GeoCoded Special Report: The Geopolitics of Rare Earths (August 2025)

Rare earth elements (REEs) – a family of 17 metallic elements including neodymium (Nd), praseodymium (Pr), dysprosium (Dy), terbium (Tb), samarium (Sm), cerium (Ce), lanthanum (La) and yttrium (Y) – are indispensable to high‑technology and defence applications. They enable the magnets in electric‑vehicle (EV) motors, wind‑turbine generators, smartphone speakers and military radar systems; they polish semiconductors and optical glass; and they strengthen catalytic converters. Despite their abundance in the Earth's crust, REEs rarely occur in economically recoverable concentrations and must be separated from each other – an energy‑ and waste‑intensive process. Today's supply chain is dangerously concentrated.

China mines roughly 70% of global REEs and controls about 90% of processing and magnet manufacturing, giving Beijing leverage over industries from semiconductors to missiles. Allied attempts to on‑shore supply chains are accelerating, yet heavy REE separation capacity remains almost entirely Chinese. Recent export controls, price floors, and an arms‑race for offtake agreements underscore the strategic nature of these elements.

Key findings:

• Highly concentrated supply: In 2024 global REE production reached ~390 kt, of which China accounted for 270 kt. The United States produced 45 kt, Myanmar 31 kt and Australia and Nigeria about 13 kt each. This yields a Herfindahl‑Hirschman index above 4 000 – well into monopoly territory. Heavy REE separation is even more concentrated; China processed 99% of heavy REEs in 2023.

• Export control shock: Beijing's April 2025 restrictions on seven REEs (samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium) require export licences. Analysts expect a temporary pause in exports during licence issuance. Prices responded violently: yttrium rose 598%, terbium 195% and dysprosium 168%; samarium reportedly jumped sixty‑fold.

• Allied reshoring momentum: The US Department of Defense (DoD) has invested over US$439 million in domestic mine‑to‑magnet projects and offered a 10‑year price floor of US$110/kg for neodymium‑praseodymium (NdPr) oxide to MP Materials. Australia is considering similar price‑floor schemes. The EU's Critical Raw Materials Act (CRMA) mandates that, by 2030, at least 10% of REEs consumed in the bloc must be mined and 40% processed domestically.

• Emerging producers: Africa has at least eight projects set to start up by 2029 – in Tanzania, Angola, Malawi and South Africa – that could deliver 9% of global supply. Brazil holds 23% of global reserves and is mobilising nearly US$1 billion through the state‑owned BNDES and Finep to finance rare‑earth projects. Vietnam is tendering the Dong Pao deposit and aims to produce 60 000 t of REO by 2030.

• High‑tech dependencies: Rare‑earth magnets (NdFeB alloys doped with Dy and Tb) are integral to EUV lithography, wafer‑handling robots and electric‑drive motors; curbs could delay chip‑fab equipment deliveries. Cerium‑oxide slurries are indispensable for chemical‑mechanical polishing (CMP) in semiconductor fabrication. Lanthanum‑oxide improves the refractive index and durability of optical glass.

The remainder of this report unpacks the market structures, geopolitical dynamics, technological dependencies, industrial policies, corporate landscape and future scenarios shaping the rare‑earth economy.

1. Global Market Structure

1.1 Production and flows

The global rare‑earth supply chain follows a multilayered value chain: ore extraction → concentrate → rare‑earth oxides (REO) → metals/alloys → magnets → finished devices. China dominates all but the first step, producing ~70% of mined REEs and ~90% of refined REOs. While China's Bayan Obo mine remains the largest supplier of light REEs, it sources most heavy REE feedstock from Myanmar. Recent instability in Myanmar cut feedstock shipments, illustrating supply vulnerability.

Table 1 – 2024 estimated REE production by major country

Global Rare Earth Element Production 2024

Production data by major producing countries (in kilotons)

Bar Chart Pie Chart Doughnut

Production Data

Country	Production (kt)	Market Share
China	270	69.2%
United States	45	11.5%
Myanmar	31	7.9%
Australia	13	3.3%
Nigeria	13	3.3%
Others	18	4.6%

Key Insights

• China's Dominance: Controls 69.2% of global production
• Market Concentration: HHI exceeds 4,000 (monopoly territory)
• Heavy REE Processing: China processes 99% of heavy REEs
• Supply Vulnerability: Myanmar provides 70% of China's heavy REE feedstock
• Total Global Production: 390 kilotons in 2024

390

Total Global Production (kt)

4,000+

HHI Concentration Index

69.2%

China's Market Share

99%

China's Heavy REE Processing

Figure 1 shows the distribution visually.

1.2 Concentration metrics

The Herfindahl‑Hirschman index (HHI) for global REE production is calculated by summing the squares of each producer's market share. Using the 2024 data above, the HHI exceeds 4 000, reflecting extreme concentration. For heavy REE separation, where China processed 99% of supply in 2023, the effective HHI is close to 10 000.

1.3 Pricing & volatility

REE markets lack transparent benchmarks. Prices are set through opaque long‑term contracts or Chinese domestic auctions. Export controls and political risk trigger extreme volatility: after China's April 2025 restrictions, yttrium prices jumped 598%, terbium 195% and dysprosium 168% (see Figure 2). Samarium prices reportedly increased sixty‑fold. To counteract volatility, the US and Australian governments introduced price‑floor schemes that guarantee NdPr oxide prices (US$110/kg in the US case).

1.4 Value‑chain mapping

Mining and milling produce rare‑earth concentrate; solvent extraction separates it into individual REOs; these are reduced into metals and alloys such as NdFeB; these alloys are pressed into magnets that go into motors, generators and devices. China dominates processing and magnet manufacturing; it exported ~70% of NdFeB magnets globally. New entrants such as Canada's Cyclic Materials are developing recycling plants that can process 500 t of magnet‑rich feedstock into mixed REOs annually, offering a potential circular pathway.

2. Geopolitical Dynamics

2.1 China

• Dominance: China holds around 70% of global REE mine production and nearly 90% of separation and refining capacity. Its state‑backed firms control patents for solvent‑extraction technology and maintain price controls, subsidies and strategic stockpiles. The April 2025 export controls on seven elements require special licences; shipments may be denied on national‑security grounds.

• Leverage: Rare‑earth magnets are essential for F‑35 fighters, submarines and missile guidance systems. By threatening or curtailing exports, Beijing wields influence over Western defence supply chains. China also finances upstream projects abroad through the Belt and Road Initiative (BRI), securing off‑take agreements in Africa and Latin America.

• Challenges: China relies on Myanmar for 70% of its heavy REE feedstock and faces growing pressure from domestic environmental activists. Its new export rules may accelerate decoupling.

2.2 United States

• Policy instruments: The Inflation Reduction Act and CHIPS and Science Act authorise billions of dollars for critical‑minerals projects. The DoD invested US$439 million across domestic mine‑to‑magnet facilities and offered a decade‑long price floor (US$110/kg) for NdPr oxide to MP Materials. The government also took a 15% equity stake in MP Materials, highlighting the shift from buyer to investor.

• Industrial response: MP Materials increased concentrate output by 45% and NdPr production by 120% in early 2025. Lynas began constructing a heavy‑REO separation facility in Texas; Energy Fuels partnered with POSCO to supply NdPr oxide to South Korea's EV motor cores. Recycling initiatives by Cyclic Materials illustrate a circular approach.

• Constraints: The US currently lacks heavy REE separation capacity and still ships most concentrate to China. Environmental permitting averages 10 years due to radioactive thorium/uranium by‑products, creating regulatory uncertainty.

2.3 European Union

• CRMA benchmarks: The EU's Critical Raw Materials Act targets extraction of at least 10% and processing of 40% of the bloc's REEs by 2030; no more than 65% of any strategic raw material may come from a single third country. Permitting timelines are capped at 27 months for extraction and 15 months for processing projects. The Act designates strategic projects eligible for accelerated permitting and preferential finance; 13 non‑EU projects were selected in June 2025, including rare‑earth mines in South Africa and Malawi.

• Industrial alliances: The EU and Japan launched an "economic 2 + 2" dialogue in July 2025 to jointly procure rare earths and simplify EU regulations for Japanese investors. The EU signed a memorandum with Namibia and Canada to diversify supply and is co‑investing in magnet plants.

• Challenges: European firms depend on imported magnets, and heavy REE separation remains absent. The CRMA's domestic extraction benchmark (10%) may be difficult due to ESG concerns and slow permitting.

2.4 Japan & South Korea

• Japan: Haunted by China's 2010 embargo, Japan diversified supply via joint ventures with Australia, India and the United States. Japan stockpiles REOs and invests in recycling; it plans to start test‑mining REE‑rich mud from the seabed near Minamitori Island by early 2026, aiming for 350 t/day by January 2027. Japan's Ministry of Economy, Trade and Industry offers subsidies for magnet production and, along with the EU, is exploring a joint procurement framework.

• South Korea: Dependence on China for rare‑earth metals exceeded 90% in 2023. POSCO's collaboration with Energy Fuels will secure NdPr oxide supply, while Korean firms are investing in Vietnamese and Australian projects. Seoul's critical‑minerals strategy calls for halving import dependence by 2030 and expanding domestic magnet manufacturing.

2.5 Australia & Canada

• Australia: Home to high‑grade Mt Weld (Lynas) and the Nolans project (Arafura). Lynas has begun producing heavy REEs at its Malaysian plant and is building a US separation facility. Canberra is considering a price floor for critical minerals akin to the US scheme and committed up to A$840 million to Arafura's Nolans project while Export Finance Australia issued a US$100 million letter of interest. Arafura has pre‑sold roughly 80% of its future NdPr output through offtake contracts with Hyundai, Kia, Siemens Gamesa and Traxys.

• Canada: Possesses significant light‑REE deposits but limited processing. Recent policy emphasises critical‑mineral processing and recycling. Cyclic Materials is building a CA$34 million recycling plant in Kingston to process 500 t/year of magnet‑rich feedstock and produce recycled REOs containing Nd, Pr, Tb and Dy. Government funding (CA$4.9 million) supported the demonstration plant. The government is also considering new industrial incentives and partnerships with the US under the G7 Critical Minerals Action Plan.

2.6 Emerging producers (Africa, Latin America & ASEAN)

• Africa: Benchmark Mineral Intelligence forecasts that eight mines across Tanzania, Angola, Malawi and South Africa will bring Africa's share of global REE supply to 9% by 2029. Companies such as Pensana (Angola) and Rainbow Rare Earths (South Africa/Burundi) are developing projects registered in Western jurisdictions, although 37% of their projected output is already committed to Chinese buyers. Processing capacity remains limited, making partnerships with European and US refineries essential.

• Brazil: With 23% of global rare‑earth reserves, Brazil is launching a near‑US$1 billion funding programme through BNDES and Finep to support 27 strategic minerals projects, including rare‑earth mines. Firms such as Aclara, Viridis and Meteoric are vying for financing; the state may invite Japan's JICA and private investors, provided projects incorporate refining capacity. Brazil's only producer, Serra Verde, primarily sells to Chinese customers.

• Vietnam: The government is reactivating the Dong Pao deposit and aims to produce 60 000 t of REO annually by 2030. Reserves were revised from 22 Mt to 3.5 Mt, but the country remains among the top six resource holders. Partnerships with Australia's Blackstone Minerals, ASM and South Korean/US magnet makers are under negotiation. Geopolitically, Vietnam is balancing US and Chinese overtures; despite US claims of a done deal, Hanoi insists no final agreement has been reached.

3. Semiconductor Dependencies

3.1 Direct inputs

Rare earths underpin critical processes in semiconductor manufacturing:

• EUV and lithography magnets: NdFeB magnets doped with Dy and Tb are used in extreme‑ultraviolet (EUV) lithography scanners, wafer‑handling robots and etch tools. Neodymium‑praseodymium alloys generate the magnetic fields for stepper motors.

• CMP slurries: Cerium‑oxide (CeO₂) slurries are indispensable for chemical‑mechanical polishing in high‑end display glass and semiconductor wafers due to CeO₂'s strong affinity for silicon dioxide. CeO₂ slurries offer high polishing efficiency and excellent surface quality but are costly and prone to agglomeration.

• Optical glass and photomasks: Lanthanum‑oxide (La₂O₃) increases the refractive index and reduces dispersion in glass, improving image sharpness in photolithography lenses; it also absorbs infrared radiation and enhances hardness and thermal stability.

3.2 Chokepoints

Key equipment OEMs (ASML, Tokyo Electron, Applied Materials) rely on specialized magnets and CMP materials that are often single‑sourced from Chinese refiners or Japanese and German magnet companies that, in turn, depend on Chinese feedstock. A shortage in heavy REEs such as Dy and Tb could delay lithography deliveries and maintenance.

3.3 Risk scorecard

Semiconductor REE Dependencies Risk Scorecard

Critical risk assessment for rare earth element dependencies in semiconductor manufacturing

Risk Radar Risk Levels Impact Matrix

Detailed Risk Assessment

Input/Module	Criticality	Substitutability	Switching Time	Key Risk Factors
NdFeB Magnets (EUV, wafer robots)	High	Very Low	≥5 years	Essential for position control; ferrite magnets insufficient; long redesign cycles
Dy/Tb Doping (High-temp magnets)	High	Very Low	≥5 years	Critical for coercivity; substitutions degrade performance; direct yield impact
CeO₂ CMP Slurry (Advanced nodes)	Med-High	Moderate	2-3 years	Required for planarization; alternatives slower; tool recalibration needed
La₂O₃ Optical Glass (Photolithography)	Medium	Moderate	1-2 years	Improves refractive index; zirconia alternatives exist; optical quality impact

Critical Risk Factors

• Supply Concentration: China controls 99% of heavy REE processing capacity
• Single Points of Failure: Key equipment OEMs depend on specialized Chinese suppliers
• Long Switching Times: Redesign and qualification cycles take 5+ years for critical components
• Performance Trade-offs: Most substitutes significantly degrade semiconductor performance
• Export Control Vulnerability: Recent restrictions caused 168-598% price spikes

4

Critical Dependencies

99%

China's Heavy REE Control

≥5

Years to Switch (High Risk)

598%

Max Price Spike (Yttrium)

4. Industrial Policy & Security Instruments

Governments are deploying an unprecedented mix of subsidies, trade restrictions and security tools:

• China: Export licences and technology‑export bans weaponise its dominant position. Beijing also uses investment screening to acquire foreign projects and offers concessional loans through the BRI.

• United States: Public‑private partnerships are the centrepiece. The DoD price floor and equity stake in MP Materials underpin a vertically integrated magnet supply chain. Tax credits under the Inflation Reduction Act support EV manufacturers using domestically sourced REE magnets.

• European Union: The CRMA introduces mandatory stockpiles, sustainability and recycling requirements and prohibits more than 65% import dependence from any single country. Strategic projects receive accelerated permitting and access to European Investment Bank financing.

• Australia: Canberra is exploring price floors and offtake guarantees for rare‑earth projects. In 2025 the government provided A$840 million in support to Arafura and signalled additional financing for heavy‑REE facilities.

• Japan & South Korea: Both governments provide low‑interest loans and subsidies for exploration and magnet plants. Japan stockpiles REEs and invests in deep‑sea mining; South Korea has launched a critical‑minerals plan aiming to halve import dependence by 2030 and signed supply agreements (e.g., Energy Fuels–POSCO MOU).

• Emerging producers: Brazil's BNDES and Finep are offering nearly US$1 billion for rare‑earth projects. African governments are establishing royalty regimes; Malawi and Tanzania signed binding agreements with Pensana and Mkango while the D.R. Congo introduced royalty incentives for REE producers.

5. Corporate & Asset Landscape

5.1 Leading players and projects

Leading REE Players and Projects

Major companies and projects driving the global rare earth supply chain diversification

Production Capacity Investment Size Project Timeline

Leading Players & Projects Overview

Company/Project	Country/Region	Asset & Stage	Key Highlights
MP Materials	US	Mountain Pass mine Operating Magnet factory 2026	45 kt concentrate, 597 t NdPr oxide (H1 2025); DoD price floor US$110/kg; 15% gov equity stake
Lynas Rare Earths	AUMYUS	Mt Weld mine Operating Heavy REE facility Texas	Largest non-Chinese producer; first heavy REE production 2025; price-floor rally
Arafura Rare Earths	AU	Nolans project Development	A$840M government support; US$100M export finance; 80% output pre-sold to Hyundai, Kia, Siemens
Energy Fuels & POSCO	USKR	White Mesa mill Operating Supply chain MOU	NdPr oxide supply to POSCO; monazite from multiple sources; 30k+ EV support capacity
Pensana	AOUK	Longonjo mine Development	One of Africa's largest light-REE projects; NdPr oxide production; UK critical minerals strategy
Cyclic Materials	CA	Kingston recycling CA$34M	500 t/year magnet-rich feedstock; Nd, Pr, Tb, Dy recovery; circular economy approach
Blackstone & VTRE	VN	Dong Pao JV Planning	60 kt REO by 2030 target; separation plant plans; revised reserves 3.5 Mt
Rainbow Rare Earths	ZABI	Phalaborwa & Gakara Development	~1,900 t magnet REOs/year by late 2026; dual-country operations

Project Development Timeline

2025

MP Materials magnet factory construction begins; Lynas heavy REE production starts

2026

MP Materials Texas facility operational; Rainbow Rare Earths Phalaborwa production

2027

Cyclic Materials recycling plant full capacity; Multiple African projects ramp-up

2029

Arafura Nolans project production; Africa reaches 9% global supply share

2030

Vietnam Dong Pao 60kt REO target; EU CRMA benchmarks achieved

Strategic Industry Insights

• Western Integration: US/Australia building complete mine-to-magnet supply chains
• Government Backing: Price floors, equity stakes, and export finance de-risking projects
• Offtake Security: 80% of Arafura's output pre-sold; long-term contracts securing investment
• Diversification Focus: Africa targeting 9% global supply by 2029
• Circular Economy: Recycling initiatives reducing primary supply dependence
• Heavy REE Critical: US and Australia prioritizing heavy REE separation capabilities

10+

Major Projects

$2B+

Total Investment

80%

Arafura Pre-sold Output

9%

Africa 2029 Target Share

60kt

Vietnam 2030 REO Target

5.2 Offtake agreements and financing

Offtake contracts underpin project finance and reduce exposure to price volatility:

• Traxys–Arafura: Five‑year contract for 100–300 t/year of NdPr oxide priced relative to China's market with take‑or‑pay provisions.

• Energy Fuels–Neo Performance: Tolling arrangement linking US monazite processing with Neo's Silmet separation plant; ensures production of individual REOs in Europe.

• MP Materials–GM & Apple: Multi‑billion‑dollar deals to supply magnets for EVs and consumer electronics; Apple prepayments fund MP's Texas magnet factory.

• REEtec–Schaeffler: Five‑year agreement starting 2024 to supply separated REEs for magnets.

6. Scenario Analysis (2025–2035)

Scenario 1: Tightening Controls

Description: China escalates export restrictions to include magnets and alloys; Western–Chinese relations deteriorate (e.g., over Taiwan), prompting full or partial embargos.

• Leading indicators: Additional Chinese export licences; public threats to suspend supply; inclusion of REE processing technologies in tech‑export bans; removal of Myanmar feedstock due to sanctions.

• Triggers: Geopolitical crises (Taiwan Strait conflict), escalation of trade wars, or Western sanctions on Chinese tech firms.

• Impacts: Prices spike; heavy REE shortages delay EV and semiconductor production; Western governments accelerate stockpiling; allied price floors expanded; substitution research intensifies.

Scenario 2: Managed Diversification

Description: Allied nations succeed in building alternative mine‑to‑magnet supply chains while cooperating with China to maintain stable trade.

• Leading indicators: Ramp‑up of African and Brazilian mines; completion of Arafura, Pensana and Longonjo projects; new separation plants in the US, Europe and Japan; recycling capacity growth.

• Triggers: Implementation of CRMA benchmarks, full commissioning of U.S. and Australian separation plants, stable China–West relations, long‑term offtake contracts with automakers.

• Impacts: Market concentration declines (HHI < 2 500 by 2030); price volatility moderates; ESG‑compliant mines become competitive; technology substitution remains slow as NdFeB magnets continue to dominate.

Scenario 3: Tech Substitution

Description: Rapid breakthroughs in magnet‑free motors (e.g., switched‑reluctance, superconducting) and sodium‑ion batteries reduce REE demand; recycling scale increases.

• Leading indicators: Commercial adoption of rare‑earth‑free traction motors; large EV makers announce magnet‑free platforms; major investments in sodium‑ion battery gigafactories.

• Triggers: Sustained high REE prices, new environmental regulations on radioactive waste, or major funding for substitution R&D.

• Impacts: Demand for NdPr and Dy/Tb peaks by 2030; some mines become stranded; recycling and substitution technologies displace primary supply; China's leverage erodes; investor returns hinge on low‑cost producers and recyclers.

7. Risks & Constraints

• Environmental, social & governance (ESG) and permitting: Many REE deposits co‑exist with radioactive thorium and uranium. Secure storage and impoundment ponds require special licences and lengthy environmental assessments; US permitting can take around 10 years. EU regulations are similarly stringent. Local opposition to tailings, water use and Indigenous rights often delays projects.

• Geopolitical nationalism: Resource nationalism in emerging producers (e.g., Indonesia's nickel ban) could spread to REEs. Governments may impose export quotas, windfall taxes or nationalization, threatening investor returns.

• Financial fragility: REE prices are opaque and volatile; capital expenditure for new separation plants is high (>US$500 million). Without long‑term offtake agreements or price‑floor guarantees, investors may delay projects.

• Technological substitutes: Advances in permanent‑magnet‑free motors, magnet recycling and alternative battery chemistries (e.g., sodium‑ion, lithium‑sulfur) could erode demand. R&D on "green separation" using bacteria and proteins aims to reduce environmental impacts.

8. Country Scorecards

Country Scorecards - Global REE Strategic Positions

Comparative analysis of national roles, capabilities, and constraints in rare earth markets

Strategic Capabilities Import Dependencies Development Progress

Country Strategic Assessment

Country	Strategic Role	Key Developments & Assets	Risks & Constraints
🇨🇳China Medium Risk	Dominant Producer & Processor	270 kt production (70%); >90% separation capacity; export controls on 7 REEs; BRI upstream investments	Myanmar feedstock reliance; environmental protests; potential Western sanctions
🇺🇸United States High Risk	Emerging Integrated Supplier	Mountain Pass mine; DoD price floor ($110/kg); magnet factory construction; recycling initiatives	No heavy REE separation; 10-year permitting; high operational costs
🇪🇺European Union High Risk	Consumer Policy Maker	CRMA benchmarks (10%/40%); 13 strategic projects; joint procurement with Japan	Chinese magnet dependence; slow permitting; ESG activism constraints
🇯🇵Japan High Risk	Advanced Manufacturer	Strategic stockpiles; deep-sea mining R&D; Minamitori test-mining (350 t/day by 2027)	Negligible domestic production; import reliance; high seabed mining costs
🇰🇷South Korea High Risk	Manufacturer Importer	POSCO-Energy Fuels MOU; halve import dependence by 2030; Vietnamese/Australian investments	>90% China reliance; limited domestic resources; Japan competition
🇦🇺Australia Medium Risk	Producer Project Incubator	Mt Weld (Lynas); Nolans (Arafura A$840M); heavy REE separation facility; price floor consideration	Labor shortages; Indigenous negotiations; China export reliance until processing ready
🇨🇦Canada Medium Risk	Producer Recycler	Nechalacho deposit; CA$34M Kingston recycling plant; G7 Critical Minerals Action Plan	No domestic separation; remote infrastructure; regulatory delays
🇧🇷Brazil Medium Risk	Resource Holder Prospective	23% global reserves; BNDES/Finep $1B funding; Serra Verde operations; Aclara/Viridis development	Limited processing; Chinese buyer reliance; bureaucratic hurdles
🇻🇳Vietnam Medium Risk	Dormant Giant Emerging	Dong Pao tender; 60 kt REO by 2030 target; Blackstone/ASM partnerships; US/China balancing	Revised reserves (3.5Mt); nascent industry; infrastructure gaps; geopolitical balancing
🌍Africa High Risk	Emerging Producers	8 mines targeting 9% global supply by 2029; Pensana (Angola); Rainbow RE (SA); EU/US partnerships	Financing gaps; infrastructure deficits; 37% Chinese off-take; governance risks

Strategic Capability Comparison

Production Capacity

China dominates with 70% global production

Processing & Separation

China controls 90% of separation capacity

Heavy REE Processing

China processes 99% of heavy REEs

Western Alternative Capacity

Allied nations building 15% alternative capacity by 2030

Geopolitical Strategic Assessment

• China's Leverage: Near-monopoly on heavy REE processing creates strategic chokepoint
• Western Response: $2B+ investment in alternative supply chains accelerating
• Critical Dependencies: Japan/South Korea >90% import reliant; EU lacks domestic processing
• Emerging Alternatives: Africa could provide 9% global supply by 2029
• Technology Race: Deep-sea mining, recycling, and substitution R&D intensifying
• Policy Tools: Price floors, export controls, and strategic stockpiles reshaping markets

10

Countries Analyzed

70%

China Production Share

99%

China Heavy REE Control

$2B+

Western Investment

2030

Diversification Target

9%

Africa 2029 Target

9. What Changed This Quarter (April–August 2025)

• China imposed export controls on seven rare earths (Sm, Gd, Tb, Dy, Lu, Sc, Y) effective May 1, 2025, requiring special licences. Heavy REE prices surged (Y +598%, Tb +195%, Dy +168%).

• The US Department of Defense announced a 10‑year price floor of US$110/kg for NdPr oxide and invested US$400 million in MP Materials, taking a 15% equity stake. MP Materials' H1 2025 output rose 45% for concentrate and 120% for NdPr.

• Australia signalled a national price‑floor scheme for critical minerals, including heavy REEs; shares of Lynas and Arafura rallied.

• The EU announced its first list of 13 non‑EU strategic projects under the CRMA, including rare‑earth mines in South Africa and Malawi, and set permitting timelines of 27 months for extraction and 15 months for processing.

• Japan and the EU agreed to launch an economic "two‑plus‑two" dialogue to coordinate rare‑earth procurement and allow Japanese firms to participate in EU strategic projects.

• Brazil unveiled plans to allocate nearly US$1 billion through BNDES and Finep to fund rare‑earth projects and invited international investors as long as projects include refining capacity.

• Vietnam reopened tendering for the Dong Pao mine and revised its reserves from 22 Mt to 3.5 Mt, while setting a target to produce 60 kt REO annually by 2030.

10. Implications and Recommendations

10.1 For governments

1. Stockpile strategically: Build or enlarge strategic REE inventories, particularly of heavy REEs, to buffer against supply disruptions. Align stockpile sizes with consumption needs in defence, EV and power sectors.

2. Anchor supply chains: Use long‑term offtake contracts, price floors and equity stakes to de‑risk projects. The US DoD model shows that guaranteed pricing catalyses investment.

3. Streamline permitting: Expedite approval processes while maintaining environmental safeguards; adopt "one‑stop shop" frameworks like the EU's 27‑month extraction permit cap.

4. Strengthen alliances: Pursue joint procurement (EU‑Japan example), coordinate sanctions enforcement and engage in diplomatic dialogues with emerging producers to secure offtake agreements.

5. Invest in R&D: Fund alternative magnet chemistries, "green separation" technologies using biological agents, and deep‑sea mining tests. Encourage domestic processing and recycling to reduce environmental footprints.

10.2 For businesses

1. Dual‑source and localise: Diversify suppliers across multiple regions; co‑invest in mines and separation plants to secure feedstock. Map the entire supply chain from ore to magnet to anticipate bottlenecks.

2. Design for flexibility: Explore magnet‑reduction strategies in EV motors (e.g., switched‑reluctance designs) and incorporate modularity that allows substitution if REE prices spike.

3. Engage in long‑term contracts: Secure offtake agreements with miners to lock in quantities and pricing, using take‑or‑pay clauses to mitigate volatility. Consider participating in government‑backed price‑floor programs.

4. Invest in recycling: Partner with recyclers like Cyclic Materials to recover Nd, Pr, Dy and Tb from end‑of‑life magnets. Recycling reduces exposure to primary supply risks and improves ESG performance.

10.3 For investors

1. Assess project pipelines: Focus on companies with advanced-stage projects (bankable feasibility studies) and secured offtakes (e.g., Arafura's Nolans project). Be wary of early‑stage exploration without separation capacity.

2. Incorporate risk overlays: Evaluate geopolitical risk, permitting timelines and exposure to heavy REEs. Projects in stable jurisdictions with supportive policies (Australia, Canada) merit premium valuations, while those in high-risk regions require higher returns.

3. Look beyond mining: Consider investments in separation, magnet manufacturing and recycling, where value capture and barriers to entry are higher. Platform companies integrating the entire value chain (e.g., MP Materials, Lynas) may offer resilient returns.

4. Monitor substitution research: Track breakthroughs in magnet‑free motors and sodium‑ion batteries; early investment in substitution technologies can hedge against future demand declines.

Conclusion

Rare earth elements have moved from obscurity to a geostrategic focal point. Their supply chain sits at the intersection of industrial policy, technological rivalry and environmental stewardship. Beijing's dominance and recent export controls exposed the fragility of global supply. While allied governments are mobilising capital, introducing price floors and crafting industrial policies to re‑shore production, building a resilient supply chain will take years. Emerging producers in Africa, Brazil and Vietnam offer hope but also bring geopolitical complexity. Investors and policymakers must navigate this landscape with a long‑term view, balancing security, sustainability and economic efficiency. The coming decade will determine whether the world remains beholden to a single supplier or achieves a diversified and resilient rare‑earth ecosystem.