Few Substitutes for Rare Earths

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"By the time we have REE substitutes in place, there may be an oversupply."

Demand for rare earth elements (REEs) is growing as they are increasingly needed in emerging technologies, and not every nation has access to an ample supply. And now, the Chinese government is suggesting that it may need to start importing REEs soon. All this is leaving many countries worried about possible supply shortages in the future, prompting R&D investment into the use of alternative materials to achieve the same functionality as the more obscure REEs.

"Countries like South Korea, Japan and Europe, which see they have a dependency may run into a physical shortfall where no price in the world will actually deliver it," said Kaiser Bottom Fish Writer John Kaiser. "The practical thing is to look at how this can be done without requiring these materials. So, they have to invest the money in substitute technologies because it's the prudent thing to do."

But, Kaiser says, though these countries are performing due diligence by developing alternatives, substitutes are seldom readily available that can achieve the same level of performance as REEs.

"It takes a long time to come up with a substitute and commercialize it and, most of the time, it's not as good," said Kaiser. "Besides, in five or six years from now, by the time we have substitutes in place, they could have an oversupply of REEs and other critical metals, so that they can use the metals best suited for the functionality. If the REEs then came into existence, unless there had been a fabulous breakthrough, they would just ditch it and go right back to using the REEs."

There is no doubt that the global production trends for REEs have changed in the past 20 years as demand continues to grow and countries focus on control of these critical materials into the future.

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