- Rare earth elements used to create clean energy products, fighter jets, phones and other supplies may be particularly vulnerable to disruptions as demand is expected to rise, according to a recent study by U.S. Department of Energy researchers.
- The findings suggest that a single year of not exporting several rare earths and two years of mine closures could result in years of price, production and capacity impacts. DOE's Argonne National Laboratory, which conducted the study, focused on "temporary loss of production, shutdown of capacity, and diversion of supply" to identify the potential impact of rare earth disruptions on global supply chains.
- The report comes as interest in manufacturing electric vehicles and other energy-efficient goods increases, supply of which may be vunerable to bottlenecks. The researchers are working to enhance the model used for the report to assess how shortages of rare earth minerals may impact the supply of energy-saving products that use lithium-ion batteries, for example.
Rare earth supply disruptions can be far reaching, impacting a wide range of industries from healthcare to clean energy. With manufacturers depending on the mining and refining of most rare earth materials by China, any hiccup — be it natural disasters, labor disputes or geopolitcal tensions — can create prolonged procurement challenges that companies have to overcome.
To gain insight into the possible sourcing disruptions, Argonne used a computational framework to simulate various possibilities for supply chain challenges by focusing on specific actions in the chain, called agents.
"Agent-based modeling looks at the parameters that trigger decisions, such as whether to open or close a mine, and how those decisions cascade through the market and supply chain," said Allison Bennett Irion, study co-author and chair of Argonne’s Advanced Supply Chain Analytics initiative.
The start of the pandemic showed all too well how an over reliance on China for sourcing can impact supply chains if a sustained challenge arises. In response, companies either completely looked elsewhere or decided to diversify their suppliers to better withstand disruption issues. Some companies turned to other countries like India and Vietnam to maintain product flows.
But for rare earth materials, moving outside of China isn't currently a viable long-term option. Most of the elements aren't necessarily rare, researchers said, but are difficult and expensive to mine and produce. Rare earth elements are used in creating technologies that support clean energy options for companies and governments.
China produces the lion's share of rare earths, 58%, and controls 85% of global refining capacity, according to the study researchers. And while some mining has started elsewhere due to disruptions, researchers found alternate mines "would not likely be able to keep operating" once primary sourcing options recover.
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