Nickel and neon are powering the future of technology, from electric vehicles to semiconductor manufacturing. Here's what you need to know:
- Nickel: Critical for EV batteries, with demand projected to grow 65% by 2030. Prices hover around $20,000/ton, driven by EV adoption and renewable energy storage.
- Neon: Essential for semiconductor production, especially in lasers for chip manufacturing. Supply chain disruptions can cause price spikes - key for AI and tech advancements.
- Rare Earths, Cobalt, Graphite: Used in EV motors, batteries, and AI hardware. Demand is surging, with cobalt expected to grow fourfold by 2030.
- Global Challenges: China controls ~90% of rare earth processing, creating supply risks. Recycling and alternative sources are gaining attention.
Quick Overview of Key Materials:
Investors are eyeing opportunities in mining companies, tech firms, and recycling technologies as the demand for these materials reshapes industries. These rare commodities are at the heart of the clean energy and tech revolution.
Key Rare Materials in Modern Tech
Nickel in Battery Production
Nickel plays a central role in powering the batteries used in electric vehicles (EVs) and renewable energy storage. Modern battery designs, like NCA (Nickel Cobalt Aluminum) and NMC (Nickel Manganese Cobalt) batteries, now contain up to 90% nickel [2].
Why the focus on nickel? These batteries offer higher energy density, which means EVs can travel farther on a single charge - a major selling point for consumers. Companies like Queensland Pacific Metals are leading the way, using advanced methods to produce high-purity nickel tailored to the EV battery market [3].
"Nickel is essential for the batteries used in electric vehicles, which are becoming more popular by the day as vehicle manufacturers and consumers embrace the EV revolution." - Sprott ETFs [3]
Neon in Chip Manufacturing
Neon gas is a key player in semiconductor production, especially in excimer lasers used for photolithography. These lasers, critical for creating high-resolution chips at 7nm spatial resolution, require ultra-pure neon (99.999%) to function efficiently [4].
With around 70% of global neon output going to chip manufacturing, disruptions in supply chains can cause major price spikes, as seen when prices soared from $3 to $9 per liter due to geopolitical tensions.
"Neon is a critical material for excimer lasers used in steppers for DUV lithography like the 193 nanometer Argon Fluoride excimer laser." - Jon Y, Asianometry [5]
While neon is vital, other materials like rare earth elements, cobalt, and graphite are also reshaping tech industries.
Rare Earths, Cobalt, and Graphite Uses
Demand for rare earth elements has surged, doubling over the last 15 years. By 2030, it’s expected to hit 280,000 tonnes [6], fueled by their use in advanced electronics and renewable energy.
Tesla, for instance, has reduced its cobalt usage by 60% through new battery technologies and secured a 6,000-ton annual supply deal with Glencore in March 2023 [7].
"The demand for cobalt is expected to grow fourfold by 2030, largely due to widespread adoption of electric vehicles." - Kara Norton, National Geographic [7]
Recycling technologies are gaining traction as companies aim to recover these materials from used batteries. This approach helps mitigate supply chain risks while addressing environmental challenges, making it a key focus as EV and renewable energy production scales up.
These advancements are driving rapid changes across industries, which will be explored further in the next section.
Main Industries Using Rare Materials
EVs and Clean Energy Growth
The rise of electric vehicles (EVs) and clean energy is fueling a massive surge in mineral demand. By 2040, this demand is expected to grow 30 times larger than current levels [8]. EVs alone require six times more minerals than traditional vehicles. Clean energy technologies are projected to dominate global production of critical minerals by 2040 [9].
"The shift to a clean energy system is set to drive a huge increase in the requirements for these minerals, meaning that the energy sector is emerging as a major force in mineral markets." – International Energy Agency (IEA) [8]
This growth in energy technology mirrors the increasing demand for rare materials in the semiconductor industry.
Chip and AI Production Needs
Semiconductors and AI technologies are driving up the need for rare materials. In 2023, the U.S. consumed 19 tons of gallium, all sourced from Japan [10]. The rare earth metals market is expected to hit $10 billion within two years [12], as AI computing needs have skyrocketed since 2010 [11].
Military and Medical Uses
Rare materials play a crucial role in defense and healthcare sectors as well. The defense industry is increasingly focused on securing reliable supply chains for these resources. For example, the Mountain Pass mine in California supplies about 15% of the global rare earth elements [12]. However, with China accounting for approximately 70% of global rare earth production [12], there is a growing push to develop alternative supply chains and boost domestic production.
Inside Indonesia's Explosive Rise Into the Global EV Supply Chain
Market Risks and Obstacles
As demand continues to rise, several risks and challenges are becoming more pressing.
Political and Resource Limits
Geopolitical concerns remain a major issue, largely due to China's overwhelming control of rare material production and processing. Currently, China is responsible for around 60% of global rare earth element production and processes about 90% of these materials [13]. This dominance creates vulnerabilities across global tech supply chains.
Back in 2010, China cut its export quota by 37%, leading to market disruptions and forcing countries to rethink their reliance on a single supplier [13]. Such events highlight the fragility of global supply chains in this sector.
"Whichever countries dominate critical minerals will set the rules for the modern economy." - Christopher Mason, Vice President of Global Compliance and Investigations, Infortal Worldwide [13]
Market Changes and Supply Issues
Recent price fluctuations reveal how unpredictable this market can be:
A projected shortfall of 2,823 tons of dysprosium by 2034 highlights the growing challenges in securing adequate supply [14].
"A lack of sufficient and affordable supply would therefore risk hindering the at-speed deployment of crucial low-carbon technologies." - McKinsey & Company [15]
Material Recovery Methods
To address these challenges, companies and governments are exploring recovery strategies. For instance, the CSyARES project, launched in 2022, leverages blockchain technology to improve supply chain transparency and better manage resources [16]. Similarly, Aclara Resources has developed water-conserving extraction methods in Brazil and Chile that aim to balance efficiency with environmental responsibility [14].
These efforts align with increasing regulatory requirements, such as those outlined in the European Green Deal and the Critical Raw Materials Act [16]. By advancing these technologies, industries aim to reduce supply risks and guide future investment decisions.
How to Invest in Rare Materials
With supply challenges and shifting market dynamics, there are several ways to invest in rare materials.
Commodity Investment Options
One way to tap into rare materials is through commodities. For broad exposure, you can invest in ETFs like the SPDR S&P Global Natural Resources ETF (with $2.8 billion in assets under management and a 0.40% fee). This ETF includes materials like nickel. For direct exposure, trading LME futures is another option - each nickel futures contract represents 6 metric tons [17][18].
Mining Company Investments
Investing in major mining companies offers another route. Here are some key players:
Vale S.A. has committed over $3 billion to modernize operations and cut carbon emissions. Norilsk Nickel, on the other hand, plans to spend $8 billion by 2030 to upgrade facilities and boost high-purity nickel output.
"As automakers and governments prioritize EV adoption, demand for nickel could outpace supply, driving prices higher." - Carbon Credits, January 2025
While mining companies focus on meeting supply needs, tech companies are creating additional demand through long-term material contracts.
Tech Company Investment Guide
Tech companies relying on rare materials represent another investment opportunity. By 2030, demand for these materials is expected to grow 3.5 times, with green technologies accounting for 82% of that growth [20]. Key areas include:
- EV Manufacturing: Battery production alone will require an extra 3 million tons of nickel by 2035 [20].
- Semiconductor Production: Chip manufacturers depend heavily on materials like neon.
- Clean Energy Systems: Renewable energy infrastructure needs various rare materials.
When considering tech companies, prioritize those with strong supply chains and long-term contracts for critical materials. The sector may require $3-4 trillion in investments by 2030 to meet material demands [19].
"Materials are a critical enabler of the net-zero transition." - McKinsey & Company [19]
These strategies let investors align their portfolios with the growing needs of the tech and green energy sectors.
Conclusion
Main Points Review
Rare materials like nickel and neon are essential for modern technology. Nickel demand is projected to grow by 27% year-over-year in 2024, with batteries accounting for over half of this increase by 2030. Meanwhile, the neon market is expected to hit $286.6 million in 2024 and grow at an annual rate of 7.8%, reaching $605.4 million by 2034 [21][22].
Companies are adjusting to these shifts. For example, SK Hynix aims to reclaim 30% of its neon supply by 2030 [22], while MP Materials has secured a $35 million grant from the Department of Defense to strengthen domestic supply chains [23]. These developments are shaping the market's future direction.
Market Predictions
The market is evolving, with supply challenges and strategic moves influencing future outcomes:
These trends point to fresh investment opportunities as supply and demand shift.
"The long-term outlook for battery nickel remains robust." – Jorge Uzcategui, Senior Nickel Analyst, Benchmark Mineral Intelligence [21]
Western nations are pushing for supply chain independence, creating new prospects for investors, especially in North American and Australian mining ventures [24].
"The rare earth market is growing and is expected to continue expanding due to their necessity in the ever-growing tech industry, especially for artificial intelligence and EVs." – Tracy Shuchart, Senior Economist at NinjaTrader [1]
These projections emphasize the crucial role rare materials play in advancing technology and clean energy solutions.
