There are several moving parts in the rare earths supply chain that could lift the sector out of its current depressed state.
Brendan Clark, CEO of Victory Metals (ASX:VTM) — which is advancing a heavy rare earths project in Western Australia — tells Mining.com.au that 2024 was a particularly rough year for the sector due to strong manipulation from China which provided a false economy for a sector that is in high demand.
But one possible “wildcard” comes from the geopolitical instability in Myanmar – the world’s fourth largest producer of rare earths.
In Myanmar, the Kachin Independence Army previously seized control of key rare earth mining hubs, Panwa and Chipwe, leading to supply interruptions.
“Myanmar reportedly accounts for some 40% of the global mining supply of dysprosium and terbium, and such disruptions could significantly affect the prices of heavy rare earths,” says Philippa Leggat, Managing Director of rare earths explorer Critica (ASX:CRI).
“The question is whether this instability in Myanmar has already been priced in by Chinese producers.”
At the same time, US President Donald Trump’s continued roll out of tariffs on goods imported from several countries, including China, is also unsettling the market.
The US currently only has one operating rare earths mine and processing facility in the country.
In January, Nevada-headquartered rare earths major MP Materials (NYSE:MP) began commercial production at its fully integrated rare earth magnet manufacturing facility in Texas.
The company began producing neodymium-praseodymium (NdPr) metal and trial production of automotive-grade, sintered neodymium-iron-boron (NdFeB) magnets.
MP Materials says this brings the US closer to reestablishing a fully integrated, domestic supply chain for these critical components for the first time in decades.
The US plans to impose a 25% tariff on NdFeB magnets imported from China starting in 2026.
However, since most NdFeB magnets are already embedded in components imported by US manufacturers, the tariff is expected to affect only a small portion of the nation’s overall magnet consumption.
“The combination of tariffs and initiatives to expand domestic production presents a complicated short- and long-term outlook for rare earth pricing in the US,” Leggat explains.
“The tariffs could initially raise costs (and end product prices) by disrupting existing supply chains. In the same vein, China, which holds a significant share of both REE mining and processing capabilities, has shown a willingness to leverage its control over this supply and related processing technologies by limiting rare earth exports to the United States, including key technology and intellectual property.
“Recent export controls on critical elements like antimony, germanium, and gallium have demonstrated how quickly prices can spike when supply is restricted.”
The rare earths supply chain is entering a new phase of development, as signs of price decoupling from China start to emerge.
Rare earths prices could potentially receive a boost if Beijing decides to block the export of rare earths to the West.
“In either case, a restriction on magnet exports, even if short-lived, is likely to further incentivise Western nations in rapidly progressing the development of alternative rare earth supply chains,” Leggat notes.
Billions flowing into rare earths
Victory Metals’ Clark says the Australian Government is doing more than many when it comes to shoring up the Western supply chain.
“This is evident from the billions of dollars of funding into rare earth projects over recent times, this shows the importance of the sector and the role Australia can play,” he tells Mining.com.au.
“Victory’s benefit will be a far lower capex to traditional hard rock deposits and the time to production much quicker. Downstream processing is something we shouldn’t forget about and that is also an important step of breaking the reliance from China.”
The junior explorer this week released an exploration target of 100 to 230 million tonnes @ 330 to 600 parts per million (ppm) total rare earth oxides (TREO) and scandium for its North Stanmore Rare Earth Element and Scandium Project.
The project already has an existing indicated and inferred resources of 247.5 million @ 520ppm TREO.
“Australia is one of the best mining jurisdictions in the world and we host the resources that the US and the rest of the western world need not only for decarbonisation but also national security,” he adds.
Clark says rare earth elements are broken into two categories — light and heavies.
“The lowest value heavy rare earth yttrium still has a value of seven times that of light rare earths lanthanum and cerium that generally make up the major portions of light rare earth projects,” he says.
“Victory has the highest ratios of heavies for a clay project in Australia and that’s why we have an extremely high basket price.
“Other heavy rare earths that many people haven’t heard about such as lutetium are also set to start shining due to its scarcity and importance with aerospace and high tech alloys, along with its advanced technologies. Lutetium has a value in excess of $1,200 per kilogram.”
Meanwhile, American Rare Earths (ASX:ARR) CEO Chris Gibbs tells Mining.com.au any shifts in US trade policy, including proposed tariffs, are likely to accelerate efforts to reduce reliance on foreign-controlled supply chains, reinforcing the need for domestic production of rare earths.
“Tariffs or other trade measures could drive increased government investment and incentives for US-based rare earths projects, fast-tracking the development of processing and magnet production capabilities,” he says.
Australian companies building operations in the US are benefiting from these tailwinds. For example, Lynas Rare Earths has partnered with the US Department of Defense to develop a processing plant in Texas.
Since 2022, the US Department of Defense and the Department of Energy has awarded more than $440 million to rare earth companies, with additional tax credits provided under the Inflation Reduction Act.
In April last year, the US Department of Energy allocated $17.5 million to developing rare earth and critical mineral processing technologies.
The government has also introduced legislative measures aimed at streamlining permitting processes to accelerate project development.
Sydney-headquartered American Rare Earths is advancing its Halleck Creek Project in Wyoming which hosts a 2.63-billion-tonne resource containing 8.6 million tonnes of total rare earth oxides (TREO), including the high-demand magnet metals neodymium and praseodymium.
American Rare Earths says the project could become the largest rare earth mine in North America and a multi-generational project, making it the first major rare earth mine to be developed in the US since Mountain Pass.
“Our Halleck Creek project in Wyoming offers a long-term solution to ensuring NdPr independence,” Gibbs says.
“Importantly, we have strong support from the State of Wyoming, including state funding and grants. Additionally, Halleck Creek is on state land, providing a clear and defined permitting pathway — a key advantage in expediting development.
“Further underscoring the strategic importance of Halleck Creek, the US EXIM Bank issued a letter of interest last year. This highlights the growing recognition of our project and the potential financial backing available for US-based critical minerals projects.”
Strategic moves
While depressed prices over the past two years have impacted the financial viability of rare earths projects, they have encouraged partnerships, consolidation, mergers and acquisitions.
Some of the more notable deals include Australia-listed but Hong Kong-domiciled Astron (ASX:ATR) forming a joint venture with Colorado’s Energy Fuels (NYSE:UUUU) for the development of Victoria’s Donald Rare Earths and Mineral Sands Project.
Defense Metals (TSX-V:DEFN) signed a memorandum of understanding with the Saskatchewan Research Council to advance Canada’s domestic rare earth supply chain.
Meanwhile, Ucore Rare Metals (TSX-V:UCU) received US$1.8 million in US Department of Defense funding to commercialise its RapidSX separation technology for rare earths.
In September 2024, Ucore also signed a memorandum of understanding with Australia’s ABx Group (ASX:ABX) to work towards a binding offtake agreement that would see ABx supply mixed rare earth carbonate to Ucore as well as a potential investment by Ucore into ABx.
Critica is advancing the development of its flagship Brothers and Jupiter projects in Western Australia.
Initial metallurgical testwork recently completed at the Jupiter Project resulted in a nine-fold increase in the grade of the rare earths extracted from the clay-hosted deposit.
Meanwhile, American Rare Earths is actively engaging with federal and state stakeholders to ensure the company is well-positioned to access the available funding and support mechanisms.
“At American Rare Earths, we fully intend to be part of this strategy to onshore the US rare earths supply chain. Our Halleck Creek project aligns with US government priorities,” Gibbs says.
While significant progress has been made to secure the Western supply chain, there are three key areas that remain critical for achieving this goal, according to Gibbs.
These include scaling up domestic processing and refining capacity, advancing rare earth processing technologies and strengthening partnerships with Western allies.
On the technology front, American Rare Earths is partnering with Penn State University to provide ore from Halleck Creek for testing a processing method that enables one-step rare earth extraction without harmful solvents.
While rare earths prices have been under pressure for some time, the longer term picture is more positive.
Gibbs says the fundamentals for rare earths remain strong, with sustained demand growth driven by advanced technology, defence applications, and critical infrastructure.
“REEs are essential for military systems, including fighter jets, missile guidance systems, and radar technologies, as well as AI, computing, and next-generation telecommunications,” he notes.
“Additionally, rare earths will continue to be critical for clean energy solutions, including electric vehicles (EVs), wind turbines, and energy storage.
“While short-term pricing fluctuations may occur, the long-term trajectory is highly positive, and American Rare Earths is well-positioned to play a key role in securing a sustainable, domestic rare earths supply.”
Write to Angela East at Mining.com.au
Images: Mining.com.au, MP Materials, Wikipedia & American Rare Earths
