Machacek and Fold reported in 2014 that the 2011 peak in rare earth element (REE) prices revealed a vast knowledge gap on the REE-based industry considered to be almost monopolized by Chinese players. A global value chain (GVC) framework is used to provide an understanding of value-adding segments of REE in their transformation from mine to market but inquiries on the currently most-advanced company strategies for alternative REE supplies form the cornerstone of this paper. The Anglo-REE deposit developer strategies are aligned with the value-adding segments and different approaches to integration and co-optation of REE processing competence are uncovered. On this basis the significance of alternative Anglo-REE-developer supplies is discussed and positioned in the perspective of Chinese industrial upgrading.
The authors mapped the GVC of REE and revealed the strategies of three Anglo-REE deposit developers who sought to establish alternative supplies to the dominant Chinese REE industry. The authors also presented their strategies with reference to the value-adding segments of the GVC of REE and transcend into the REE magnet filament for explanatory purposes.
Three historically distinct periods which align with the Chinese transformation of the REE industry were observable: intensified increases in shareholdings in
their joint ventures in China in the first two periods followed by a third period after the 2011 price peaks characterized by mergers and acquisitions as well as negotiations of off-take agreements outside China. Whereas Molycorp and GWMG pursue acquisitions, Lynas entered into lose agreements possibly influenced by the Japanese government support of its operations at the time. These strategies aimed to succeed in a market dominated by China which strives for further industrial upgrading. The authors pointed to the upgrading potential in the GVC segment of chemical separation and illustrated the differences in length of downstream integration pursued by the three Anglo-REE-deposit developers: the alternative supply chain of Molycorp reaches down to REE-based magnet production while GWMG will lean into REE alloy production and aimed to strengthen capacity in the previous metal-making segment.
In contrast, Lynas pursued integration down to the chemical separation segment only, potentially downstream to formulation through Solvay. Against the background of strong Asian presence in the REE industry, the authors critically reflected on the value of the efforts by the three Anglo-REE-deposit developers.
The authors concluded that the value-adding potential inherent to REE downstream processing following chemical separation is significant from the perspective of indirect value-adding possibilities enabled by REE-containing components. These value-adding opportunities can take the shape of innovations related to product performance which might support the upgrading of firms, employment in the many industries which absorb REE-containing components, and opportunities for research and development which frequently are higher in the geographical and institutional proximity of production sites as ideas can be applied and tested easier.
The authors illustrated a simplified GVC for REE and a simplified REE-permanent magnet filament, and argued for further research that follows the REE-containing ore to intermediate industries and final end-products to derive specific data on value-adding dimensions of REE-using (globally-organized) industries and of their importance to national economies.
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