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

Executive Intelligence Summary: The global rare earth ecosystem, valued at over US$60 billion in end-use markets, stands at a strategic inflection. While China’s export curbs and processing dominance threaten critical-tech supply chains, allied reshoring efforts and emerging producers signal a gradual rebalancing. This “green versus gray” tension—between diversification rhetoric and persistent Chinese leverage—will dictate technological leadership, defense readiness, and industrial policy over the next decade.

Strategic Overview: Supply Chains Under Strain

Monopoly Metrics: In 2024, China mined 270 kt (69 percent) of global REEs and processed 99 percent of heavy REEs, yielding a Herfindahl-Hirschman index above 4 000—firmly in monopoly territory. Beijing’s April 2025 export‐license regime for seven elements triggered yttrium price spikes of 598 percent and samarium sixty-fold, exposing acute chokepoints.

Reshoring Momentum: U.S. DoD’s US$439 million mine-to-magnet initiative and a US$110/kg NdPr price floor catalyzed 45 percent concentrate and 120 percent NdPr output growth at MP Materials. Australia’s A $840 million support for Arafura’s Nolans project and EU’s CRMA benchmarks (10 percent mined, 40 percent processed by 2030) underscore allied industrial‐policy convergence.

Emerging Frontiers: Africa’s eight slated projects could add 9 percent of supply by 2029; Brazil’s 23 percent reserve stake is backed by a near-US$1 billion BNDES/Finep programme; Vietnam targets 60 kt REO by 2030 via Dong Pao JV. Yet processing capacity remains the critical bottleneck outside China.

1. Market Structure & Concentration

1.1 Production Landscape

Global Rare Earth Element Production, 2024

Major producing countries by kiloton output

HHI > 4 000 confirms extreme concentration; heavy-REE separation HHI approaches 10 000.

1.2 Pricing & Volatility

Opaque contract structures and China’s auction system drive volatility. April 2025 controls produced:

• Yttrium: +598%

• Terbium: +195%

• Dysprosium: +168%

• Samarium: ×60

Allied price-floor schemes (US$110/kg NdPr; Australia under consideration) aim to cap extreme swings.

2. Geopolitical Dynamics

2.1 China’s Leverage

State-backed firms control solvent-extraction patents, maintain stockpiles, and restrict exports on national-security grounds. Heavy‐REE inputs underpin F-35 magnets and EUV lithography scanners, granting Beijing coercive influence over defense and chip-making supply chains.

2.2 United States’ Industrial Mobilization

DoD equity stakes and price floors accelerated MP Materials’ output, while Lynas’ Texas facility and Energy Fuels–POSCO partnerships address heavy‐REE gaps. Regulatory lag (10-year permitting) and radioactive byproduct hurdles remain major constraints.

2.3 European Union’s Strategic Mandate

CRMA mandates: 10 percent domestic mining, 40 percent processing, and import caps of 65 percent per source by 2030. Accelerated permitting (27 months extraction; 15 months processing) and 13 strategic projects (South Africa, Malawi) target immediate capacity gaps.

2.4 Asia-Pacific Realignments

• Japan: Deep-sea test-mining (350 t/day by 2027), stockpiles, and EU “2+2” procurement dialogue.

• South Korea: POSCO–Energy Fuels MOU secures NdPr; aims to halve import reliance by 2030 via ASEAN/Australia ventures.

• Australia: A$840 million to Nolans; US separation facility for Lynas; price-floor policy in discussion.

• Canada: CA$34 million recycling plant; G7 Critical Minerals Action Plan synergies; seeks heavy‐REE separation partnerships.

3. Semiconductor Dependencies & Risks

Semiconductor Rare Earth Dependencies & Risks

Criticality, substitutability & key risk assessment (2025)

Input/Module	Criticality	Substitutability	Switching Time	Key Risk Factors
NdFeB Magnets (EUV, wafer robots)	High	Very Low	≥5 years	Essential for precision control; ferrite magnets insufficient; redesign cycles long
Dy/Tb Doping (High-temp magnets)	High	Very Low	≥5 years	Critical for coercivity; substitutes degrade performance; impacts chip yields
CeO₂ CMP Slurry (Advanced nodes)	Med-High	Moderate	2–3 years	Planarization essential; alternatives slower; tool recalibration/disruption risk
La₂O₃ Optical Glass (Photolithography)	Medium	Moderate	1–2 years	Enhances optics; zirconia alternatives exist but impact quality/cost

Key chokepoint: Chinese refiners dominate specialized magnet and CMP inputs, risking multi-year project delays under export controls.

4. Industrial Policy & Security Instruments

China: Export licences, BRI upstream deals, and tech-export bans.
USA: DoD price floors/equity; Inflation Reduction Act tax credits for domestic magnets.
EU: CRMA stockpiles, recycling mandates, and EIB-backed strategic finance.
Australia & Canada: Price-floor schemes, offtake guarantees, and recycling incentives.
Emerging Producers: Brazil’s US$1 billion funding; African royalty regimes; Vietnam’s bid-off take negotiations.

5. Corporate & Asset Landscape

Leading Rare Earth Corporate & Asset Landscape

Major projects and company activity shaping global supply (2025)

Company / Project	Region	Stage	Key Highlights
MP Materials	US	Magnet Plant (2026)	597 t NdPr (H1 2025); DoD price floor; 15% DoD equity stake
Lynas Rare Earths	AU→US	Separation	First heavy-REE output 2025; US facility under construction
Arafura Nolans	AU	Development	A$840m support; 80% offtake pre-sold to Hyundai/Kia
Energy Fuels & POSCO	US–KR	MOU	Secures NdPr for EV motors; supports 30k+ units annually
Pensana Longonjo	AO	Development	Africa light-REE hub; UK strategic supply linkage
Cyclic Materials	CA	Recycling	500 t/yr magnet feedstock; circular economy for Nd, Pr, Tb, Dy
Blackstone & VTRE (Dong Pao JV)	VN	Planning	60 kt REO by 2030 targeted; separation facility planned
Rainbow Rare Earths (Phalaborwa)	ZA/BI	Development	1,900 t/yr magnet REOs by 2026; dual-jurisdiction investment

6. Scenario Analysis (2025–2035)

1. Tightening Controls (30%): China extends embargos to magnets/alloys; allied price floors and stockpiling intensify; severe supply shocks.

2. Managed Diversification (50%): U.S./EU/AUS separation plants and African/Brazilian mines commissioned; HHI < 2 500 by 2030; moderated price volatility.

3. Tech Substitution (20%): Breakthroughs in magnet-free motors and sodium-ion batteries reduce NdPr demand; recycling scales; stranded-asset risk for primary mines.

7. Risks & Constraints

• ESG Permitting: Radioactive byproducts delay approvals (~10 years in U.S./EU).

• Resource Nationalism: Export quotas, windfall taxes, and nationalizations threaten project viability.

• Financial Fragility: US$500 million+ capex for separation; volatile REO prices deter capital without offtake guarantees.

• Substitution Threats: Green R&D (biological separation) and magnet-free technologies could undercut primary demand.

8. Country Scorecards

Country Scorecards: Global REE Strategic Positions

Comparative analysis of national roles, capabilities, risks (2025)

Country	Strategic Role	Key Developments & Assets	Risks & Constraints
🇨🇳 China	Dominant Producer & Processor	270 kt production (~70%), >90% separation, export controls on 7 REEs, BRI upstream investments	Myanmar feedstock reliance, environmental protest risk, Western sanctions exposure
🇺🇸 United States	Emerging Integrated Supplier	MP Materials vertical integration, DoD price floor (~$110/kg), magnet factory, recycling push	No heavy-REE separation, ~10-year permitting delays, high operational costs
🇪🇺 European Union	Consumer Policy Maker	CRMA targets: 10% mined, 40% processed by 2030; 13 strategic projects; EU–Japan procurement alliance	Magnet import dependence, slow permitting, ESG activism
🇯🇵 Japan	Advanced Manufacturer	Strategic stockpiles, seabed mining trials, EU–Japan procurement, deep-sea R&D	Negligible domestic supply, import dependence, deep-sea mining cost
🇰🇷 South Korea	Manufacturer Importer	POSCO–Energy Fuels MOU, magnet plant plans, reducing China reliance, Vietnam/AUS projects	>90% China dependence, limited domestic supply, Japan/EU competition
🇦🇺 Australia	Producer Project Incubator	Mt Weld/Lynas, Nolans/Arafura, price floors, ~80% output pre-sold, US/EU partnerships	Labor shortage, Indigenous rights, China offtake until new separators
🇨🇦 Canada	Producer Recycler	Kingston plant CA$34M recycling, G7 coordination, recycled REEs (Nd, Pr, Dy, Tb)	No commercial separation, remote sites, permitting
🇧🇷 Brazil	Resource Holder Prospective	~23% global reserves, US$1B funding program, Serra Verde startup, Japan/EU outreach	Limited processing, Chinese buyers, bureaucracy
🇻🇳 Vietnam	Dormant Giant Emerging	Dong Pao, 60 kt REO by 2030, Blackstone ASM JV, US/China balancing	Reserve revisions, nascent industry, infrastructure gaps
🌍 Africa	Emerging Producers	8 mines by 2029, target ~9% share, Pensana, Rainbow, EU/US partnerships	Financing, infrastructure, ~37% China offtake, governance

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

• China enforced export licences on 7 REEs from May 1, triggering record price volatility.

• U.S. DoD invested US$400 million in MP Materials, took 15% equity; MP output +45% concentrate, +120% NdPr.

• Australia signaled price-floor considerations; Lynas/Arafura stocks rallied on government support.

• EU designated 13 CRMA strategic projects (incl. South Africa, Malawi); set faster permitting caps.

• Japan–EU launched “2+2” procurement dialogue; Brazil committed US$1 b funding; Vietnam revised Dong Pao reserves to 3.5 Mt and resumed tender.

10. Implications & Recommendations

10.1 For Governments

• Stockpile Critical REEs: Align inventory levels with defense and industrial needs; integrate with allied reserves.

• De-risk Projects: Leverage offtake guarantees, price floors, and equity stakes to attract capital.

• Permit Reform: Establish one-stop frameworks to condense environmental approvals to CRMA-like timelines.

• Forge Alliances: Expand joint procurement (EU-Japan model) and coordinate sanctions enforcement.

• Fund R&D: Support green separation, substitution tech, and deep-sea mining demonstrations.

10.2 For Business Leaders

• Diversify Supply: Secure multi-region feedstocks; co-invest in separation and magnet plants.

• Design Flexibly: Adopt magnet-light or magnet-free motor architectures to mitigate supply shocks.

• Lock in offtakes: Use take-or-pay contracts and participate in government-backed price-floor schemes.

• Invest in Recycling: Partner with recyclers to capture value from end-of-life magnets and enhance ESG.

10.3 For Investors

• Vet Pipelines: Prioritize bankable projects with secured offtakes; avoid early-stage exploration lacking separation plans.

• Apply Risk Overlays: Adjust valuations for geopolitical, permitting, and heavy-REE exposure.

• Target High-Value Nodes: Focus on separation, magnet manufacturing, and recycling firms with high barriers to entry.

• Monitor Substitution: Hedge via early-stage investments in magnet-free and sodium-ion technologies.

Conclusion: Rare earths now command center stage in the nexus of technology, defense, and climate policy. Beijing’s stranglehold and export curbs unveiled supply fragilities, prompting unprecedented allied interventions. While reshoring and new producers offer diversification pathways, processing remains the critical chokepoint. The next decade’s winners will be those who secure integrated, resilient supply chains—balancing security, sustainability, and economic efficiency.

GeoCoded Special Report synthesizes primary-source intelligence from official government production data, mining company reports, Department of Defense procurement records, EU Critical Raw Materials Act filings, and verified industry pricing benchmarks. Analysis represents objective assessment of strategic supply chain vulnerabilities and geopolitical implications for technology, defense, and industrial policy decision-makers. Next update scheduled for Q1 2026 following completion of major separation facility commissioning and African project developments.

Data Annex: [Production matrices, offtake agreements, and processing capacity networks available]
Distribution: Government, policy makers, business leaders, academic researchers, institutional investors
Report Number: GC-REE-2025-08
Publication Date: August 16, 2025