Rare earth metal prices explode, may lead to increased prices for electronics

nanoguy

Posts: 898   +12
Staff member
Why it matters: Prices for rare earth metals have surged over the past twelve months. This development will likely impact the prices of electronics for end-users in the coming months. Meanwhile, the US and China have been pointing fingers at each other, with no diplomatic solution in sight.

Over the past year, we've seen a string of news about supply shortages for everything from capacitors, $1 display driver chips to the advanced silicon found in phones, tablets, PC components, and car infotainment and driver assistance systems. Even if the tech industry were somehow able to crank more of these components, they'd still have to deal with a shortage of shipping containers.

Nikkei Asia reports, the crisis is far from over. Manufacturers of electronic components are now facing a new challenge as prices for rare-earth metals have surged over the past year and are expected to rise even further in the coming months.

The primary reason for the price hike is the smoldering trade war between China and the US, which never seems to end. Now that's affecting shipments of some of the crucial ingredients needed to make all manner of electronic products.

The lithium used in batteries, nuclear energy, and spacecraft equipment has seen the most significant price increase—150 percent compared to September 2020. The second-largest increase was observed for holmium, which has more than doubled over the past twelve months.

Holmium is used to make magnets and special alloys for sensors and actuators. Neodymium and praseodymium are also used to make strong magnets found in speakers, motors, wind turbines, and more. These two metals have also seen an increase in price of over 73 percent year-over-year.

Prices of copper, tin, aluminum, cobalt, copper, and terbium oxide have also seen increased costs from anywhere between 37 to 82 percent. Manufacturers use these in chip packaging, mounting, and connecting electronic components on printed circuit boards, mechanical parts, metal casings, and more.

For most people, the behind-the-scenes process of sourcing these materials and transforming them into electronic devices, electric cars, and other products has been invisible and uninteresting. Now that it threatens to increase the prices we'll pay for various electronic goods, the ugly complexities of the global supply chain are bubbling to the surface.

It certainly doesn't help that governments have decided to electrify everything and set aggressive green goals at a time when the electronics and automotive industries can barely keep up. Demand for everything is at an all-time high, and experts have conflicting views on when supply will catch up with it.

Year US production (metric tons) China production (metric tons) Rest of the World (metric tons) US share of global output China share of global output
1985 13,428 8,500 17,157 34% 21%
1990 22,713 16,480 20,917 38% 27%
1995 22,200 48,000 9,700 28% 60%
2000 5,000 73,000 5,500 6% 87%
2005 0 119,000 3,000 0% 98%
2010 0 120,000 11,000 0% 92%
2015 5,900 105,000 19,100 5% 81%
2020 38,000 140,000 62,000 16% 58%

Some believe that China is the culprit, as the country controls 55 percent of global production capacity and no less than 85 percent of the refining output for rare earth metals. In June, the Biden administration decried tighter export controls imposed by the Beijing government, calling them a "capricious enforcement of Chinese customs."

One of the proposed solutions to this problem is to build more US rare earth capacity and reduce the reliance on China for critical raw materials. Perhaps ironically, Chinese rare earth mining giant Shenghe Resources owns a minority stake in MP Minerals. This US company operates the recently re-opened Mountain Pass mine in California—the supposed buffer against fluctuating prices for rare earth materials coming out of China.

In trying to build more rare earth capacity, the US government has offered millions in grants for mining companies to expand their operations. However, most of the concentrates obtained through mining in the US—some 50,000 tonnes per year—still have to be sent to China for final processing.

Meanwhile, several Chinese suppliers that have contracts with Apple, Amazon, Dell, Facebook, Logitech, and Sennheiser have seen their gross margins shrink below the industry average of 20 percent. So far, they've been able to absorb the shock, but soon enough, they'll have to pass the costs to their customers, which will translate into higher prices for everything with electronics and batteries in it.

As of writing, there is only one consumer-facing company that adjusted its prices. During an earnings call, Sonos said it would raise prices between $10 to $100 depending on the product starting this month. Whether or not this will turn into a trend, only time will tell.

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Irata

Posts: 1,660   +2,777
„ It certainly doesn't help that governments have decided to electrify everything and set aggressive green goals at a time when the electronics and automotive industries can barely keep up“

The important thing is what the supply and price situation will look like mid to long term, not short term.

That said, I doubt governments did any kind of real planning but rather push what makes them look good.

Here in Germany, it seems that the plan is to shut down all electricity generation that‘s not based on renewables. If I didn‘t live here I‘d find it interesting to see what happens once they discover the concept of base load and dispatchable generation after all conventional power plants have been shut down.
 

Uncle Al

Posts: 8,157   +6,915
It’s called inflation and it should scare the living hell out of you….. unless you’re 50 years old or younger…. Then it’s just a thing of the past that doesn’t mean antlything.

Sorry but this is not inflation, itś simple gouging. Unfortunately international law does not address this so there is no simple recourse. Of course the US could do a lot more toward recovery & reuse of these elements and this price increase might, just might be enough to push us over the edge. And yes, I am well over 50 years of age .....
 

Theinsanegamer

Posts: 2,648   +4,122
"In June, the Biden administration decried tighter export controls imposed by the Beijing government, calling them a "capricious enforcement of Chinese customs.""

Well yeah, no **** Hairsniffer-in-chief. You, and politicians from all over the country for the last 30 years, have been warned repeatedly that china having a monpoly was a REALLY BAD IDEA. Yet none of those in power ever made moves to fix any of this mess. While you guys were busy talking about EVs and critical race theory china was busy tightening the noose around your neck.

Now this is the result:

"Some believe that China is the culprit, as the country controls 55 percent of global production capacity and no less than 85 percent of the refining output for rare earth metals."
"However, most of the concentrates obtained through mining in the US—some 50,000 tonnes per year—still have to be sent to China for final processing.
"

China owns our industry, our raw materials, and our companies. They can freely jack up the price and gouge as they please. Nobody will actually move to fix this problem other then throwing money at it, which they are now doing. Gee I wonder why the price is flying sky high, maybe because all you worthless politicians can do is shovel money into the furnace and further devalue our entire economey!

"In trying to build more rare earth capacity, the US government has offered millions in grants for mining companies to expand their operations"

Perhaps instead of getting involved with lobbyists and screwing americans out of their rights and freedoms, politicians should have spent the last 30 years reigning in the corruption and greed that ahs permeated our once strong country and turned it into a corpse dependant on Winnie the Pooh for almost everything. But that would have been too much work, lets just pass patrioat act 3 and go to early lunch!

Oh no, this goes back a lot further - you can thank unchecked short term greed for this. Many got filthy rich severely damaging the West‘s industrial base and this started long ago.
Yup, and now we have to pay the price. Figuratively and literally. The long term effects of the Corona panic and the accompanying shutdowns are only just beginning. The tremor before the tsunami, if you will.
 

JamesBlond

Posts: 123   +75
I have friends in the mining industry, Silver, Gold, Diamonds.... the efficiency is 15% better than 10yrs ago, they can even re-mine old mines its so good, this is not only BS, its called Monopoly, the Giants Control it as they can and will. Cut the head off the snake and see what happens to the fear
 

Irata

Posts: 1,660   +2,777
"In June, the Biden administration decried tighter export controls imposed by the Beijing government, calling them a "capricious enforcement of Chinese customs.""

Well yeah, no **** Hairsniffer-in-chief. You, and politicians from all over the country for the last 30 years, have been warned repeatedly that china having a monpoly was a REALLY BAD IDEA. Yet none of those in power ever made moves to fix any of this mess. While you guys were busy talking about EVs and critical race theory china was busy tightening the noose around your neck.
Problem is the majority of their employers - from retail to industry - made a fortune replacing western made goods with cheaper Chinese imports, pocketing a good part of the price difference.

Also, eliminating US industry had other benefits - farmers who could earn money by working in the local factory ? Now that this is eliminated, it‘s easier to force deals on them.

Notice how this only became a problem once Chinese companies wanted to pocket the difference for themselves.
 

EdmondRC

Posts: 144   +119
You can thank Biden and the Left for all this.
I really like to thank them every time I go to the pump and find that gas is 50% more than under Trump. The last time gas prices were that high was under Obama... Huh? But, as long as we have California, despite how much it has been screwed up under the left, still voting to keep Newsom, there is little hope. At least I know that CA residents won't be scooping up all the gaming PCs though haha... Nein, vou vant ze gaming PC? nein gaming PC vor vou.
 

Nobina

Posts: 3,285   +3,360
Jeez, they'll use ANY excuse to jack prices up won't they?

Well, the market won't be able to bear this greed much longer and their revenue will fatally tank.
Oh you'll be surprised how much people are willing to endure. It's gonna take a lof of self control to make this happen.
 

gamerk2

Posts: 584   +488
I really like to thank them every time I go to the pump and find that gas is 50% more than under Trump. The last time gas prices were that high was under Obama... Huh? But, as long as we have California, despite how much it has been screwed up under the left, still voting to keep Newsom, there is little hope. At least I know that CA residents won't be scooping up all the gaming PCs though haha... Nein, vou vant ze gaming PC? nein gaming PC vor vou.

Priced dropped under Trump due largely due to the pandemic. OPEC lowered production in order to jack up prices, and now that people are driving again the supply shortage is driving price increase.

Anyone who thinks which party controls the Presidency has any effect on oil prices really doesn't understand how those prices get set. Case in point: Oil production EXPLODED under Obama, yet you blame him for rising gas prices.
 

mbrowne5061

Posts: 1,904   +1,105
I have friends in the mining industry, Silver, Gold, Diamonds.... the efficiency is 15% better than 10yrs ago, they can even re-mine old mines its so good, this is not only BS, its called Monopoly, the Giants Control it as they can and will. Cut the head off the snake and see what happens to the fear
Different minerals have different extraction techniques. An improvement in the yield of one, does not mean an improvement in all of them - just because we can mine more gold does not mean the same rings true for lithium, uranium, holmium, etc.
 

gamerk2

Posts: 584   +488
Industry left the west because the left made it too expensive with taxes/regulation.

No, they left because they could make more profits elsewhere. And yes, there's a difference. Unskilled labor is *never* going to be a major thing without direct government intervention simply because wages are higher in the US. Now, if you eliminated the minimum wage and were willing to work for 50 cents an hour, then *maybe* you'll see those jobs come back. Maybe.

You also ignore another key point: It's not exactly like loosing those jobs was a bad thing for the economy. Unemployment during non-recession periods has remained in the 4% range, so it's not like there's a massive glut of unemployed workers. Frankly, replacing low-paying jobs with higher paying ones is a *good* thing for the economy.

Finally, it's somewhat ironic that people who backed Trumps trade war to "bring back jobs" then complain the loudest when price inflation results from said trade war.
 

Theinsanegamer

Posts: 2,648   +4,122
Priced dropped under Trump due largely due to the pandemic. OPEC lowered production in order to jack up prices, and now that people are driving again the supply shortage is driving price increase.

Anyone who thinks which party controls the Presidency has any effect on oil prices really doesn't understand how those prices get set. Case in point: Oil production EXPLODED under Obama, yet you blame him for rising gas prices.
I must have missed that pandemic in 2019. And 2018.
 

gamerk2

Posts: 584   +488
I must have missed that pandemic in 2019. And 2018.
You mean when prices rose relative to the end of Obama's second term in office?


2013: $3.584/Gal
2014: $3.425/Gal
2015: $2.510/Gal [Start of Shale Oil boom]
2016: $2.204/Gal
2017: $2.469/Gal
2018: $2.794/Gal
2019: $2.698/Gal
2020: $2.242/Gal [Start of Pandemic]

And as per usual, gas prices were basically flat when adjusted for inflation.

Gotta love it when people don't even look at the data before making an argument.
 

Avro Arrow

Posts: 1,717   +2,024
TechSpot Elite
Oh you'll be surprised how much people are willing to endure. It's gonna take a lof of self control to make this happen.
Oh I know how much people are willing to endure. The thing is, never before has the average person been so financially assaulted from so many vectors at the same time as they are today, especially in the USA (which makes me glad I'm Canadian).

The average American is facing rising costs for electricity, healthcare, automobiles, insurance and now there's a housing crisis to boot. If the cost of tech keeps going up as well, millions will be forced to prioritise things other than tech and the tech industry will contract because there will be far fewer people able to buy it.

Oh yeah, and the pandemic has made employment a lot more complicated for millions of people as well. So many factors compounding the problem makes what people are willing to endure irrelevant when compared to what they CAN endure. Nobody is going to prioritise tech over having a place to live and sleep.