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OVERVIEW

Global Demand

China accounted for 70% of world mine production of rare earths in 2022.
China is home to at least 85% of the world’s capacity to process rare earth ores.
The United States sources most of its rare earth imports from China.
The U.S. government announced that Canadian companies can be eligible for the Defence Production Act that will be awarded as grants, not loans, to companies that can help secure domestic REE supply.
Canada and the U.S. signed a Memorandum of Understanding confirming Canada’s participation in the U.S.-led Energy Resource Governance Initiative (ERGI), part of a multi-pronged strategy by Washington to break free of China’s near-monopoly on so-called critical energy minerals.

China Dominates the Market

MINING

Processing

EXPORTS

Chinese exports of rare earths have declined. The country exported 20,987 metric tonnes in the first five months of 2023, down 4.4% year-on-year, Chinese customs data showed.
China exported 48,728 metric tonnes of rare earths in 2022, down 0.4% year-on-year.
The United States sources most of its rare earth imports from China, but that dependence has eased to 74% between 2018 and 2021, from 80% during 2014 to 2017.

Source:

Domestic Opportunity

Market Size Outlook

(USD Million)

2017: USD $6,898.00 Million

Rare Earth Metals Market

SHARE BY APPLICATION (USD MILLION)

Permanent Magnets Segment

2017: USD $1,972.83 Million

Market growth will ACCELERATE at a CAGR of

8.3%

Growth contributed by APAC

72%

Growth for 2023

8.1%

Incremental growth ($M)

4932.67

The market is FRAGMENTED with several players occupying the market

Industry Leaders

MP Materials (NYSE: MP)

The only operating mine in North America
$4B Market Cap
Public Through Chamath Palipathya SPAC

Lynas Rare Earths (ASX: LYC)

First Rare earth refinery to be built in North America, shifting away from China.
$6.85B Market Cap.
$258M contributed from US government.

The Power of REE Drives Global Economies

Rare Earth Elements (REE) Applications

AGRICULTURE

Farm Equipment Motors
Fertilizers

AUTOMOTIVE

Vehicle motors
Catalytic converters

AEROSPACE/DEFENCE

Plane motors
Submarines
Guidance equipment
Thermal barrier coatings

CHEMICALS/ CATALYSTS

Optical-quality glass
Air pollution control

HEALTHCARE

MRI scanners
CT scanners

ELECTRONICS

Computer screens
Smartphones
Semi-conductors

POWER GENERATION

Wind turbines
Electric vehicles

REE Global Production 2022

REE Global Reserves (estimates) 2022

Supply Chain Headlines

Energy Resources Governance Initiative (ERGI)

Canada and the U.S. signed a Memorandum of Understanding confirming Canada’s participation in the U.S.-led initiative as part of a multi- pronged strategy by Washington to break free of China’s near-monopoly on so-called critical energy minerals.

US Government announces Canadian companies can be eligible for the Defence Production Act that will be awarded as Grants, not Loans, to companies that can help secure domestic REE supply.

Sources: https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/joint-statement-by-president-biden-and-prime-minister-trudeau/ and https://www.cbc.ca/news/politics/critical-minerals-biden-trudeau-1.6790933 and https://www.cbc.ca/news/world/u-s-military-mining-projects-canada-1.6649522

Three Strategic Objectives:

Engage resource-rich countries on responsible energy minerals governance.
Support resilient supply chains.
Meet the expected demand for clean energy technologies.

Source: https://ca.usembassy.gov/united-states-and-canada-sign-memorandum-of-understanding-on-critical-energy-minerals/#:~:text=The%20new%20MoU%3A%201

Canada and USA to partner in semiconductor “Chip Corridor” between the two countries

Sources: https://globalnews.ca/news/9403453/trudeau-three-amigos-semiconductors-north-america/ and https://www.reuters.com/technology/us-canada-plan-north-american-chip-corridor-starting-with-ibm-expansion-2023-03-24/

Malaysia to ban exports on rare earths

Source: https://www.bnnbloomberg.ca/malaysia-seeks-to-develop-ban-on-exports-of-rare-earths-1.1969758

The Canadian government will spend C$250 million on its domestic semiconductor industry to boost research and development and manufacturing, the prime minister’s office said in a statement.

An electric vehicle (EV) uses 1kg to 3kg of neodymium-iron-boron (NdFeB) magnets in standard drivetrain motors.
NdFeB magnets are 93% of all electric vehicles. Tesla, GM, Ford, VW, Hyundais, Toyota and others build vehicles using these magnets.
Every ten million new EV’s require ~10,000 tonnes of additional neodymium or ~20% of current annual global supply. Over 70 million electric vehicles are expected to be sold when internal combustion engine vehicles are phased out.

Source: MP Materials, Morgan Stanley, CRU

Rare Earth Elements (REE): CRITICAL USES

Companies directly affected by the Rare Earth market and Supply Chain

Nvidia, Taiwan semi-conductor, Intel are the largest semiconductor manufacturers and heavily rely on REE to keep up with the massive demand, especially due to AI
Apple: Microchips and semiconductors
Tesla: Magnets for electric vehicles and microchips in cars
Open AI heavily use semiconductors to power their technologies

SEMICONDUCTOR MANUFACTURING: Rare Earth Metals like cerium, lanthanum, and yttrium are used in the production of semiconductor materials and wafers. These elements help improve the performance and reliability of semiconductor devices.
MAGNETIC STORAGE: Neodymium-based magnets are used in computer hard drives, contributing to high storage density and faster data access.
CRT MONITORS: Cerium and europium are used in the phosphors of cathode-ray tube (CRT) monitors, which were once widely used in computer displays.
LED DISPLAYS: Europium and terbium are used in the production of phosphors for LED displays, improving color quality and energy efficiency in computer monitors and TVs.
LASER TECHNOLOGY: Neodymium-doped lasers are used in various computer-related applications, such as laser printers, barcode scanners, and optical communication systems.
HIGH-PERFORMANCE COMPUTING: Some rare earth elements may find applications in high-performance computing (HPC) systems due to their unique magnetic and electrical properties, which can enhance processing capabilities.
ELECTRIC VEHICLE MOTORS: Rare Earth Metals, especially neodymium and dysprosium, are crucial in the production of electric vehicle motors. These motors are essential components in electric cars and contribute to their energy efficiency.

BATTERY TECHNOLOGIES: Some Rare Earth Metals, like lanthanum and cerium, are used in battery technologies. While this is not limited to computers, they can be found in rechargeable batteries used in laptops and other portable electronic devices.
OPTICAL COMPONENTS: In the field of optics, Rare Earth Metals are used in various components such as laser crystals, optical lenses, and prisms, contributing to the precision and performance of optical devices used in computers and telecommunications.
SUPERCONDUCTORS: Some Rare Earth Metals are used in the development of high-temperature superconductors, which can have applications in advanced computing technologies, including quantum computing.
ELECTRONIC SENSORS: Rare Earth Metals can be used in sensors and detectors, which are vital for various computer-related applications, including environmental monitoring, security systems, and industrial automation.
DATA STORAGE: In addition to hard drives, Rare Earth Metals are used in other forms of data storage, such as magnetic tapes and optical discs, contributing to archival and long-term data preservation.
MANUFACTURING AND PACKAGING: Rare Earth Metals are used in the manufacturing and packaging of electronic components, ensuring the reliability and longevity of computer hardware.

The scientific and technical content in this material has been reviewed and approved by Jared Galenzoski, P. Geo., who is a “qualified person” as defined by National Instrument 43- 101 – Standards of Disclosure for Mineral Projects