This month Project Blue is looking more closely at two of the rare earths underpinning energy transition: dysprosium and terbium. Dysprosium (Dy) and terbium (Tb) are two elements that form part of the heavy rare earth elements (HREE). HREEs rank 2/40 in Project Blue’s 2022 Critical Materials Risk Index (CMRI), the critical materials most at risk behind only cobalt.
What role does Dy & Tb play in energy transition?
Dy and Tb are key additives to high-performance neodymium-iron-boron (NdFeB) rare earth permanent magnets. NdFeB magnets have been a key technology for the miniaturisation of smartphones and other portable applications over the 2000s and entered the energy transition space in scale through its use in wind turbines. As the strongest known permanent magnets to date since their inception in the 1980s, these magnets have allowed for the most efficient conversion of torque into energy (generator) or energy into torque (motor).
The use of NdFeB magnets in electric vehicle (EV) motors lets OEMs optimise drivetrains to either increase driving range or reduce costs from Li-ion batteries. Dysprosium and/or terbium are critical elements in the make-up of NdFeB magnets needed in EV drivetrains, as these HREEs allow for the magnets to maintain performance at higher operating temperatures.
It is because of the energy efficiency gains through the switch to NdFeB magnets that Dy and Tb are locked into energy transition forecasts. Offshore wind farms use 100s of kgs of NdFeB magnets per turbine, but it is the 1-2kgs used in EV drivetrains that are reshaping rare earth supply chains. Further demand upside comes from other electric motor applications, such as air conditioners and even elevators, where the use of high-performance NdFeB magnets is offering significant electricity cost savings.
However, consumers are cautious of the exposure to rare earth permanent magnets and technological developments are advancing to substitute out NdFeB magnets where possible, but for the time being, coming at a loss of efficiency. A recent example came from Tesla’s Investor Day, where the company announced plans to completely remove rare earths from its drivetrain in next-generation motors. There are several options for electric motors, with the challenge being delivering energy to the moving rotor part.
New motor technologies are continuously improving efficiencies and allowing OEMs to substitute in cheaper and weaker magnets (e.g. axial flux permanent magnet motors). However, re-substituting NdFeB back into new permanent magnet motor technologies will likely allow even further energy gains to be achieved.
Early on in its history, Tesla reviewed the use of permanent magnets in its electric vehicle (EV) drivetrains, though settled on induction motor technology to avoid supply chain risk within the rare earth industry. In 2017, however, Tesla began incorporating rare earth permanent magnet motors into its Model 3 vehicles and more recently its Model Y range, to remain competitive in the growing EV landscape.
What makes Dy & Tb critical?
Dy and Tb are extracted together as part of the suite of rare earth elements, which thanks to their physicochemical properties have not been naturally enriched into separated components by geological processes. Rare earths are considered the new posterchild of supply risk across its value chain. China is the hub of rare earth mining, processing, and manufacturing and while mining has diversified over the last few years, the majority of rare earths mined outside of China are exported to China in order to enter the rare earth value chain. Critically, China accounts for well over 90% of NdFeB output.
For HREEs, Project Blue’s data shows that around 50% of raw materials are sourced from Myanmar. Myanmar is a relatively recent significant supplier of rare earths and supply ramped up following the closure of ionic-clay deposits in Southern China around 2016-2017, which were suspended after environmental inspections. The ionic clay deposits are richer in HREEs compared to traditional monazite and bastnaesite mineral deposits and therefore are critically important to the market balance of Dy and Tb. Myanmar shares geological similarities with Southern China and poor mining practices have moved across the border to extract these elements which have kept the HREE market in balance since.
Coming back to the NdFeB magnet, as much as 30% of the rare earths contained in NdFeB magnet was made up of DyTb in early-generation magnets. The other rare earths are neodymium and praseodymium (NdPr), which make up the majority of NdFeB magnets and are the two elements currently determining the overall supply of all rare earths. The main issue with this 70:30 NdPr:DyTb ratio in NdFeB magnets is that the natural supply ratio of these elements in ores is closer to 98:02, with Dy, Tb occurring at lower ratio than their content in the magnetic alloy. Over the last two decades, the loading of DyTb has dropped to around 4% in the latest high-performance magnets through innovation of grain boundary diffusion technologies.
The above highlights the fundamental issue that makes Dy & Tb more critical than NdPr in that their relative supply ratio is around half of its relative ratio in modern NdFeB magnets. That means that either for every NdFeB magnet produced in future growth models there is half the required DyTb available (if NdPr supply-demand is in balance) or NdPr market is in a structural surplus (if DyTb supply-demand is in balance).
How can future markets be met sustainably given the mismatch in supply ratio?
Moving the relative ratio of DyTb and NdPr in NdFeB magnets
closer to its natural abundance in mined mineral deposits will be the most sustainable solution for the longevity of the rare earth supply chain.
The mining of ionic clay deposits or other HREE-rich minerals (such as xenotime) can allow some support for the NdPr-DyTb narrative, however, would flood the associated yttrium market much like NdPr supply from monazite-bastnaesite has done to lanthanum and cerium (LaCe). These deposits also tend to be the lowest in-situ grades of known rare earth mineralisation and are currently only mined on a scale in Myanmar (previously southern China). In Brazil, Serra Verde is on track to commission the first ex-China ionic clay deposit this year (delayed by more than 12 months already) and if ESG concerns can be proven to be overcome will open the way for others to join.
Another scenario is demand destruction caused by supply constraints, which may very well be a limiting factor in this early phase of rapid demand growth. Tesla’s recent announcement to switch to rare earth free permanent magnets – i.e., not using NdFeB magnets – is further evidence that the company is addressing potential supply chain bottlenecks and the latest example of the threat of demand destruction to the rare earth industry. BMW is already employing rare earth free electric motors also addressing the “issue of rare earths”. However, demand destruction of NdFeB magnets does not change the mismatch in elemental supply and the underlying issue will remain. And the technological advantages of NdFeB magnets (for the time being) will mean that where possible high-performance EV makers will look to secure materials and likely switch back if sustainable supply chain solutions are established.
The final scenario outside the invention of a more powerful permanent magnet is further technological developments in the NdFeB makeup. Producers of NdFeB magnets are working closely with EV makers to reduce the Dy/Tb content in magnets further through innovative technologies. This can be achieved by pin-point targeting of adding Dy to the magnet shape only where it is needed, rather than dispersed throughout the magnet (30% Dy loading in early generation magnets) or grain boundary diffusion technology (4% Dy loading in modern magnets).
Project Blue’s outlook shows that the most sustainable prospect for rare earth permanent magnets is further technological enhancements of NdFeB formulations. Looking at the supply ratio, the DyTb content would need to drop to around 2% of total rare earths contained in NdFeB magnets to match the relative natural abundance. Together with forecast commissioning of some heavy rare earth projects in the pipeline, the rate at which that ratio needs to decline could be accommodated to some extent.
By Nils Backeberg
