Rare Earth (RE) Metals and the Future of Lighting

When improving energy efficiency, every light bulb counts. Some of our clients are replacing incandescent, metal halide, halogen and fluorescent lamps with LEDs. In most cases, the energy payback alone is strong enough to make this a sound investment. But soon, LEDs may be an even smarter buy, as global market forces are driving up the price of fluorescent lamps.

It is a complicated scenario, but it is impacting all fluorescents, including energy efficient CFLs and T8s. Essentially, in order to make the phosphors in fluorescent lamps, manufacturers need certain Rare Earth (RE) metals, to wit: Europium, Terbium, Cerium, and Ytterbium (…say that five times fast). To this day China supplies the overwhelming majority of the RE metals to manufacturers around the globe. But in recent years the Chinese government has taken issue with RE mining practices because of their negative environmental effects. (This is very encouraging on a policy level, of course.)

And, as a result, they have implemented many controls and restrictions on RE production – from suspending new RE mine site exploration to placing heavy duties on RE resources in effort to finance site remediation, to limiting overall RE supply. Phosphor suppliers are already experiencing the price impact. Thus, in turn, fluorescent manufacturers are feeling the phosphor pinch and are hiking prices. So phosphors that once represented only 10 to 15% or fluorescent lamp production costs now represent 50% or more.

While other suppliers will certainly rise up to fill the gap created by China, it is unlikely that prices will ever be as low as they once were. Similar beneficial environmental regulations probably will make mining more expensive in other countries in the future.

So it’s pretty safe to say that LED’s will become an even more attractive lighting option in the months and years to come. Admittedly, LED technology is changing continuously, with new manufacturers and designs ever on the horizon, even for the consumer market. But the established manufacturer’s products are sound performers built to the exacting quality standards that made these companies world leaders in lighting. So they are good investments even if the lamps next year or the year after might look a little different. The phosphor drama just provides another impetus to switch to LEDs.