Unlocking Clean Energy: The Crucial Role of Rare Earth Minerals: What’s all the Fuss About?

As the world transitions towards cleaner and more sustainable energy sources, the demand for rare earth minerals has surged. From wind turbines and solar photovoltaic (PV) cells to electric vehicles (EV) and battery storage, rare earth minerals are essential components in powering the technologies that will drive the renewable energy transition.

Our previous article focused on the challenges faced by the rare earth mineral industry, including supply chain shortages and high costs for products, and how these challenges may be addressed to further progress the new energy transition.

In Part 1 of our two-part series on Unlocking Clean Energy: The Crucial Role of Rare Earth Minerals, we outline what is driving the extraordinary attention towards rare earth minerals and provide an update on the recent challenges of the industry.

What’s All the Fuss About?

Rare Earth Minerals: The Unsung Heroes of Renewable Energy

Rare earth minerals are major components of renewable energy technologies, however, the types and quantity of minerals required vary by technology. Neodymium and praseodymium, for example, are used in the production of magnets which are key to the operation of wind turbines and EV motors.1 Those elements strengthen the magnets, while other minerals (dysprosium and terbium) make them resistant to demagnetisation. Likewise, while silicon is still the dominant semiconductor metal used in solar PV cells, rare earth minerals cadmium and gallium are increasingly being used due to their conductive efficiencies.

Without an abundance of rare earth minerals, renewable energy technologies would not exist in their current form or would be highly inefficient when compared with traditional generation methods such as oil, coal and gas. Similarly, technological advancements such as those between silicon solar PV and cadmium or gallium solar PV cells, could not occur. It is due to the availability of large amounts of rare earth minerals for use in renewable energy technologies (and other technology advancements) that the market and quality of renewable energy sources have been able to flourish.

Australian businesses and the Government alike have realised the importance of supporting an industry essential to facilitating the domestic transition to net zero, including how the rare earth minerals industry will enable Australia to meet its own legislated emissions targets of 43% below 2005 levels by 2030 and net zero by 2050.2 Through investment in domestic infrastructure and in international partnerships, interested Australian stakeholders will be well positioned to take advantage of the renewable energy transition.

More Capacity Equals More Minerals

The International Energy Agency (IEA) notes that renewable power capacity additions for solar PV and wind will more than double by 2028 compared with 20223 and that the world is on course to add more renewable capacity in the next five years than has been installed since the first commercial renewable energy power plant built over 100 years ago.4

Demand for cadmium and gallium, for example, is expected to increase sevenfold and twofold respectively by 2040 for use in solar PV technology.5 These global trends are also important considerations for Australia given the vast investments that have been made into technologies which will eventually need to be updated or replaced. 1 in 4 houses in Australia have a rooftop solar PV system, the world’s highest per capita.6 Rooftop solar PV systems accounted for 28.5% of all renewable energy and 11.2% of total energy generation in 2023 in Australia.7 As such, Australia will be heavily dependent on the production of sufficient quantities of rare earth minerals to both supply new demand of the technology, and update or replace existing units.

These market forces mean production of technology-ready rare earth minerals, such as cadmium and neodymium, will need to keep pace with the demand for the technologies themselves. However, a challenge for the industry will be bringing online sufficient new supply of raw materials to meet that demand and ensuring it is done in a sustainable manner. New mining processing and manufacturing projects can take years to reach production, particularly when done in a sustainable way supported by other stakeholders such as local communities.8

Challenges of a Global Industry

Sustainable Supply Chains

In our previous article we noted the rare earth minerals industry would be challenged by supply chain issues brought front of mind for many countries following the war in Ukraine. While general trade and supply chain issues continue, particularly given the recent escalations in violence in the Red Sea, the rare earth minerals industry has the additional challenge of implementing sustainable supply chain practices.

As demand grows for rare earth minerals there will be increased pressure from potential new mines and processing facilities on people, the environment, local communities and indigenous groups.9 Australian businesses and governments must ensure that in meeting the market demand for rare earth minerals that the interests of those affected parties are not only recognised but enhanced.

The importance of sustainable supply chains is not isolated to Australia. To ensure that rare earth minerals supply chains are sustainable and responsible, the IEA has recommended:10

  1. ensuring robust legal and regulatory protections for the environment, workers and communities;
  2. channelling public spending to encourage the development of better practices and rewarding good actors;
  3. strengthening collection and reporting of granular and standardised data to enable benchmarking and progress tracking across the industry and throughout the supply chain;
  4. undertaking due diligence and reporting publicly on risks and mitigation actions; and
  5. supporting the development of credible voluntary sustainability standards and encouraging harmonised approaches consistent with international standards.

Domestically, there is vast potential to make the supply chains of the mining industry sustainable, particularly given the existing capabilities in the energy and resources sector. Already this appears to be underway, with the recent signing by Rio Tinto of the largest renewable energy power purchase agreement in Australia to supply its smelting and refining operations in Gladstone, Queensland.11 The deal involves taking 80% of the output from the 1.4GW Bungapan wind energy project. Once developed, the project could lower carbon emissions by about 5 million tonnes per year and generate the equivalent of 10% of Queensland’s current power demand. Starting construction in 2025, the Bungapan project is a step in the right direction for Rio Tinto to ensure that its supply chain is renewable. Similarly, a Northern Territory rare earth minerals mine and refinery project aims to secure 20% of the 300 new jobs it will produce as local Indigenous employment.12

Ensuring sustainable supply chains is perhaps the most pressing issue affecting the rare earth minerals industry. New mines, refineries and other facilities all bring attendant risks to the environment, workers, and communities. Relatedly, without the buy-in of communities and robust sustainable practices, projects risk stalling before approval stages, or encountering lengthy and costly dispute proceedings down the line.

Under the Spotlight

The spotlight on rare earth minerals has intensified recently due to their pivotal role in renewable energy technologies such as EVs, solar PV and wind turbines that will drive the clean energy transition. However, ensuring sustainable supply chains remains a formidable challenge, necessitating domestic and global cooperation, innovation and responsible practices from Australian organisations. We will cover these matters in Part 2 of this article series.


For more information, please contact Matt Baumgurtel and David O’Carroll.


1International Renewable Energy Agency, Critical Materials for the Energy Transition: Rare Earth Elements, <https://www.irena.org/-/media/Files/IRENA/Agency/Technical-Papers/IRENA_Rare_Earth_Elements_2022.pdf> at page 6.

2Department of Climate Change, Energy, the Environment and Water, Net Zero, <https://www.dcceew.gov.au/climate-change/emissions-reduction/net-zero>.

3International Energy Agency, Renewables 2023: Electricity, <https://www.iea.org/reports/renewables-2023/electricity>.

4International Energy Agency, Renewables, <https://www.iea.org/energy-system/renewables>

5 International Energy Agency, Mineral Requirements for Clean Energy Transitions, <https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions/mineral-requirements-for-clean-energy-transitions>.

6Australian Government, Clean Energy Regulator, Related Industries: Critical Minerals, <https://cer.gov.au/news-and-media/case-studies/related-industries-critical-minerals>.

7Clean Energy Council, Clean Energy Australia 2024, <https://assets.cleanenergycouncil.org.au/documents/resources/reports/clean-energy-australia/Clean-Energy-Australia-2024.pdf> at page 10.

8Australian Government, Critical Minerals Strategy 2023-2030, <https://www.industry.gov.au/sites/default/files/2023-06/critical-minerals-strategy-2023-2030.pdf> at page 11.

9International Energy Agency, Sustainable and Responsible Critical Mineral Supply Chains, <https://iea.blob.core.windows.net/assets/7771525c-856f-45ef-911d-43137025aac3/SustainableandResponsibleCriticalMineralSupplyChains.pdf> at page 3.

10Ibid at pages 7-8.

11Giles Parkinson, ‘Rio signs Australia’s biggest wind energy deal to help power giant smelter and refineries’, Renew Economy, (online, 21 February 2024) <https://reneweconomy.com.au/rio-signs-australias-biggest-wind-energy-deal-to-help-power-giant-smelter-and-refineries/>.

12Prime Minister of Australia, Major critical minerals funding unlocks Northern Territory jobs and positions Australia as renewable energy superpower, <https://www.pm.gov.au/media/major-critical-minerals-funding-unlocks-northern-territory-jobs-and-positions-australia>.

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