down. It’s cloud-based and can monitor, reduce and control operational emissions, optimise energy use and minimise environmental impact. It’s currently being used in the oil and gas industry and it's been shown to save up to 10% of power, but the driver of it was actually Co2.
“If you're running an oil platform, your power is essentially free because you're pumping it out of the ground. But in a mine the biggest power user, outside of the trucks and shovels, is the process plant. It uses around 21 kilowatt hours per tonne of processing power to run, right? Obviously, that's dependent on the plant, but it's a power-hungry situation. Diesel is not cheap, especially in remote locations. Being able to save five to 10% of your power usage for no issue in terms of production could be a big win for mining.”
Carr highlights there is also the real opportunity to significantly reduce Scope 1, Scope 2 and even into Scope 3 emissions where Opex Group’s solutions could be used in a smelter to go for the “low hanging fruit” and cut Co2 emissions. “It's a win-win all around, and yet it's a technology which the mining industry doesn't use today, but it exists in a parallel industry.”
To further reduce emissions, Axora is offering solutions which are involved in the scheduling and optimisation of haul truck fleets. “If your fleet is idling for even 10 minutes a cycle, that is wasted fuel,” notes Carr. “It just goes into the atmosphere. And very rarely do the drivers turn the trucks off because they don't want to be stopping and starting those big engines. The mine may be in an extreme climate so even something as basic as saving idling can contribute towards a company’s net zero targets.” The Axora platform also features a system to manage shipping and logistics. “Are you moving your material in the most effective way in terms of routing for fuel usage and speed?” asks Carr.
“Being able to program those variables in terms of Co2 tonnage produced offers new capabilities. We’re able to help our customers understand what they want to achieve. Scope 1 emissions might be the easiest to impact with the haul fleet. Scope 2 focuses on the processing plant and the downstream movement. Understanding what a mining company’s customers are using its materials for makes Scope 3 more difficult to impact – for iron ore it would be a steel melt…”
To that end, Axora offers a predictive maintenance system for aluminum smelting which Carr notes can reduce downtime by up to 20%. “Aluminum smelting tends to come from hydro which can be very clean – it’s energy intensive,” he explains. “But the same system could easily be applied to steel or copper processes where you don't want to be turning them on and off. You don't want to be running your autoclave in a gold mine with a varying sulfide input because the heat goes up and down and it messes with your recovery and you're using a lot more power to heat and cool your autoclave.”
The Axora Platform
“Challenge us and we will find it for you,” asserts Steytler when explaining how he envisages the Axora platform developing. “We aim to match a technology provider to a particular business buyer, somebody that has a real problem that needs to get solved. They can then collaborate to deploy that technology successfully.” Steytler is positioning Axora beyond the sales and procurement process. “There’s no such thing as on time and on budget with a digital transformation effort, right? It’s a difficult thing to achieve, we’re not talking about shrink-wrapped software. That’s why partnerships are extremely important and we can help facilitate those to deliver the value required.”
Reacting to Trends
Against the backdrop of record years for many mining companies – with copper and gold production and prices on the rise – what trends are the team at Axora seeing across the industry that will necessitate a response from its multi-solution platform? “Despite the uncertainties of the global pandemic, mining companies have taken a practical approach,” notes Carr. “What we’ve seen during the pandemic is that miners have realised they need to embrace the digitisation journey. The past year has proved to be a gateway with younger guys coming through the system ready for change.”
Carr highlights that with Covid, engineers couldn’t simply fly to West Africa or Chile so the door to digitsation opened. Where has he seen the biggest push? “How do we get the data we want and then what do we do with it?” he counters. “Miners have so much data that it's in Excel sheets, and it's got macros, and it's historically stored on a server somewhere that nobody's looked at for five years since it was sent out. Our clients' demands today are more around how do we do something with that data? Because we know the benefits are there. The sensor data around predictive maintenance and all these things exist, but they're having such a struggle to deal with it and deliver meaningful insights.”
However, Carr concedes it's a cyclical business. “If it comes down to buying another truck or buying a data server, what's going to get more tonnes out of the ground? But with the right data we can see what will actually benefit operations in the long term… That push towards digital has seen what we thought would take the next five years actually happen in one year because remote capabilities and enhancement to operations centres have advanced to meet demand. At Axora, we’re seeing mining companies assess solutions to improve health and safety on their sites by reducing members of the workforce exposed to risk and in harm’s way and keen to discover how they can drive efficiencies to make more tonnes for less. Ultimately, it’s part of our job to make it simple in terms of a value calculation.”
“Axora is here to accelerate digital transformation in the mining industry,” asserts Steytler. “We can simplify that process. And with investment in that transformation expected to reach $6.8trn between 2020 and 2023 as the world economy digitizes, there’s never been a better time to realise the benefits.”