Rare Earths and Critical Materials in Battery Manufacturing

Jan 4
4 min read

Presented by Amindus Consulting and Solutions

The shift to clean energy and electric mobility depends heavily on advanced battery technologies. While metals like lithium, cobalt, nickel, and manganese often take center stage in discussions about batteries, rare earths play a crucial but sometimes overlooked role. These elements are essential in electric motors and certain battery components, influencing performance, efficiency, and sustainability.

This post explores what makes rare earths different from other key metals, their role in the battery value chain, and the strategic challenges shaping the future of battery manufacturing.

Samples of rare earth minerals used in battery and motor manufacturing

What Are Rare Earths and How Do They Differ from Other Battery Metals?

Rare earths are a group of 17 chemical elements found in the Earth's crust. They include the 15 lanthanides plus scandium and yttrium. Despite their name, rare earths are relatively abundant but rarely found in concentrated, economically viable deposits. This scarcity in accessible form makes their extraction and processing complex.

In contrast, lithium, cobalt, nickel, and manganese are transition metals or alkali metals with distinct chemical properties and uses:

Lithium is a light alkali metal critical for energy storage in lithium-ion batteries.
Cobalt and nickel are transition metals used primarily in cathodes to improve energy density and battery life.
Manganese stabilizes cathode structures and enhances safety.

Rare earths differ because they are primarily used in electric motors and some battery components rather than the battery’s core electrochemical reactions. For example, neodymium and dysprosium are key for permanent magnets in electric vehicle (EV) motors, enabling high power density and efficiency.

The Role of Rare Earths in Batteries and Electric Motors

Rare earth elements contribute to battery manufacturing and electric mobility in several ways:

Permanent magnets in electric motors: Neodymium-iron-boron (NdFeB) magnets are the strongest permanent magnets available. They enable compact, powerful motors essential for EVs and wind turbines
.
Battery additives: Some rare earths improve battery performance by enhancing electrode stability and conductivity, though this is less common than their use in motors.
Thermal management: Certain rare earth oxides help manage heat in battery packs, improving safety and lifespan.

By contrast, lithium, cobalt, nickel, and manganese are the main active materials in battery cathodes and anodes, directly storing and releasing electrical energy.

The Industrial Value Chain: From Mining to Battery Integration

The journey of rare earths from the ground to battery-powered devices involves several stages:

Mining

Rare earths are mined mainly in China, Australia, the United States, and some African countries. Mining involves extracting ores like bastnäsite and monazite, which contain rare earth oxides. Mining rare earths is challenging due to:

Complex geology requiring specialized extraction techniques.
Environmental concerns from radioactive byproducts.
Limited geographic concentration, leading to supply risks.

Refining and Processing

Refining rare earth ores into usable metals or oxides requires chemical separation processes. This step is energy-intensive and environmentally sensitive, often involving hazardous chemicals. China dominates this stage, controlling about 80% of global refining capacity.

Integration into Battery Technologies

Rare earths are integrated primarily into electric motors paired with batteries. Battery chemistries include:

Lithium-ion (Li-ion): Uses lithium, cobalt, nickel, and manganese in cathodes. Rare earths are not a direct component but are critical in motor magnets.
Lithium iron phosphate (LFP): Uses iron and phosphate, avoiding cobalt and nickel. Rare earths still support motor function.
Nickel manganese cobalt (NMC): Combines nickel, manganese, and cobalt for high energy density. Rare earths enhance motor efficiency.
Emerging technologies: Solid-state batteries and sodium-ion batteries may reduce reliance on some metals but still depend on rare earths for motors.

High angle view of a lithium-ion battery production line with visible cathode materials — Lithium-ion battery manufacturing with cathode materials and assembly

Strategic, Economic, Environmental, and Geopolitical Challenges

The battery supply chain faces several challenges related to rare earths and other critical materials:

Supply concentration: China’s dominance in rare earth mining and refining creates geopolitical risks. Trade restrictions or export controls could disrupt global supply.
Price volatility: Rare earth prices fluctuate due to limited supply, demand spikes, and geopolitical tensions, impacting battery production costs.
Environmental impact: Mining and refining rare earths generate toxic waste and radioactive byproducts, raising sustainability concerns.
Energy consumption: Processing rare earths requires significant energy, often from fossil fuels, affecting the carbon footprint of batteries.
Recycling limitations: Current recycling rates for rare earths are low due to technical and economic barriers, increasing dependence on primary sources.

These factors contribute to the overall cost and sustainability of battery manufacturing, influencing investment decisions and technology development.

Future Solutions for Securing Supply and Sustainability

Addressing these challenges requires a combination of approaches:

Rare Earth Recycling

Recycling rare earths from used batteries, magnets, and electronics can reduce dependence on mining. Advances in hydrometallurgical and pyrometallurgical methods are improving recovery rates. For example, some companies are developing processes to extract neodymium and dysprosium from end-of-life EV motors.

Technological Alternatives

Research into motor designs that reduce or eliminate rare earth magnets is ongoing. Induction motors and electrically excited synchronous motors use fewer or no rare earths but may sacrifice efficiency or size. Battery chemistries that minimize cobalt and nickel are also gaining traction, indirectly affecting rare earth demand by shifting motor and battery system designs.

Supply Chain Best Practices

Diversifying supply sources, investing in domestic mining and refining, and building strategic reserves can improve supply security. Transparent sourcing and environmental standards help mitigate social and ecological risks.