Abstract:As an important scarce strategic resource in China, the demand for rare earth is expected to increase steadily with the rapid development of new energy vehicles, wind power, industrial robots, humanoid robots, inverter air conditioners, energy-saving elevators and other industries.
1.Rare earths are important and non-renewable natural resources
Rare earth is a general term for 15 kinds of lanthanides and scandium and yttrium in the periodic table, of which seven elements such as lanthanum, cerium, praseodymium and neodymium are called light rare earths, and the rest are medium and heavy rare earths. Improving production efficiency plays a huge role. From initial development to downstream application, the rare earth industry chain can be divided into mining, smelting and separation, processing and other links. First of all, the raw ore is obtained from rare earth mines, and rare earth oxides and rare earth metals are obtained by smelting and separation, which are further precision processed into rare earth magnetic materials, rare earth luminescent materials, rare earth catalytic materials, rare earth alloy materials and rare earth hydrogen storage A variety of downstream materials, which can be widely used in new energy vehicles, industrial robots, inverter air conditioners, tail gas purification catalysts, petroleum cracking catalysts and rare earth luminescent materials.
2.Supply side: The rigid pattern of supply continues to be optimized, and China's resource endowment is prominent
From the perspective of the global pattern, rare earth mineral resources are mainly distributed in China. China's rare earth reserves reached 44 million tons, flat year-on-year, accounting for 34% of the world's largest reserves. Vietnam, Russia, Brazil, India, Australia, and the United States accounted for % and 2%, respectively.
From a global perspective, 70% of rare earth ore production is in China. Global rare earth production in 2022 was 300,000 tonnes (290,000 tonnes in 2021), up 34%, of which, China's rare earth output reached 210,000 tons, a year-on-year increase of 25%, accounting for 70% of the world's total, ranking first in terms of output. The United States, Australia, Thailand, Vietnam, India, and Russia accounted for % and 1%, respectively.
China's rare earth industry has entered a new stage, with the formation of a pattern of heavy south and light north, and rigid supply under the quota system. Since the 80s of the last century, China has gradually dominated the global rare earth industry, and since the 90s, China's rare earth industry has mainly experienced three stages of development:
1990-2005: In the early stage of development, China relied on the advantages of rare earth resource endowment, and gradually dominated the global supply of rare earths, and since 1985, China's rare earth has implemented an export tax rebate policy, and a large number of low-cost rare earth resources have been exported overseas, and the proportion of China's rare earth in global production has increased from 48% in 1994 to 95% in 2004. However, the disorderly mining of the industry also makes the waste of rare earth resources a large amount, and at the same time brings a series of environmental pollution problems;
2006-2010: Policy intervention strengthened control, and the growth rate of rare earth production slowed down. Since 2005, China has cancelled the rare earth export tax rebate policy, and in 2006, the Ministry of Land and Resources formulated the total control index of rare earth mining, and China's rare earth export quota from 2005 to 2010 was 6560,000 tons down to 3030,000 tons, but there are still illegal mining and smuggling, and a series of export restrictions have been gradually withdrawn after the WTO rare earth case;
Since 2011: the industry order continues to rectify, entering a new stage of development, in 2011 the first round of rare earth resources integration curtain opened, to build a 5+1 north-south rare earth pattern, at the end of 2015, Chinalco, Xiamen tungsten, northern rare earth, China Minmetals, Guangdong rare earth, southern rare earth six groups basically integrated. In 2021, China Rare Earth Group was established, and the industry structure continued to be optimized, with a quota system for mining and smelting, and rigid supply.
Under the quota system, the total amount of rare earth mining and smelting in China has grown steadily, and the increase is mainly light rare earth. According to the Ministry of Industry and Information Technology and the Ministry of Natural Resources, China's rare earth mining indicators have grown steadily in recent years, with the mining index increasing from 120,000 tons in 2018 to 240,000 tons in 2023, doubling the mining index in the past five years.
From a structural point of view, the increase is mainly light rare earths, and the proportion of light rare earth mining indicators will increase from 84% in 2018 to 92% in 2023; From the perspective of enterprise distribution, in 2023, the mining indicators of Northern Rare Earth, China Rare Earth, Xiamen Tungsten Industry, and Guangdong Rare Earth will be tons respectively, accounting for 694%/28%/1.4%/1.1%。The total mining indicators of northern rare earth (light rare earth) and China rare earth (mainly medium and heavy rare earth) exceed 95%.
The smelting index has grown in tandem with the mining index, and the total smelting index of Northern Rare Earth and China Rare Earth has exceeded 90%. China's rare earth smelting index has increased from 1150,000 tons to 230,000 tons in 2023, with an annual growth rate consistent with mining targets. In terms of enterprises, in 2023, the smelting indicators of Northern Rare Earth, China Rare Earth, Guangdong Rare Earth, and Xiamen Tungsten Industry will account for 66 respectively2%/27.5%/4.6%/1.7%。
3.Demand: Affected by the rising prosperity of new energy vehicles and wind turbines, demand is on the rise
Due to its unique electronic layer structure and heat-resistant characteristics, rare earths have been widely used in petroleum, chemical industry, gold, textile, ceramics, glass, permanent magnet new materials and other fields. 35% of global rare earth consumption comes from rare earth permanent magnet materials, which account for about 91% of the consumer value. Rare earth permanent magnet materials benefit from the rapid development of new energy vehicles and electronics industry, accounting for the highest proportion of global rare earth consumption, at 35%; Catalytic materials are mainly used in automobile exhaust purification and other fields, accounting for about 26% of consumption; The remaining major consumer sectors are battery alloys, ceramic pigments, glazes, glass polishing powders and additives, phosphors and others.
Rare earth permanent magnet materials benefit from the drive of new energy vehicles, wind turbines, inverter home appliances, industrial motors, industrial robots, electric vehicles, consumer electronics, traditional automotive EPS fields, etc. The contradiction between supply and demand of rare earths will become more and more acute driven by the global "carbon neutrality" action. According to the report of Arafura Resources, in order to support the global low-carbon transformation goals such as "carbon neutrality", the demand for rare earth praseodymium and neodymium will increase from about 50,000 tons in 2020 to about 100,000 tons in 2030, and the gap between supply and demand in 2030 will be as high as 470,000 tons, which will lead to risks such as insufficient global rare earth production capacity, insufficient reserves and ** interruption.
4.A series of policies for the rare earth industry and rare earths**
In recent years, the rare earth industry has entered a stage of standardized and healthy development, and the rare earth center has risen. Before 2010, China's rare earth ** basically maintained a narrow ** pattern, in 2010 due to the Diaoyu Islands dispute, China's implementation of rare earth export control measures, rare earth ** soared, affected by high returns, a large number of illegal mining and illegal production scale rapidly expanded, the scope of Jiangxi, Guangdong, Fujian, Guangxi plasma ore production areas. Subsequently, the surge of rare earth** suppressed the demand for downstream functional materials and triggered a partial substitution effect, and rare earth** began to fall sharply in the fourth quarter of 2011.
From 2012 to 2020, in order to standardize the healthy development of the industry, with the establishment of the China Rare Earth Association, the successive merger and formation of large rare earth groups, and the supply-side reform of the rare earth industry, China's rare earth industry has gradually entered the stage of standardized development. After 2020, due to the rapid growth of demand in the fields of new energy vehicles, wind power, energy-saving electrical appliances, etc., superimposed on the basic clearance of black rare earth production capacity, and the basic stability of the supply side of the industry, the rise and fall of rare earth ** is gradually driven by demand. However, due to the fact that rare earth is an important strategic resource in China, the impact on the supply side is still large.
5.Rare earth permanent magnet investment logic and related ** combing
In recent years, with the formation of China's large-scale rare earth group and the basic clearance of black rare earth, the rare earth industry has entered a new stage of development, with the rapid development of new energy vehicles, wind power, industrial robots, humanoid robots, inverter air conditioners, energy-saving elevators and other industries, the demand for rare earth is expected to increase steadily. Moreover, China is the only country in the world with the production capacity of various products in the whole rare earth industry chain, and its competitive advantages are highlighted, and leading companies are expected to fully benefit: Northern Rare Earth, China Rare Earth, Guangsheng Nonferrous Metals, and Jinli Permanent Magnet.
Reference Material**:
1.2023-8-24Central Plains** - scarce strategic resources, knowledge and practice, carry forward the past and forge ahead into the future.
2.2023-9-11Debang**—Supply disruption, demand can be expected.
2.2023-10-12Hua'an** - a leading enterprise of medium and heavy rare earths, the curtain of resource integration is opened.
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