Aspiring rare-earth producers should focus on niche products – F&S
Aspiring rare earth material producers aiming to compete with the likes of Australia’s Lynas Corporation and Iluka Resources will have to focus on manufacturing customised products for clients to break into the market.
This is according to research and consulting firm Frost and Sullivan (F&S), which in its latest research on the $5.40-billion global rare earth materials market says that major mining companies are conducting extensive market research of client needs to offer products for specific applications and to create tailor-made solutions.
“Manufacturing customised products that meet specific application requirements will be key to tapping major business opportunities,” says senior analyst Ganesh Dabholkar.
He suggests that would-be participants should also aim to tap growth opportunities by forward integration, developing their own processing capabilities and establishing a strong sales and distribution network.
Long-term pricing contracts with raw material suppliers will also help to effectively manage rare earth material price fluctuations.
Further, Dabholkar says that producers should leverage the demand for high-purity and mandate-specific compositions to meet high-end applications, as relatively higher margins exist in high-end product applications, rather than in conventional applications.
F&S states demand for rare earth materials is driven by a global uptick in infrastructure development and electric vehicles, augmented by a rise in neodymium magnet-, lanthanum- and cerium-based application requirements in many countries around the world.
Its latest analysis on the global rare earth market is forecasting the market to grow at a compound annual growth rate of 7% from 2018 to 2025.
“There has been significant demand for rare earth materials, especially for use in the production of high-end permanent magnets. Demand is strongly characterised by niche requirements – high-purity, specialised rare earth material products with extremely customised application characteristics. End-user electronics, technology and automotive industries prefer such products even though procurement is pricey,” Dabholkar comments.
Although there are significant growth prospects, the rare earth materials market is restrained by China’s dominance in terms of reserves, product supply, project investments and consumption.
“Environmental concerns regarding extraction and use of rare earth materials and a growing trend to research alternative materials, recycle, or find other low-cost rare earth products are factors further hindering market growth.”
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