From mine to magnet: rewiring the rare earths ecosystem | Fast Forward podcast season 2, episode 3 transcript

You can read the full transcript of our conversation between Fastmarkets’ own Andrea Hotter and Williams Adams, including an interview with Rowena Smith, CEO of Australian Strategic Materials, and Ahmad Ghahreman, the co-founder and CEO of Cyclic Materials.

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Full episode transcript

Fast Forward, seasdon 2, episode 3 transcript

Andrea Hotter [AH]: Welcome to Fast Forward, a podcast by Fastmarkets. I’m Andrea Hotter, Fastmarkets special correspondent, and this is episode three of our second series on the key issues impacting critical minerals, energy security, and the energy transition. I’m joined by my friend and colleague William Adams, head of battery and base metals research at Fastmarkets. 

Will, how are you doing?  

William Adams [WA]: Yeah, good. Good to see you, Andrea. Good to be back on the podcast. As you can imagine, it’s been an extremely busy time with President Donald Trump around his tariffs and sometimes they’re on, sometimes they’re off. So, yeah, keeping us on our toes, let’s say. 

AH: It certainly has been busy. Have you been traveling at all or have you been kind of tied to the desk with everything that’s been going on?  

WA: So more recently I’ve been in the office and haven’t travelled. Some of the other team members they’ve been off in Korea and in China at our battery conferences there. 

But no, I’ve been behind the desk trying to keep up with tariffs and the markets are just amazing. I mean, they’ve been all over the place. Really interesting times.  

AH: It’s very interesting. I was at the Safe Summit in Washington DC and I was actually there on Liberation Day as it’s being called when the reciprocal terrorists were first properly announced. 

It was such an interesting time ’cause everybody was just glued to their phones or their television screens trying to work out what was happening.  

WA: And I think it was interesting in that, although a lot of these tariff things have been well telegraphed I think when they actually hit it was like, oh my goodness, they are actually going ahead. It wasn’t like all crying wolf. But it’s actually gone ahead.  

AH: Well, I went from there. It was even more interesting. I went from there to Santiago Chilo for the annual CESCO industry week, and I got to see a lot of my copper friends and sources from around the world who are similarly very focused on the potential impact of Section 232 tariffs, because there’s a big investigation ongoing. There as well. And maybe by the time this goes live there may have been some results. There’s a lot of talk around it coming early, but yeah. 

Fascinating times. Alright, well today we are going to be talking about rare earth elements and as we’ll learn, they have a strangely inaccurate name and are at the center of a race to secure critical minerals and dial down reliance on the biggest producer, which you guessed it is China. Trade tensions between China and the US have gone into overdrive with China suspending exports of certain rare earth minerals and magnets that are crucial for the world’s car, semiconductor, aerospace and defense industries. That was in retaliation for those terrorists we were just discussing that were imposed by the US.  

Now, we recorded the interview coming up before this escalation had happened and. By the time the audience hears this, things may have changed again, but to our guests, I spoke with Rowena Smith, the CEO of Australian Strategic Materials, which is mining in Australia, refining and processing in South Korea, and looking at adding an additional plant in the United States. 

The company’s also considering moving into the production of magnets as well, which we’ll hear about later. And I also spoke with Ahmad Ghahreman, the co-founder and CEO of Cyclic Materials, which is working to recycle rare earth elements from magnets and has funding from the investment arms of Jaguar, land Rover, BMW, Microsoft, and Amazon among others. 

So, shall we hear what they have to say? 

Rowena and Ahmad, it’s great to have you both here.  

Rowena Smith [RS]: It’s very nice to be here, Andrea. 

Ahmad Ghahreman [AG]: Great to be here. Thank you.  

AH: Great. Well, look, there’s been a lot of discussion around rare earths, but not everyone is familiar with them, so I think I’d like to start with the basics for our listeners very briefly, what are rare earths and why are they actually so important? 

Rowena, would you like to start?  

RS: Well, essentially, they’re about 17 different elements that sit along the bottom of the periodic table. They’re the ones that, when we’re at school, we completely ignored and if we ever did try to look at them, we wouldn’t have been able to pronounce them. 

So, you know, they’re that group of elements along the bottom and I think they’re important because they are essential for a lot of the advanced technologies that we’re developing now. They’re used in a range of applications from your LED screens through to the magnets that are an essential component in the wind turbines and the electric vehicles all the way through to weapons systems. 

AH: Right. Okay. Also something really interesting that I’ve learned since I’ve been looking at Rares is that despite their name, they’re not actually that rare. Are they Ahmad?  

AG: No, actually they are not that rare. You can find rare earth deposits and basically almost every continent and every country on the planet. But the reason we really are excited about rare Earth elements is that we need a lot of them in the future of our decarbonization and electrified cities and that makes them critical. Various elements are like vitamins, we need a little bit of them, but we can’t not have them.  

And in different applications we use them, to improve the quality of those products. I’m gonna start with one example. The AirPods that we use in our years, if we don’t use neodymium magnet or Rare Earth Magnet in them and use commissional magnets then the size of the magnet would need to create the same quality of sound is gonna be ginormous. So that’s what rare earth magnets deliver. They deliver a lot of magnetism, powerful magnetism in a small scale.  

RS: And I think one of the things when we talk about them being rare they are actually very difficult to extract. So that I think is also something that’s important to understand that whilst they’re in abundance in it’s crust, they generally are found in combination with each other. And so, to actually be able to extract them, separate them, refine them, requires multiple complex processing steps. And that’s why they are so rare to actually be economically developed. 

AH: Okay, great. Well, that sets the scene a little bit. So, we’ve established that the title Rare Earths is a bit of a misnomer. I think the key here is that China dominates rare earth supply chains, not just at a mine level, although there has been some diversification in recent years, but also massively at the processing stage. 

So, the playing field is currently very unequal, but it hasn’t always been this way. I think many people believe the tensions over rare earths have just begun as part of an escalation of trade tariffs and restrictions over the past few years. But in reality, this has been ongoing for decades. So how did we get here? 

RS: Well, you’re right. Andrea, if we were going back into the 20th century, actually the US was the major producer of Rare Earth and MP materials in the eighties was producing in California. And at the time the predominant usage was the defense industry. 

So there wasn’t at that time as many of these advanced technologies that were utilizing these materials. So it was fairly split volumes. I think China was the first country to really recognize the strategic opportunity for these products to have a much wider commercial application. And so, they then in the sort of late eighties, early nineties, started to develop industrial policy around prioritizing the development of this as a supply chain. 

You know, Deng Xiaoping famously said in the early nineties, the Middle East has oil, China has rare earths and they really invested quite substantially, both in the mining. They subsidized the mining, but they also developed the processing technology to refine, separate it, metalize it. 

And so, you saw then through the late nineties and through into the early two thousands, them really starting to build strength across this supply chain. And then they started to very aggressively price this in order to effectively squeeze out the Western suppliers. And we saw the majority of the Western suppliers actually withdraw and start outsourcing their supply through to China, and they’ve just got stronger and stronger to now the point where 60% of mining is done in China and the processing steps beyond that. Over 90% of those are currently in China.  

AH: Yeah, definitely part of a very strategic plan by China, wasn’t it? Ahmad?  

AG: Oh, absolutely. But the key story here is that there are three important numbers. The first one is that 60% of rare earth mining is happening in China. That immediately tells me 40% is outside China. 

It’s in Australia. In the us 90% of processing of rare earths is happening in China. That tells you that China acts like a vacuum and brings in 30% more material to process and then 92% of magnets are manufactured in China. It means that China still goes out and sources oxide and brings it in processed material and then makes more magnets. 

So, the resource outside China is available. It’s just us to change the supply chain, which we will review.  

AH: Yeah, absolutely. Lots to unpack in now and we’re gonna get to all of that. So, as you both have noted, China might account for about a third of rare Earth reserves, but there are projects outside China underway. 

Ahmad, you mentioned Australia, one of those is yours, Rowena, maybe you wanna tell us a little bit about what you are doing?  

RS: Yes, indeed. So, we’ve got a project in Dubbo in New South Wales, which does have the rare earth. It also has some other critical minerals in it as well. So it’s a good example, Andrea, of where they coexist with other materials. 

So we’ve done a lot of development work on this. We’re 20 years into developing this project. We’ve got a multi-generational resource in terms of size. We’ve got all of the engineering work done, we’ve got all the permitting done, we’ve done all the IP development work to be able to separate and refine it. 

We’re at the point now where we’re talking to funding bodies and off takers in order to be able to actually construct this and get it into production with the intention of having it in production in around about 28, 29.  

AH: Fantastic. We often hear as well about Vietnam, Brazil, Russia, Canada, as other areas. 

We have heard an awful lot about Greenland recently, not just around its strategic, geographical importance to the US but also around interest in rare Earths. To what extent do you guys think Greenland might actually help solve some of the concerns around rare Earth Mine supply?  

AG: Look, rare earth settlements and critical minerals overall have been in top of mind for US administrations in the previous one and the current one as well. We all understand how critical these metals are for decarbonization and for our future. 

Every single opportunity of rare earth’s elements is of value to be looked into. Greenland might have rare earths deposits, but of course Australia, Canada, US itself, many other countries come in Africa, several deposits. So, there are lots of opportunities out there, and of course, recycling on our side as well. 

So all those opportunities are equally important to be looked at. 

RS: One of the key things as well is that, where I was explaining, we’ve been working on our project for 20 years. Actually, the average time span to develop a rarest project is 18 years. 

So, you know, that process of developing the resource specific technology to separate out all of the various different materials is intensive as well as going through the permitting process. So I think Greenland in particular, they definitely do have some great deposits there, but there are some huge challenges to bringing those into commercial production and the likelihood of that happening in the kind of timeframe that the US administration is wanting to establish this alternative supply chain is pretty remote, to be honest. 

I think the only way you’re going to get volume of these materials into the market in that sort of ‘27 through ‘32 phase is to actually commit to projects that are already very advanced and ready to construct and start commissioning.  

AH: Yeah, 18 years. I mean, it’s just crazy. We keep hearing that constantly through these series of podcasts we’ve been doing, the amount of time it takes to bring projects on, and as you guys were already mentioned production costs can be high. The minerals aren’t concentrated enough to attract large scale investments sometimes, or to be worthwhile. Mining isn’t the only stage. Also refining, processing, producing magnets and other products is a bigger problem because that’s where the west is highly dependent on China. 

Both of you noted many mining companies send their rare earth products in concentrate or oxide form for the final stages of processing and metalization to China because they’re not set up to process them themselves. So this obviously has to change Ahmad, what needs to happen?  

AG: Well, it’s true the majority of supply chain and downstream for rare earth processing and magnet manufacturing is in China. 

The stats are there 90% plus. But I’m optimistic again and the opportunities outside China exists as well. There are plans outside China operating. The technology is available outside China. There are magnet companies, manufacturing magnets outside China. So every single piece of the supply chain does exist individually as an island isolated outside China. 

Now tying that all together takes an effort but we have started to put that energy and timeline in few years back. Metalization is growing in multiple companies, so that sub supply change shows signs of being alive and grown outside China. It’s not there yet. It’s not producing in mass volumes. But I’m confident we are inching close to that.  

AH: It sounds like vertical integration would be key here. Rowena, I know this is something I think you’re quite passionate about from your project, right? 

RS: Absolutely. One of the challenges we found when we were developing Dubbo over the years is you can’t get a project up unless the rest of the ecosystem is there and that ecosystem hasn’t been there historically. And so, many years ago we started looking at coming down that supply chain and our strategy is to go from mine all the way through to the alloy that is the precursor for the magnet production.  

And so, where we talked before about what we’re doing in Dubbo in New South Wales, developing that project, and we’ll take it there all the way through to the high purity oxides. 

What we then have already committed to is building the first metalization facility in Korea. So that’s been up and in production, producing the light rare earth metals and those specialist alloys that are the main constituent for those high performance magnets. We’ve been in production there since ‘22, and we’ve been working particularly in the last 18 months, going through the qualification process with all the various different emerging magnet producers outside of China. So, I completely agree with Ahmad’s point. We’ve got emerging magnet producers in Korea. We’ve got them in Europe. We’ve got them in the US. 

So we are seeing it happening. We built our plant in 2022 and we’ve been waiting for the rest of the ecosystem to catch up. it’s moving slowly.  

AH: That was gonna be my question because presumably if it was this easy to do, then we’ve already done it, right? So why haven’t we, what’s holding us back in this ecosystem? 

AG: My view is the mid midstream was missing. So, we did have resources outside China. We did consume magnets in our products. The midstream was missing in the supply chain, and that includes from processing of the concentrate to processing of the oxides.  

Then metalization magnet making. Those pieces of puzzle were missing and they were in China, but that, again, I use the word intentionally that is being untangled. We are bringing back those pieces of industry outside China. But the pace also has been really fantastic and really fast in the past few years. 

A lot of those supply chain units that didn’t exist few years ago now does exist outside China. And that’s phenomenal to see. For instance, in our case on recycling side, we just started the company in 2021. We shipped out our mixed oxide in 2024. That’s basically three years. So getting there is possible doing that by intention is another thing I guess. 

RS: I think part of the issue is there is no silver bullet. There is no one issue that if you solve that, then it’s all gonna flow. Taking it through to oxide is really capital intensive. 

So then you’ve gotta find funding and I think, to expect the private investors to come toward it. Then there needs to be a lot more certainty about pricing. And I think the point that I would really emphasize is there’s been a very deliberate strategy to price the intermediate products along this supply chain at prices that don’t support investment. 

And that’s been a deliberate strategy. It’s been very effective at disincentivizing Western investment into this supply chain. And if that continues to be the case where product is being offered sub cost, not just sub cost of the Western supply chain, but actually sub cost of what it’s actually really costing to do in China as well. 

Then that’s gonna be very difficult to establish an alternate supply chain. If the end users are not prepared to move away from that super cheap product to something that is actually more appropriately priced, then again, you’re not going to see the off takes that ultimately underpin the funding of these investments. 

AH: Let’s jump into pricing, but we can come back to some of the downstream in a second. As you mentioned that price of rare earth is often a China price because of the country’s supply and customer dominance. So how do you see this evolving in the coming years in terms of actually finding that benchmark? 

Is there an alternative out there? What does the industry need? 

AG: So, currently I don’t believe there is a universal alternative to Chinese prices. So there are forces and intentions and need to walk away from that and create a separate pricing model. 

So seems like, traceability and sustainability of the material that you produce is going to have an impact on how people view that material. For instance, on the recycling end of rare earth elements for us, traceability on where we collected this material, where we process it, who did we hand it to, and which product did it end up to adds quite a bit of value to the company. So maybe perhaps with different value add things that you provide to the customers maybe it becomes possible to discuss different alternatives for pricing of diverse oxides.  

I can tell you a lot of excitement is out there with companies to look into alternative pricings. But I don’t think there’s a universal solution for that just yet out there. I’ve seen few models proposed.  

AH: Yeah, I’m just gonna wave a flag here for Fastmarkets and its own pricing in this area. Please do check that out on our website if you don’t already know about it. But one of those things, and Rowena, I’d love your opinion on this. 

We keep hearing the idea of a price floor mechanism to help operations. So, government backed price floor that guarantees pricing. Does that tick all the boxes? Like cutting that financial risk, reducing pricing exposure, encouraging growth, ensuring production is consistent over a period of time, or is that not really a great option? 

RS: Look, I think that is exactly the type of conversation that’s happening. As I’m sitting talking to off-takers about taking an offtake, that would then be a bankable offtake for us to help with support funding. We’re talking about the fact that the bankers need to see a floor. 

And so even if it’s just company to company they may also agree a cap, but they’re agreeing on some sort of basis that’s considered to be fair, that all right, this is the range that we commit to. So those conversations are definitely happening. But. I think until we’ve got enough volume outside of the China supply chain, you’re not gonna be able to have a proper market price. 

You’ve gotta have some sort of transition arrangement that helps to establish these early operations that are gonna establish the market, that then we can work out what fair pricing is. So, there is discussion with governments. I know the US government are very active in this discussion at the moment about looking at, how do you use the strategic stockpiles? 

Do you do long-term off takes in order to be able to get funding in place and then make that available to private customers in your jurisdiction? Or do you have a market of last resort where customers make a commitment.  

But if it goes below a certain level that’s then when these government guarantees step in, there are also private groups that are looking at how could we create a futures market. 

So, I think it’s one of the things, it’s not the only thing that is needed, but it is one of the essential things that reduces the uncertainty that is then going to allow private investment to be more confident about stepping into these investments. 

AH: Do you agree with that Ahmad? Do you think things like the government being an off-take partner would help solve the issue or do we need something else? 

AG: I would rather see something else. Government uptakes are, for instance, department of Defense. The volume they need is substantial, but in the grand scheme of market size, it’s really not that big. So, the extent that they can. Support the market with pricing is really limited unless they do extraordinary things. 

And I don’t see that happening anytime soon through the signs that we have seen from the governments around the world. So with that in mind, I think it’s really up to industry itself to come up with creative solutions, floor and ceiling pricing model. I’ve seen it, we have had conversations on that with investors with companies, with up-takers. 

That is a possible way to do it, and I think that’s one of the solutions out there that potentially will, eventually will work. I’ve seen that being implemented in different industries, different middles as well. And if I were to bet, I would bet on that solution or similar ones. 

AH: All right. This dovetails quite nicely. And going back to the downstream side, because say we build up the processing capacity. Who’s the customer? The customer is China, right? Because we don’t have that magnet manufacturing capacity. Rowena, I know this is something that your company’s considering, so where do things stand for ASM in terms of magnets at the moment? 

RS: Well, we are committed to a strategy of going from mine to metal. We have toyed with would we go into magnets? But, that’s another competency in itself. So what we are seeing is actually there are a lot of people or a lot of organizations globally at the moment that are looking to step into magnets. 

And in fact, what we can see is if we can get it all the way through to Alloy and then qualify for multiple different magnet producers, then we can provide economies of scale for that part of the supply chain and particularly the metalization and alloying is where the least margin sits. 

So you really want that to be supported a in a low cost jurisdiction, but b, you want that to be as much as possible have economies of scale. When you’re in that production. So if we take it through to there, then we work with all of the various different magnet producers that are producing or that are developing. 

Then we think that’s a good model. And so one of the things we’ve been talking about, again with the US Department of Defense, they’re saying, would we replicate the metalization facility that we have in Korea, in the States? And then allow that to be a facility that can be serviced, the various different magnet producers that are establishing themselves in the states, and then have that domestic supply chain. 

We’ve just put in actually an application for funding support from the Department of Defense to do exactly that. And I think that kind of model of leveraging where someone’s already got existing established capability and bringing that into your domestic jurisdiction, but then being able to work with that, enabling multiple other parties who are very focused on developing their bit of the technology puzzle that they’re expert in. That’s how we’re gonna get an industry up and going rather than just a business or one single supply chain.  

AH: Yeah. It’s interesting you mentioned the DOD. Tthe US Department of Defense has ruled that only non-Chinese magnets can be used by its defense manufacturers by 2027. 

At the moment, options are still pretty limited. There are advances, but I’m wondering, is that actually doable? 

AG: I believe so. I believe so. So, again, pieces and parts of supply chain does exist outside China. There are mines outside China in Australia, in the US. There are processing plants outside China and Malaysia and Vietnam the US, in Europe. 

Magnet manufacturing does exist. Metalization does exist. LCM is a company in England and few other companies actually out there that are doing metalization and magnet manufacturing. So I think it’s not the easiest thing to do for DOD, but let’s face it it’s a national security matter and they will spend the extra dollar to get it done. And I’m sure it’s doable. 

AH: Which kind of begs that question as well at the current pace, how long before the west can sufficiently diversify and catch up, whether it’s in the mining stage , which is more advanced, the processing stage or the going all the way through to the magnets. In other words, how far behind are we and is it reasonable to think well can actually catch up with China? 

Rowena, what do you think?  

RS: You know, I can produce non-China metal and alloy and give it to a non-China magnet producer today. So, is it possible? Yes, it is possible. The question is at what scale? And I. Yeah, I completely agree with Ahmad’s comment that the defense industry is an essential supply chain, but it’s not large volumes. 

And so again, coming back to what’s gonna support this supply chain in order to be at the economies of scale, one of the things China did very cleverly is that they made sure that there was commercial usage for these materials, and then they really supported the growth of that commercial industry, which then underpinned the economics of it, which then ensured that they had the materials for the defense industry. 

And I think that model is one that we should really reflect on and think about what are we doing to really support the commercial applications of these materials. In order to get really healthy volumes. I was in the states just a couple of weeks ago and I could really feel the shift there with this I mean, it’s noisy with concern around tariffs, but it was also this optimism around the fact that there was going to be a commitment to policies that were going to enable a robust manufacturing downstream industry in the states. 

That was going to be able to flourish. And if that is there, if those policies are put in place, if they work, then I don’t think we should underestimate how rapidly we can actually get this supply chain up and going. But we do have to be sensible about where we’re putting our investment. So it goes back to invest in projects that are already advanced work with allied countries to leverage each other’s strengths. 

Don’t everybody try to work off a blank page. Let’s work in partnership with each other across jurisdictions and let’s move fast because we don’t have time to waste.  

AH: Yeah, for sure. I think the recent executive order we saw on Critical Minerals has definitely put a bit of a turbo charge under some of the actions there. We do, as you alluded to though, have a very complex backdrop in terms of trade and we’ve seen the opening salvo of a trade war building slowly over the past several years really. China is ratcheting up its control of rare earths supply chains. As we heard earlier, it’s not just geopolitical, but a strategic move that’s been going on for absolutely decades. 

There are concerns it might start to use production and export quotas on rare earths. My question to you is if China shut down rare earths supply chains, how long before it would start to hit home and impact the west? 

AG: It would not be a great outcome if they shut down the supply chain to the West. Look, China has been clear in their messaging that, critical metals and specifically rare earths is absolutely important to that. They have gained the dominance because they wanted to have the dominance and I think it would be silly for us to believe that they will  let go of it just by us asking. 

So, we have to be prepared. We have to be ready. Different pieces of rare earth’s supply chain will have different pace to get to fruition. What I mean by that is, for instance, for a greenfield mining project, it’ll take years just to get permit. 

The average is 15 to 20 years, somewhere in that range. For magnet processing, we have had examples of getting permits in weeks in the US  but what we are focused as at Cyclic Materials today is to support the supply chain with recycling of materials. 

Why we do that? Because in the past 20 years, we have imported all the products from China to Western countries to consume those in our everyday life, from our laptops to wind turbines, to many other applications and electric vehicles and hybrid vehicles. 

Now at the recycling end, at the tail end, at the end of life, we actually have ended up with the largest overground deposit of reverse elements in the US that we are not touching and bringing that deposit to life and recycling might be much faster than many other mining alternatives. So, there are different tools in the toolbox for the Western countries to utilize to get there. 

But again, I’m optimistic and we will be able to do so.  

AH: And Rowena, what do you think about the trade situation? I’m curious, where in the supply chain is it gonna bite the most?  

RS: If China cut off supply today, we would start feeling pain later today. It would be that immediate. We saw it in Covid. In Covid we just had disrupted supply chains. We didn’t have broken supply chains or barred supply chains. But, a story just here in Perth where I lived during the Covid period. 

A friend of mine had ordered a prestige car from Europe and eventually it arrived. And when it arrived, it came with a note of apology that they hadn’t been able to source the magnets that are needed for the automatic seat and windows. I think it took about six months before they were able to install the opening mechanisms for the windows and to be able to automatically move the seats. 

So, even during Covid when these rare earth supply chains were disrupted, we saw that immediately flow through to the producers that are using these materials. We shouldn’t underestimate how vulnerable we are when so much of that supply chain is in China. 

AG: Maybe I add one note here that rare earths elements might be a few billion dollars, $20 billion market, but the reality is they are part of a multi-trillion dollar economy. So if China today decides not to export anything that includes rare earths elements in them, that would do ginormous damage to their own economy as well. So, on export of rare earths elements, on export of magnets, they have much more flexibility to control that. But on export of products, final products I think that would be equally damaging to Chinese economy as well.  

RS: Yeah, I agree with that. They’re very likely to stop the intermediate products, but they’re gonna wanna still export their cars, for example. 

AH: Yeah. Do you think we could see a complete change of approach and President Trump negotiates with China over key strategic issues, including rare earth elements. He cut some kind of deal because he definitely is somebody who’s known for the art of the deal in his own words. What do you think about that option? 

AG: Oh, it’s possible. It’s possible. I love the book Art of Deal. think it’s one of the possibilities out there that he makes a deal with China and this ends up being part of the possibilities as well. There are a lot of challenges between the two countries to discuss before to get to rare earths elements. 

In fact, having access to solid, robust supply chain of rare earth for US would be a negotiation power piece would be a nice card on their table before they go into the negotiations with China. So having the supply chain of rare earths within the borders of US I would imagine, would be an important thing for President Trump before he, he starts negotiations and making a deal. 

RS: That is the Japan model, I think. If you look back to 2011 when China did weaponize rare earths and cut off Japan’s supply and that had an immediate effect. That’s why Japan then, did take that early strategic commitment to developing an alternative. But they didn’t replace China as their primary supply chain. They just made sure that they had an alternative and they worked with, Linus the Australian producer and government worked with corporations together in Japan to make sure that they supported that supply chain through all of the price attack that it came under, through that period. 

And that’s why they are the one country now that does actually have at least some alternative. So it would be a very sophisticated switch of narrative for us to be negotiating directly the US with China. But at the same time, it would be a very sensible outcome to have worked out how to work in harmony but not be entirely dependent. 

And so I don’t think that even him doing a deal necessarily makes any change to the imperative to establish this alternative, we still need it, even if it’s predominantly a supplementary source of feed.  

AH: Yeah, it could act as a catalyst to get things done even more quickly, as you say. I’d like to go back to recycling that you mentioned earlier, Ahmad, you’ve explained the role in Rare Earth, but only about 1% of rare Earth come from recycling the moment. 

So there’s obviously a really long way to go. What kind of a dent do you expect recycling to be making in say, a decade?  

AG: Quite a bit actually. So if you look into some other metals such as nickel cobalt, copper, aluminium, steel, the global recycling percentage of those metals land somewhere between 30 to 60 ,70% for some metals like lead, it’s really high. 

Looking at rare earths elements being at 1% recycled today is really mind boggling, but there are a few reasons for that. So the first one is we didn’t consume a lot of rare earth elements to begin with. The second reason was rare earths elements usually the key metals are consumed in magnets. 

And I usually have my example that magnets and steel, they’re in love. They attach to one another, go into steel making furnace, and then you lose your rare earths elements to the base of magnet manufacturing. So that has been the classic way, how we lost our rare earths elements this space. And no technology available to undo that. 

For us at Cyclic Materials,  if we do everything that we have in our plannings right, by 2035 about 30% of the rare earths elements that we will need will be in deficit. It means that we will produce less rare earth elements than what we’ll need. And our contribution will be only very few percentage, five percentage of that deficit. In 2035, this is how much rare earths elements we need, and that’s why we need everybody to be around the table. 

Mining is crucial. We need more mining of rare earths elements in this space, and we need recycling of this for the sake of decarbonization and access to the material with better supply chain and less geopolitics challenges.  

AH: Yeah. And the technology at the scale to make it efficient. Roweva, what’s your opinion on the recycling side? 

RS: Absolutely agree with what was just said. It’s an essential part of the mix. I said earlier on, there is no one silver bullet that if we just do this, it’s going to deliver everything we need. The deficit that’s being predicted is so large that if we don’t commit to every avenue we’ve got no chance of really meeting it.  

And I think it’s partly the mining and processing it is working across jurisdictions in partnership. It is definitely looking at recycling. And I think there’s also a role for substitution, So there’s certainly a thought around how can we use less dysprosium and terbium and some of the applications and still get the performance that we need. 

But also where are the times where you could use a lower performance magnet and you don’t need to have these higher performance magnets? And actually all of that is going to be needed if we are going to address this deficit that we are predicting over the next 10 years.  

AH: I am very glad you brought up substitution, ’cause I did wanna ask you that before we round off the podcast. 

Obviously rare earths elements, they’re unique in terms of their specifications and properties and characteristics, which typically means they’re quite difficult to replace. Is substitution possible? What is it gonna take to find them? What impact might it have? 

AG: So 95% dollar value of rare earths elements is used in magnets. If you can substitute rare earths elements with lower cost rare earths elements in the magnets that are high performance. We should do that. 

If we could substitute rare earths elements with non-rare earths elements and metals simply because of cost, availability and carbon footprint of rare earths elements, which are quite high, versus other metals. We should do that, but doing so is not straightforward and simple. The magnetic power per unit of volume you can get from rear earth magnets is quite substantial. 

That makes the electric motors with those magnets most sufficient electric motors that we know of on our planet. Let’s take electric vehicle as an example. The battery pack in an electric vehicle is the most expensive part of that electric vehicle. Now, if you are spending a lot of money on that battery pack, it is just wise and makes sense to tie it up to the most efficient electric motor. 

To utilize that energy, and that’s why permanent magnets with rare earth elements are really popular in auto industry, for instance. Now substituting rare earth with other metals, there are initiatives, there are companies focusing on that, but it has proven to be more difficult than we believed a few years ago. 

AH: Yeah, Rowena, in 2023, Elon Musk talked about moving away from rare earth for magnets in his cars. Do you think it’s viable?  Where are we with that situation?  

RS: Well, as Ahmad said, there is nothing to date that actually delivers the same performance. So if you are going to move away from a rare earth magnet, then it means you’re moving away from a high-performance magnet and then you get the inefficiencies that are attached to it. 

So, there are times where perhaps you don’t need the high performance, where you could look at it. There definitely are a lot of clever people at the moment looking at how they can use less of the rare earths and still get enough of the high performance. So that sort of conservation, but actually doing without them completely you will have quite a heavy car. 

AH: Yeah, they may not be like their name rare, but they’re actually pretty rare in what they can do. Guys, this has been amazing, such an interesting conversation. Obviously, rare earth elements are a high stakes game at the moment in terms not just of national security, but also in economic and technological competitiveness. 

So it’s been great to hear more about the implications for various industries and also to understand the diversity of their end use demand sources. I’ve learned a lot and it’s not hard to see why rare earth elements are so important. So thank you very much for your time today.  

AG: Absolutely. Thank you so much. 

RS: It’s been a real pleasure.  

AH: Will, I found that whole discussion super interesting.  

WA: Yeah, absolutely. And I think, across all the metals China plays such an important part, and we see that in the battery raw materials. There is a bigger footprint in the battery or materials, but in the rare earths, so much is controlled by China. 

And when you’re talking 60% on the mining, when you’re talking over 90% on the processing and all the years of experience, there’s no question that China is the incumbent producer with a very concentrated supply chain.  

AH: And it was so interesting that it hasn’t always been that way. As we know, the biggest suppliers, I think it was until 1948, were India and Brazil, and in the fifties it was South Africa, then the US and the sixties, seventies and eighties. And since then it’s been China. So we do know it’s possible to change this as well because as Ahmad said, there’s still a lot of resource available to mine outside China, and you could co-locate the rest of the supply chain there. 

WA: Yes, that is the thing. But the key problem is time and knowhow and the huge headstart that China has. And that complicates the picture. It really is gonna be very difficult for players outside of China to catch up.  

If you look at the knowhow, these are very complicated minerals elements to actually extract. Their chemistries are very similar, so it’s very hard to actually extract them and separate them all. In the situation right now where, supply exports from China are threatened you don’t have the luxury of 18 years. 

AH: And I think another one of the big conundrums seems to be, as you said about the concentrations. They’re not found in concentrations high enough to extract them economically as well. 

So that’s another big problem because that means global annual production is notably low in comparison to many other metals, which really doesn’t help in terms of developing new sources, does it?  

WA: No, that’s right. But, obviously demand is going to increase significantly with a whole lot of new technologies. 

And, it looks like we’re heading into another arms race as well. These rare earths are used heavily in the military high-tech side of things as well. So, there’s no question that the West as Ahmad said the markets are great and we need a lot of them. 

The main thing is it’s gonna take time. And the other side of it is, China does things the Chinese way. And it’s very concentrated. It’s very integrated. And one of the big issues the West has is it’s often, much more piecemeal. 

And therefore it’s harder to get the whole of that supply chain in a big partnership. And I think what we’ve learning from the battery raw materials is, for the West to compete against China, we need a lot more partnerships to be developed. And we also need it to be done on a scale so you can get the benefit of the economies of scale as well. 

Which means that it’s not just the government needs and their military needs and things, we need the whole industry to be looking and prepared to be supplied by Western companies. And that will take time and it’s bound to be more expensive as well. 

AH: Yeah, and I thought there was something really interesting that Rowena said, she touched on an example from history that wasn’t so long ago. It was 2010, but she talked about Japan and how it started to diversify it boosted R and D. It started to look at mine projects domestically invested in projects internationally, including in India and Australia. Started recycling, stockpiling.  

I mean, that’s a list that we should be taking as a kind of a guideline now, and the dependence on China by Japan for rare Earths has gone from 90% to below 60%. 

WA: Unfortunately, I think because of the Chinese current position in their dominance in this, I think China has found its sort of Trump card, if anything. And that is the rare earth, they have got the world over a barrel really ’cause we just can’t catch up quickly enough. So it’s gonna be really interesting. The whole of these metals have been as we’re seeing in so many different things, weaponized.  

So, I think China has found the West’s weak spot.  

AH: absolutely. And weaponization is the right word, I think. Then it might be worth talking about what we’re seeing happen as a result of tariffs. Now. Then on April 4th, the Chinese government ordered restrictions on the export of seven heavy rare earth metals, which are refined entirely in China, as well as rare earth magnets, 90% of which are produced in China. So, as you said, over a barrel, that definitely sounds right there. So the metals and the magnets made with them can now be shipped out of China only with special export licenses. 

But China doesn’t have a licensing system for these in place. So while they create one shipments are effectively suspended. So that’s creating a big problem. Now. Come on, Will, let’s go through the names of these seven heavy rare earths I’ve been practicing, so I kind of wanna do this. 

WA: Okay. You say them. 

AH: So I’m gonna go with samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium. 

So, there you go. And yttrium is actually named after a little village in Sweden called Ytterby, where it was discovered in the 17 hundreds. So there. Is my fun fact. I’m gonna get dozens of people telling me I totally mispronounced the now, but there you go. I had a go.  

WA: Yeah, well done. There are two parts to this. I think one is, because the licensing system hasn’t been worked out yet. That will cause an immediate disruption. But who knows? They could hold back even longer. Whole industries are really in need with these things. 

So they’ll have a certain amount of stockpiles. But, if China wanted to play hardball it could have significant implications. And I think that’s one of the reasons why we’re seeing President Donald Trump has pushed back on some of the tariffs he’s done. 

I think hopefully some common sense will come of these negotiations.  

AH: Yeah, you’re right. I mean, we’re talking about everything from cars, drones, jet engines, robots, missiles, data centers, smartphone spacecraft. 

And remember what Rowena said, about the immediate impact. Her friend who bought her car, and it took six months to get windows that opened because they didn’t have the magnet. 

So it’s really fascinating. I guess the other side of it as well is there’s been very little progress on substitution. 

WA: Yeah, it’s gonna take time to build up a west, an alternative supply chain on things that we know about. If you could imagine looking for substitutes, that’s gonna take even longer, I’d imagine. Because you’re gonna have to get the knowhow and everything else. 

I think Rowena said bringing on a new mine could be 20 years or 18 years, even if we halved that to nine years or so, it’s still too long. And we still need to find solutions. And the solutions, I’m afraid have to be diplomatic. 

Because as I said, China does hold the cards at the moment. So where there is some Western production and it’s in its infancy. And if they can get it right, and we often have delays in starting up these things, but hopefully things do run smoothly. 

And then it should be hopefully easier to scale up, but you’re still talking years probably before we have a supply chain, which the west can totally rely on. And, we can reduce our need for China. But you know. Still, let’s build up the Western supply chain, but at the same time still have trade deals with China. 

AH: If you are listening to this and wondering how to make sense of this fast moving and incredibly opaque sector, then I wanted to give us a shameless plug for Fastmarkets here. They have a great suite of prices and news coverage for rare earth elements. Will do you wanna talk about that a little bit? 

WA: Yeah. So we introduced five rare Earth prices in 2023. Mainly from the oxide type of rare earths. And then last year we introduced another five which we’re mainly looking at the metals of them, but we did that really to try and shed some more light on the pricing of those rare earths. So it’s not just all about the Chinese pricing. 

So we gave a bit more transparency into the prices. And this is something which will obviously develop more and more. One of the issues in this market is they are very opaque. So the more we can actually shed light on that, hopefully the better to help our clients understand where things are going. 

AH: And I would imagine there’s a lot of price volatility at the moment with the geopolitical tensions, so yeah, great for companies to be able to plan more accurately and appropriate around this.  

A quick reminder as well to our listeners that they can catch up on our previous podcast and discover more about our products, particularly those rare earths pricings that Will was just talking about on Fastmarkets.com/podcast.  

And just to give you all a big spoiler alert on our next podcast, it’s going to feature an interview on the role of Big Oil in lithium and energy security more broadly. So Will as ever, this has been great and really interesting discussion, and I love getting your insights onto everything that’s going on.  

WA: My pleasure. Thank you. Thank you for having me back.  

AH: See you soon.