Nickel now boasts a spot on all but one of the critical minerals lists published by the world's largest economies, after the Australian government added the key battery metal to its list in February. The only hold-out is the United Kingdom, which has assessed that nickel is at low risk of supply chain disruptions.

Mining Journal and sister publications studied the critical minerals lists of every major economy that publishes and maintains one: Australia, Canada, the European Union, India, Japan, South Korea, the UK, and the United States (twice, with separate lists from the Department of the Interior and the Department of Energy). 

Although each country has its own definition, all are similar to that of the US Department of the Interior, which defines a 'critical mineral' as a non-fuel mineral or mineral material essential to the economy or national security and which has a supply chain vulnerable to disruption. Only the US Department of Energy has a narrower definition, in that it strictly includes minerals that "serve an essential function in one or more energy technologies." 

According to our research, only seven minerals currently appear on all the lists: cobalt, gallium, lithium, platinum, the light rare earth element (LREE) neodymium, and the heavy rare earth elements (HREEs) dysprosium and terbium.

Cobalt and lithium were to be expected given that they are key ingredients in lithium-ion batteries and, in the case of cobalt, in superalloys used by the defence and aerospace sectors. The same could be said of platinum, a key component in proton exchange membrane (PEM) technology, used in electrolysers to produce hydrogen and in fuel cells which power fuel-cell electric vehicles.

These three, along with nickel, were the only minerals highlighted for their long-term supply risk in the China State Council's New Energy Vehicle Industrial Development Plan (2021-35), one of the closest things to an official Chinese critical minerals list.

The unanimous recognition of gallium makes sense in light of China's dominance over global production (98%) and its introduction of export controls on all gallium-related materials last August. Gallium arsenide is used to manufacture semiconductor wafers used in integrated circuits and in optoelectronic devices such as laser diodes, light-emitting diodes (LEDs), photodetectors and solar cells. As the US Geological Survey notes, these technologies are crucial to national security due to their use in defence and aerospace applications as well as in high-performance computers and telecommunications equipment.

Neodymium earns its place on the basis that it is the primary REE used in Neodymium-Iron-Boron (NdFeB) permanent magnets, considered the world's strongest permanent magnet. The superior strength of NdFeB makes it the preferred type of magnet for EV motors in battery-electric vehicles and fuel cell electric vehicles, generators of wind turbines, and many military weapons systems. 

Two minerals stand out for their relative obscurity

Two of the minerals stand out from the rest for their relative obscurity: dysprosium and terbium. Indeed, a Google Trends comparison shows that in the past five years, these two heavy rare earth elements received ten and eight times fewer search queries respectively than neodymium, which itself was the subject of 89 times fewer search queries than lithium.

 

Dysprosium and terbium's importance comes down to their ability to retain their magnetic properties under higher temperatures than neodymium. NdFeB only performs better than samarium-cobalt (SmCo) up to temperatures of around 150 degrees Celsius and is only recommended for use up to around 230 C, whereas SmCo magnets can be used up to around 350 C. The addition of small amounts of dysprosium and terbium enables NdFeB magnets to maintain their strong performance in applications that expose them to higher temperatures.

These include military applications such as fin actuators in missile guidance and control systems (which control the direction of the missile), and electric drive motors in aircraft, tanks, ships and missile systems. The rule also applies to civilian applications such as EVs and offshore wind turbines, which are often manufactured without a gearbox to make them more heavy-duty and reduce their maintenance requirements.

China controlled about 92% of the approximately 120,000 ton global NdFeB permanent magnet market in 2020, with Japan accounting for about 7% and the rest of the world only 1%, according to a US government report on the effects of imports of NdFeB magnets on national security. 

Any US effort to loosen dependence on China would be constrained by vulnerability to disruptions further up the supply chain, given that China controls around 69% of rare earths mining, 89% of separation into individual rare earth oxides, and 90% of metal refining and alloy production.

The problem is particularly severe for dysprosium and terbium, according to Kingsley Jones, founder of boutique advisory firm Jevons Global and a former leader of global thematic strategy for Macquarie Group,

Jones, who has advised the Australian government on rare earths supply chains, said the US and its allies stood exposed by a lack of onshore separation facilities for both heavy and light REEs. 

MP Materials' Mountain Pass site in California is currently the only commercial-scale rare earth mining and processing site in North America, where it separates LREEs which it sells principally to China's Shenghe Resources. 

The situation is changing, with the US Department of Defense (DOD) having allocated at least US$336 million from the Defense Production Act (DPA) Title III program to to onshore rare earths processing. This includes US$258 million to Australian firm Lynas Rare Earths for the construction of an HREE separation facility in Texas and US$30 million for an adjacent LREE separation facility, as well as US$45 million to MP Materials for the construction of an HREE separation facility and additional value-add processing capabilities in California.

In Australia, the federal government has promised an A$1.25 billion (US$820 million) loan for Iluka Resources to develop a light and heavy REE refinery in Western Australia.

Gracelin Baskaran, research director for energy security and climate change at the bipartisan Center for Strategic and International Studies in Washington, D.C., said it could take a long time for the US to build up its rare earths processing capabilities to the point where it substantially reduces its vulnerability to supply constraints.

"The first DPA Title III award for a rare earths processing facility only went out in 2020. That's really recent. Think about the time it takes to build that, to get the operation up and running, and source the feedstock. Mining is a long-term game," she said.

Pointing to the DOD's August 2023 decision to provide an additional US$138 million in funding to Lynas (on top of the original US$120 million slated for its HREE facility), she said: "That tells you that it's very early days, so we are a long way from being able to set targets for sourcing and processing. We are at the point where we're accommodating budget overruns for the development of something that just started in the last couple of years."

In the meantime, both Baskaran and Jones said the US should focus on addressing an additional constraint on the HREE value chain - a lack of available mine resources.

Baskaran noted that the United States has less than 2% of global rare earths reserves. 

"What we need to start thinking about is what commercial diplomacy instruments can we deploy. It could be a combination of investment, DFC [US International Development Finance Corporation] de-risking and equity. It could be critical minerals agreements that let [partnering countries] benefit from the Inflation Reduction Act, tax incentives, etc."

In Baskaran's opinion, the US should be looking to countries like Brazil - which accounts for 19% of rare earths reserves but less than 0.5% of global production - to solve its feedstock problem.

"It [Brazil] is a country with significant untapped rare earths reserves," she said.

Jones noted that the light REEs produced at Mountain Pass "would probably be sufficient" to supply the US with enough neodymium and praseodymium for its own domestic processing needs.

"It's just that they don't have domestic manufacturing to absorb that," he said.

"But if you get into HREEs, it's a different equation," he added, explaining that the best bet for the United States was to ‘friend-shore' from Lynas' Mount Weld mine in Western Australia or from another location.

Material from Mount Weld is currently processed at Lynas' plant in Malaysia. It is then separated into light REEs neodymium, praseodymium, lanthanum and cerium, as well as a concentrate known as ‘SEG' because it consists of the other light REEs samarium, europium and gadolinium.

"That SEG material contains a bit of heavy rare earth, and presently that material gets sold mostly into China. Theoretically Lynas could ship that material into the facility they're going to build in Texas, and then get some of the heavies out. But if you listen to Lynas management, they're keen to think about getting a better source of heavy rare earths," Jones said.

Although rare earths can be found in as many as 200 types of minerals, "only a handful exist in deposits that we know how to economically extract," he explained.

Moreover, "since minerals and deposits vary in the relative amount of each element, there is a natural supply and demand balance problem. The available supply need not match the natural demand. Cerium, lanthanum and yttrium are in structural excess supply, while dysprosium and terbium are in structural deficit."

The two best sources of dysprosium and terbium are xenotime and ionic clay deposits, according to Jones. He explained that ionic clay deposits in southern China had been overexploited by unregulated and illegal mining, causing widespread environmental damage. Efforts to clean up these operations in China had led producers to move over the border to Burma, where they can exploit geologically similar deposits.

Since [REE] deposits vary in the relative amount of each element, there is a natural supply and demand balance problem... Cerium, lanthanum and yttrium are in structural excess supply, while dysprosium and terbium are in structural deficit.

The need for these two critical HREEs has driven a search for deposits outside of China and Burma - with options aplenty in Australia and South America, according to Jones.

Iluka Resources is among the frontrunners to produce dysprosium and terbium, Jones noted, thanks to a significant xenotime inventory at Eneabba sourced from its own mineral sands mining and processing activities in Western Australia. It also signed a deal with Northern Minerals in 2022 for supply of xenotime concentrate from the Browns Range hard rock project in WA.

As for ionic clays, Jones said there were known resources in Brazil, Chile and Uganda, as well as indications of near-surface resources in Australia, including in the Esperance region of Western Australia and around the Mount Gambier region of South Australia and spilling over into Victoria.

"The other big issue is not all these ionic clays were created equal in terms of the ease at which you can extract the material. Some of them require a lot of acid as a reagent to get the pH levels down. That will increase the recovery but can hurt the economics. It's a work in progress. We haven't seen any of that come to fruition, but there's reasons to believe one or other of these projects will [eventually reach production] and supply a source of terbium and dysprosium ex-China."