Rare Earth Phosphor Shortage Drives Cost of Fluorescent Lamps Higher

The rare earth phosphor shortage is resulting in price increases on popular fluorescent lamps, and shows no signs of abating.

Rare-earth elements are used in a variety of products, from smart phones to hybrid cars to about 85 percent of the phosphors used in fluorescent lamps. Elements such as Cerium, Europium, Terbium and Yttrium are examples of rare-earth oxides used in fluorescent lamps such as all T8 lamps, all T5 lamps, high-CRI T12 lamps, and all pin-based and self-ballasted compact fluorescents.

In the early 1990s, the United States stopped being the primary producer of these materials. Since 2002, China has gained control of 95+% of the world’s supply, according to NEMA, due to lower-cost mining operations that resulted in U.S. and Australian mines being no longer economically viable, and closing.

To ensure suitable supply for its own industry, China began imposing export quotas since 2005, resulting in price increases. From 2005-2008, exports were reduced 4-6% per year, but in 2009, exports were reduced by 12%, and then in 2010 another 40%. Coupled with new taxes and tariffs and domestic mining regulations, this sent prices for rare-earth materials skyrocketing, which in turn is impacting the cost of manufacturing products made outside of China, such as fluorescent lamps. So far in 2011, export quotas continue to be reduced.

The result has been a series of price increases by the major lamp manufacturers. On June 15, for example, Philips announced that effective with September 1, 2011 shipments, prices will increase an average 10% for its linear and compact fluorescent lamps. On June 29, GE announced an average price increase on linear and compact fluorescent lamps of 25% and incandescent lamps of 10%, effective August 1. On June 28, OSRAM Sylvania announced an average increase of 10% for its linear fluorescent lamps and 25% for its compact fluorescent lamps, effective August 1. These increases are on top of increases that went into effect earlier in the year.

The increase in prices has created incentive to reopen mines in the U.S. and Australia, several opening later this year and expanding through 2014. Not all mines are equal, however. There are 17 rare-earth elements, and not all mines produce all 17 elements. According to NEMA, among the first three mines to reopen–Mountain Pass, Mt. Weld and Dubbo Zirconia–the first two are likely to have little impact on the global supply of Yttrium, Terbium and Europium used in fluorescent lighting (and, in the case of Ytrrium, LED lighting as well). Mountain Pass may marginally increase the supply of Europium, and Dubbo Zirconia may increase the supply of Yttrium when it opens.

Until then, it is likely that the industry may experience additional ongoing price increases until the situation stabilizes.