New Rare Earth Deposit In Norway Challenges China's Dominance

A mining company's recent discovery of continental Europe's largest deposit of rare earth elements (REEs) could significantly impact China's control over these crucial materials. Rare Earths Norway announced that it has unearthed what it describes as "a truly transformative asset" that can help establish a secure supply chain for rare earths in Europe. This discovery is viewed as a pivotal step toward reducing reliance on Chinese imports, which currently dominate the market.

CEO Alf Reistad shared with Newsweek that their goal is to meet 10 percent of Europe's demand for magnet-related rare earths (specifically Neodymium and Praseodymium) during the initial phase of operations. These rare earths are vital for a variety of high-tech applications, such as electric vehicle motors, wind turbines, and precision-guided missile systems. The significance of this find goes beyond economics; it touches upon national security for both Washington and Brussels, as the geopolitical landscape continues to evolve.

Rare earths like Yttrium and Neodymium are not as rare as their name suggests; however, they are challenging to extract and refine. Presently, China is responsible for approximately 60 percent of global REE production and processes around 90 percent, controlling 98 percent of the European Union's imports and 80 percent of those in the United States. This heavy reliance on China has raised concerns about supply chain vulnerabilities and national security risks.

The Fen Carbonatite Complex, situated roughly 70 miles southwest of Oslo, is estimated to contain around 8.8 megatons of rare earth oxides, including 1.5 megatons believed to be magnet-related. This is especially crucial for the production of wind turbines and electric vehicles. Rare Earths Norway anticipates an investment of NOK10 billion (approximately $943 million) to initiate the first phase of mining by 2030.

In a timeline shared with Newsweek, the company projects a production volume of 2,000 metric tons of NdPr rare earths, which would fulfill about 10 percent of Europe's anticipated demand by 2030. Achieving this goal will depend on managing financial risks between 2024 and 2026, as well as expediting the permitting process. By 2045, the target production rate is expected to reach 10,000 metric tons, equating to around 30 percent of the total European demand.

The Critical Raw Materials Act, effective from May 23, mandates that the EU sources 10 percent of its annual consumption of critical materials domestically and conducts 40 percent of its processing. Although Norway is not an EU member, it participates in the single market, which enhances its strategic importance. The act also restricts no more than 65 percent of a strategic raw material from being sourced from a single third country, aiming to reduce dependency on external suppliers and mitigate supply chain risks.

European Commission President Ursula von der Leyen emphasized the growing importance of rare earths in her 2022 State of the Union address, stating that "Lithium and rare earths will soon be more important than oil and gas." She predicted that the demand for these essential metals would increase fivefold over the next decade.

China's recent actions indicate its intent to leverage control over strategic metals. In the past year, Beijing imposed tighter regulations on the export of rare earth elements, a move interpreted as a reaction to U.S. restrictions on semiconductor technologies aimed at curbing China's military advancements. Furthermore, China's Ministry of Commerce has introduced restrictions on equipment necessary for processing rare earth elements and magnets.

Newsweek has reached out to the Chinese Foreign Ministry for a comment on these developments and their implications. As this situation continues to unfold, the global balance of power in the rare earths market is poised for significant shifts.

Update 6/13/24, 10:50 p.m. ET: This article has been updated with additional information from Rare Earths Norway.