Rare Earth Minerals Are More in Demand than Ever—Here Are the Ones to Know

Demand for rare earth minerals and metals has soared over the past few years, as more industries and countries transition to cleaner energy sources.

Minerals such as cobalt, lithium, nickel, and so-called rare earth elements are known as critical minerals because they are essential to the manufacture of everything from our smartphones and laptops to electric vehicles (EVs), as well as power generation, healthcare, and military technology.?

What are the top critical minerals? Read on to find out more about them, their producers, and what they’re used for.

The Market for Critical Minerals

The market for minerals critical to cleaner energy rose to $320 billion in 2022, while demand tripled for minerals such as lithium and jumped 70% for cobalt from 2017 to 2022. With demand for these critical minerals expected to skyrocket in the decades to come, the U.S. and its allies are looking to increase their domestic supplies, as China now controls the majority of the mining and processing of critical minerals, according to a report by The Wilson Quarterly, published by the Wilson Center, a nonpartisan policy research council. 

China refines 68% of global nickel, 59% of the world’s lithium, 73% of its cobalt, and 85% of all rare earth processing. Because of this, the U.S. is working with allies such as Canada, Japan, and Australia to decrease reliance on foreign sources, as a supply chain assessment issued by the Biden administration found that this dependence poses a security threat to the national economy.

As countries transition to clean energy, the demand for these critical minerals and metals will continue to grow—and their supply is inherently limited, according to a security brief by the Wilson Center. The brief suggests that substituting rare metals for materials with more availability, such as lighter batteries for EVs, can help reduce mineral demand and be more sustainable in the long run. 

Here are the top critical minerals, their producers, and what they’re used for.

Lithium

• Top producers: Australia, Chile, China
• Uses: EVs, battery storage, smartphones, laptops, satellites, drones

Lithium is widely used to make batteries for everything from smartphones and laptops to satellites, drones, medical devices, power tools, and electric cars. Demand for lithium has drastically increased (and that is expected to continue) with the rise of EVs and other clean energy technologies.

More than 10 million electric cars were sold in 2022, according to the International Energy Agency (IEA), and demand for lithium tripled from 2017 to 2022. Companies invested in lithium development reported a 50% increase in spending, while spending on lithium exploration increased by 90%.

The top producers of lithium are Australia, Chile, Argentina, and China. Australia is the world’s largest supplier of lithium and produces it from hard rock mines. Meanwhile, Argentina, Chile, and China produce lithium from salt lakes. The U.S., Canada, and Mexico are among the top 10 countries with the largest lithium reserves.

Currently, there is no substitute for lithium that would meet the demands of the mobility sector.

Nickel?

• Top producers: Indonesia, Russia, China
• Uses: EVs, battery storage, stainless steel, power plants, wind turbines

Nickel commonly has been used in many stainless steel household appliances and electronic devices like laptops, smartphones, and more. But nickel has become increasingly popular in clean energy technologies such as EVs, battery storage, power plants, and wind turbines.

In fact, EVs and battery storage are expected to beat stainless steel as the largest users of nickel by 2040, according to the IEA. Demand for nickel has risen 40% from 2017 to 2022, while clean energy applications for nickel have risen to 16% since 2017.

Indonesia is the top producer of nickel; other producing countries include China, Russia, Japan, and Canada.

Cobalt

• Top producers: Democratic Republic of the Congo, Indonesia, China
• Uses: EVs, tablets, smartphones, tools, nickel-based alloys

Cobalt is another important metal primarily used to make batteries for EVs, smartphones, and tablets. Demand for cobalt jumped 70% from 2017 to 2022, and continues to rise as clean energy applications for cobalt rose to 40% over the same period. Demand for cobalt is expected to increase in the future due to its importance in making EVs and for energy storage.

The Democratic Republic of the Congo is the leading producer of cobalt, and made up more than 70% of the world’s cobalt production in 2022. Indonesia is another top producer of cobalt, and tripled its cobalt production in 2022. China also made up more than 75% of the world’s refined cobalt output in the same year.

Copper

• Top producers: Chile, Peru, China
• Uses: Electricity, wind turbines, solar power, energy storage, EVs

Copper is essential for any technology related to electricity, and is a key element in the transition to clean energy. Copper is used widely for energy storage, generates power from solar and wind sources to deliver clean energy, and is used heavily in EV production. The motor coils that drive the engine in electric cars, the battery, and the cables for charging stations all rely on copper. 

After several years of remaining relatively flat, copper production picked up in 2022. However, due to challenges such as water shortages, declining ore grade, and protests from local communities in major copper-producing countries Chile and Peru, growth may decline after 2024.?The top producers of copper are Chile, Peru, and China.

Graphite

• Top producer: China
• Uses: Batteries, refractory material, lubricants

Graphite is used across many industries, but is most in demand for its use in batteries, especially EV batteries. Graphite can either be sourced naturally or artificially. Synthetic graphite batteries are preferred by producers because they are more reliable and have a longer battery life.?

China is the top producer of graphite, supplying 70% of the world’s natural graphite in 2022. China is also the main producer of synthetic graphite—the process of making spherical graphite for batteries is done almost entirely in China.

Rare Earth Elements

• Top producer: China?
• Uses: Permanent magnets for EV motors, wind turbines, electronics

Rare earth elements (REEs) such as dysprosium, terbium, and neodymium are essential for making permanent magnets for EV motors, wind turbines, national defense, electronics, and more.

China is the largest producer of REEs, accounting for 70% of production and 90% of processing in 2022 and into 2023. The U.S., Australia, and Canada funded domestic REE mining and processing plants in 2022 to reduce dependence on China.

Reasons for Growing Demand for Critical Minerals

A few key factors have driven the recent increase in demand for critical minerals:

• Clean energy transition: Minerals like lithium, cobalt, nickel and copper are crucial for clean energy technologies like batteries, solar panels, wind turbines, and hydroelectrics. As countries and companies invest more in renewable energy and electric cars, demand for these minerals has surged. For example, the U.S. Inflation Reduction Act includes major investments in clean energy that will require more mineral inputs.
• Supply chain vulnerabilities: The COVID-19 pandemic and geopolitical tensions have exposed vulnerabilities in global supply chains for critical minerals. Many of these resources are geographically concentrated in a handful of countries. This has led to efforts to diversify and secure supplies. Governments are also increasingly viewing supply chain security for critical minerals as a national security issue. This is driving policies to produce more minerals domestically.
• Technological innovation: New technologies like 5G and quantum computing are increasing the need for rare earth elements and other niche minerals. The ongoing digital transformation of the economy is fueling rising demand.
• Electric cars: The rapid growth in electric vehicle production is driving up lithium, cobalt and nickel demand in particular as key ingredients in EV batteries.

The Bottom Line

Soaring demand for critical minerals underscores a pivotal shift toward clean energy technologies globally. These minerals, central to modern digital and clean technologies, are experiencing an unprecedented demand, fueling a surge in demand. However, the overwhelming control of China over the supply and processing of these minerals—particularly lithium, nickel, and cobalt, essential for EV and clean energy technology production—raises significant supply chain concerns.

The U.S. and its allies are fostering international collaborations and investing in domestic production to mitigate supply risks, ensuring a steady transition toward a clean energy future. This underscores not only the strategic importance of these minerals, but also the imperative for diversified supply chains and the exploration of alternative materials to foster a sustainable, clean energy transition.