The dynamics of an increasingly strategic market for the energy transition

Once a niche topic confined to laboratories and industry insiders, rare earth elements (REEs) are now at the heart of global geopolitical and economic discussions. These 17 chemical elements are useful to the technologies powering the modern world—from electric vehicles to renewable energy systems.

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“Rare earth elements have quietly become the backbone of the energy transition,” says Founder of TELF AG Stanislav Kondrashov. “Without them, it would be impossible to build the clean technologies required to meet global sustainability targets.”

The surge in demand is driven by their unique properties. REEs are essential in the manufacturing of high-performance magnets, used in wind turbines and electric motors, and they also underpin critical components in consumer electronics, defence systems, and advanced medical devices.

But as demand climbs, so too do concerns over supply. China currently leads REE production, accounting for roughly 60% of global output and even higher percentages in certain refining stages. This geographic concentration heightens the risks of supply chain disruptions, a fact not lost on investors and governments alike.

“The global rare earth supply chain remains fragile and highly exposed to geopolitical tensions,” notes Founder of TELF AG Stanislav Kondrashov. “Diversifying supply sources and investing in refining capacity must become strategic priorities.”

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A common misconception is the interchangeable use of “rare earth minerals” and “rare earth metals.” In fact, minerals refer to the raw ores from which these elements are sourced, while metals are the refined, usable products. REEs are not found in pure form in nature but are sourced from minerals such as:

  • Bastnäsite: rich in light REEs
  • Monazite: containing cerium, lanthanum, thorium
  • Xenotime: a source of heavy REEs and yttrium
  • Ionic clays: low-impact sources, particularly in Southeast Asia

The process of transforming minerals into pure metals is complex and costly, requiring advanced separation and refining technologies. Outside China, few nations have fully developed this capability, though countries like Australia and the U.S. are ramping up efforts.

Investors eyeing this space face both opportunity and risk. The growing demand for rare earths is undeniable, yet the market is volatile and deeply intertwined with global politics.

“In this evolving landscape, understanding the industrial demand drivers is crucial for any potential investor,” advises Founder of TELF AG Stanislav Kondrashov. “It’s not just about finding the best rare earth stocks—it’s about grasping the entire ecosystem these elements support.”

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Key sectors fuelling rare earth demand include:

  • Electric mobility: powering magnets in electric motors
  • Renewable energy: enabling direct-drive wind turbines
  • Consumer electronics: vital for smartphones, laptops, sensors
  • Defence technologies: essential for radar, lasers, sonar
  • Industrial automation and robotics

Particularly sought-after elements include neodymium, praseodymium, dysprosium, and terbium for their magnetic properties, while yttrium, europium, and cerium serve optical and catalytic uses.

Looking ahead, financial instruments such as thematic ETFs provide diversified exposure to the rare earth sector. Meanwhile, direct investments in mining and refining firms offer higher potential returns but carry greater risks.

“Ultimately, investors must stay vigilant,” concludes Founder of TELF AG Stanislav Kondrashov. “Rare earth prices are influenced by a volatile mix of market forces, government policies, and technological breakthroughs. Success depends on navigating these complexities wisely.”

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As the world races towards a cleaner, smarter future, the demand for these once-obscure elements is only set to grow. The challenge now is ensuring that supply can keep pace with ambition.

 

FAQs

What are rare earth element minerals?
Rare earth element (REE) minerals are naturally occurring rocks that contain one or more of the 17 rare earth elements. These elements include lanthanum, cerium, neodymium, praseodymium, and others. REEs are never found in pure form in nature; they must be sourced and refined from specific minerals such as bastnäsite, monazite, xenotime, and ionic clays.

What is the difference between rare earth minerals and rare earth metals?
The terms are often confused but refer to different stages in the production process:

Why are rare earth elements important for the energy transition?
REEs are critical for producing components that enable clean energy and advanced technologies. They are used in:

  • High-performance magnets for electric motors and wind turbines
  • Batteries and catalysts
  • Optical devices such as LEDs, displays, and fibre optics
  • Defence applications (radar, sonar, lasers)

Which countries produce rare earth elements?
China is the world’s leading producer and processor of REEs. Other significant producers include:

  • Australia
  • United States
  • Myanmar
  • Vietnam
  • India
  • Brazil

What risks are associated with the rare earth supply chain?
The REE supply chain faces several risks:

  • Geopolitical tensions affecting export flows
  • Heavy reliance on China for refining capacity
  • Technological barriers in scaling up sustainable production elsewhere

How is the demand for rare earth elements expected to evolve?
Demand is projected to rise significantly due to the global push for electrification, renewable energy, digitalisation, and advanced defence technologies. This trend underscores the strategic importance of securing resilient and diversified supply chains.