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Investing into Rare Earths: How Terbium, Holmium, and Dysprosium Drive the Future of Critical Mineral Investment

by | 29 September, 2025 | Encapsulation | 0 comments

Rare Earths - Holmium, Terbium, Dysprosium
Rare Earths – Holmium, Terbium, Dysprosium

Investment in rare earth mining and production is critical to addressing the inherent mismatch between demand ratios for key elements (holmium (Ho), terbium (Tb), dysprosium (Dy), neodymium (Nd), praseodymium (Pr)) and their actual supply ratios in nature. This report outlines the fundamental challenge and why focused investment is essential.

The Supply-Demand Ratio Discrepancy and Its Consequences

  • Demand vs. Supply Ratios: The industrial and technological demand for Ho, Tb, and Dy is disproportionately high relative to their natural abundance in mined ores – approximately 30 to 50 times more. Their ratios in demand far exceed their ratios in supply. For example, Tb and Dy are critical for high-performance magnets and batteries but constitute a much smaller fraction of mined ore compared to Nd and Pr.
  • Overproduction of Carrier Rare Earths: Because Ho, Tb, and Dy are produced as part of mixed rare earth ores, miners must extract and process large volumes of Nd, Pr, and especially cerium (Ce), which act as “carrier” or host elements. This results in a natural overproduction of these more abundant, less critical elements relative to demand.
  • Price Implications for Carrier Elements: Due to oversupply, the prices of these carrier rare earths (mainly Nd, Pr, and Ce) trend toward zero or at most stabilise at levels reflecting mostly their supply chain and logistics costs, offering little intrinsic value. This dynamic creates a structural economic imbalance in the rare earth market.
  • Medium to Long-Term Outlook: Without significant technological advancements in selective extraction, refining, or recycling, this oversupply effect is expected to persist, keeping the prices of carrier elements depressed and eroding mining profit margins based on these majority elements alone.

Importance of Targeted Investment

  • Focusing on Critical Minorities: Investment must prioritize mining and production technologies that can efficiently isolate and maximise the yield of critical minority rare earths — Ho, Tb, and Dy — which dictate value and technological applicability.
  • Advanced Processing Technologies: Capital directed toward innovative separation, refining, and recycling processes is essential to mitigate the oversupply problem by enabling better extraction of critical elements while reducing unwanted excess of common REEs.
  • Supply Chain Resilience and Geopolitical Significance: Given China’s dominant control over processing capacity for many of these elements, investment in open, transparent, and resilient supply chains outside China is strategically critical to secure long-term access to key rare earths necessary for clean energy, defense, and electronics.
  • Market Stability: Appropriate investment strategies can reduce market volatility and stabilize prices by aligning physical supply more closely with technological demand ratios, therefore supporting mining companies’ economic viability.

Summary

  • The physical realities of rare earth element abundances constrain supply to ratios that are mismatched with demand for critical minority elements.
  • This mismatch causes inevitable oversupply and depressed pricing for abundant carrier elements like Nd, Pr, and Ce.
  • Without focused investment in mining efficiency and refining technology targeting Ho, Tb, and Dy, the market will continue to experience these imbalances.
  • Strategic investment in both extraction and supply chain infrastructure is vital for addressing these challenges, enabling sustainable production and stable pricing that reflect the critical nature of these elements.

This investment focus represents not just an economic imperative but a strategic necessity for advancing the clean energy transition, national security, and high-tech industries globally.

Addendum: Investment Strategy for Rare Earth Mining and Production: Addressing Demand-Supply Imbalance of Critical Elements (Ho, Tb, Dy, Nd, Pr)

Executive Summary

The demand for critical rare earth elements (REEs) holmium (Ho), terbium (Tb), dysprosium (Dy), neodymium (Nd), and praseodymium (Pr) is outpacing their natural supply ratios, especially for Ho, Tb, and Dy, which occur in ore at much lower concentrations than Nd and Pr. This results in the necessary overproduction of more abundant carrier elements (Nd, Pr, Ce), which depresses their prices over time. A strategic investment approach focused on mining, processing, refining, and recycling technologies for critical minority REEs is essential to optimize economic returns and supply chain resilience.

Investment Strategy Components

1. Focused Capital Allocation on Critical Minorities

  • Prioritise direct investment in mining projects with ore bodies rich in Ho, Tb, and Dy or that provide high separation efficiency.
  • Support development of advanced extraction and separation technologies tailored to isolate these minority elements with minimal byproduct waste.
  • Fund magnet and battery material production ventures that integrate vertically with mining to capture value across the supply chain.

2. Advance Processing and Refining Capabilities

  • Invest heavily in midstream refining capacity to reduce dependence on dominant Chinese processing control.
  • Underwrite R&D in innovative low-cost, environmentally sustainable separation technologies, emphasizing water and energy efficiency.
  • Establish regional processing hubs with governmental and private sector partnerships, leveraging jurisdictions with stable political environments and infrastructure.

3. Recycling and Circular Economy Initiatives

  • Develop recycling R&D and commercial scale-up for rare earth recovery from end-of-life products, especially EV motors and wind turbines.
  • Incentivise closed-loop supply chains to reduce the need for excess carrier element production and enhance supply security.
  • Explore alternate supply sources like deep-sea mining, but with careful environmental impact assessment.

4. Risk Mitigation Through Portfolio Diversification

  • Diversify investments across geographic regions (e.g., North America, Australia, Southeast Asia) and across the supply chain (mining, refining, end-use manufacturing).
  • Support junior miners with high-quality assets and streamlining permitting and capital access to accelerate production.
  • Hedge price volatility risks through derivative instruments, long-term contracts with end-users, and government-backed purchase agreements.

5. Strategic Partnerships and Government Engagement

  • Foster public-private partnerships to leverage government financing (non-dilutive loans, grants) and policy support (streamlined permitting, export controls).
  • Align investments with national security interests to attract defense funding and priority access to markets.
  • Collaborate internationally to build trusted supply chains that reduce overreliance on any single country.

Expected Outcomes and Market Impacts

  • Improved alignment of supply ratios with demand for critical minority REEs, reducing price distortions in carrier rare earths.
  • Enhanced profitability for mining projects focused on value-critical elements rather than bulk production of abundant but low-value carrier minerals.
  • Increased supply chain independence and resilience for clean energy, defense, and advanced technology sectors.
  • Stabilized market prices with reduced volatility arising from oversupply of Nd, Pr, and Ce.

Conclusion

A forward-looking investment strategy in rare earth mining and production must directly address the physical and economic realities of the critical element supply-demand mismatch. Leveraging focused capital for advanced mining and refining technologies, recycling initiatives, and strategic partnerships will ensure sustainable supply and economic viability. This approach positions investors not only to capture growth driven by global decarbonisation and technological demands but also to mitigate risks of geopolitical disruptions and price crashes due to excess byproduct supply.

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Tags

  • #RareEarthElements
  • #CriticalMinerals
  • #CleanEnergy
  • #SustainableInvesting
  • #TechnologyMetals
Separation of Rare Earths – Holmium, Terbium, Dysprosium

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