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No telling where or what it is, but it's in the original article
The above link is to the article below. For reasons unknown, I expect this article to disappear.
Beijing’s recent export controls on permanent magnets put in stark relief the West’s continued reliance on Chinese supply. Policy interventions in the 15 years since China first used its dominance over global rare earths supply, via a de facto embargo on Japan over a geopolitical dispute, have almost universally failed to bridge the divide between what customers are willing to pay and the project economics of Western suppliers undercut by state-subsidized Chinese rivals.
This may be about to change. The Trump Administration in July 2025 made the most decisive intervention by any Western government to date to create a complete mine-to-magnet rare earths value chain. The US Department of Defense (DoD)’s deal with American miner MP Materials included an offtake agreement for permanent magnets and, crucially, provides a guaranteed floor price for a key rare earth input neodymium-praseodymium (NdPr). This floor price extends to the NdPr content in products that MP Materials will manufacture, including permanent magnets.
The MP Materials deal is unlikely to be a one-off. Deals in the works in Washington and other allied capitals could catalyze the emergence of a series of ex-China price premiums that aim to ultimately de-risk rare earths and move permanent magnet production outside China.
None of this will be simple. The US and its allies will need to coordinate to ensure that public funds are targeted at areas of the supply chain where China’s control is most entrenched. Skills shortages after decades of offshoring are one of several formidable challenges.
Anatomy of US industrial decline
It is sometimes forgotten that the US once dominated rare earths. California’s Mountain Pass mine produced the majority of the world’s rare earths right up until the late 1980s.
Around the same time, General Motors (GM) discovered and commercialized neodymium magnets. Neodymium magnets, which contain metals produced from rare earth elements neodymium and praseodymium, are a type of permanent magnet. They are integral to the functioning of electric motors, wind turbines, and defense technologies relying on guidance and propulsion.
But in a story that is now familiar, the advent of unfettered globalization led to the neglect of economic resilience. In 1995 and with US government approval, GM sold its magnet business, Magnequench, to Chinese investors as part of a cost-reduction drive. The deal likely helped expedite GM’s efforts to open an additional Chinese auto production line.1
Magnequench’s Indiana plant was shut in 2006, with remaining operations offshored to China.2 Struggling to remain competitive with Chinese rivals, Mountain Pass was mothballed for most of the 15 years between 2002 and 2017, before being acquired and reopened by MP Materials.
The atrophying of Western rare earths capability – France was a major player in rare earths processing too, until the mid-1980s – allowed China to achieve a near-monopoly.3Today, China is home to 60% of rare earths mining, 85% of rare earths processing, and 92% of permanent magnets manufacturing.
An Achilles heel hiding in plain sight
The possibility that China would one day seek to weaponize its rare earths and permanent magnets monopoly was hardly outlandish. China first limited shipments of certain rare earths to Japan in 2010. Nine years later, President Xi Jinping made a very deliberate visit to a permanent magnet factory at the height of the first Sino-US trade war.
Export controls imposed on US-bounds shipments of graphite, gallium, and germanium across 2023 were another warning sign. Whilst few in Washington or corporate America could credibly claim surprise, it was remarkable how ill-prepared swaths of industry were when China severely curtailed permanent magnet exports in April 2025.
The resulting scramble to find alternative supply led to an unsettling realization: there was almost no uncontracted supply outside China. GM re-entered the game in 2021 by signing an offtake agreement with MP Materials, but the miner turned magnet manufacturer will only achieve full-scale commercial production later this year.
The ability to shutter US production lines at will has given Xi a potent weapon, far superior to anything hitherto deployed in China’s economic arsenal.
It would be inaccurate to say that there were no serious efforts to disrupt China’s near-monopoly. Billions of dollars are being spent on mines, refineries, and magnet projects across the US, European Union, Japan, South Korea, and Australia.
But getting projects off the ground means little if they can’t find customers. The prevailing approach, especially in the West, relied on companies like GM making a strategic decision to pay a premium for non-Chinese supply. Whilst Australian company Lynas competes on cost with Chinese rivals, it is an outlier.
The sobering reality is that, absent the threat of factory closures, few Western manufacturers have been willing to pay the types of sustained premiums that suppliers need to compete. Although it is easy to criticize manufacturers, companies are facing their own challenges, including the costly transition to electric vehicles. The few permanent magnets made in the US are roughly 50% more expensive than Chinese supply.4
Iluka Resouces, an Australian company building a rare earths refinery in Western Australia, will require NdPr prices of between US$82-US$148 per kilogram to turn a profit, far above current market prices of around US$63. Prices on the Asian Metals Index (AMI), the industry’s major price discovery venue, are opaque and prone to manipulation. They are largely set by state-backed and often highly marginal or loss-making Chinese companies, unconstrained by the imperatives of Western shareholder-driven markets.5 Chinese companies have kept mining even when prices are significantly below the cost of production.
Creating a US national rare earths champion
A step change in approach, invariably involving government intervention, was clearly required.
Under the terms of Trump’s deal with MP Materials, the DoD will take a 15% stake in MP Materials and loan the company US$150 million to expand its nascent heavy rare earth separation facilities.
More novel is the DoD’s commitment to effectively underwrite MP Materials’ second permanent magnet factory, which is scheduled to open in 2028. The DoD will purchase 7,000 metric tons (MT) of magnets per year for 10 years, equivalent to 70% of MP Material’s combined output. The DoD will use the magnets for defense needs but will also supply commercial markets.
Underlying this offtake agreement is the DoD’s commitment to purchase MP Materials’ NdPr oxide output at a guaranteed minimum price of US$110 per kg. The DoD will pay MP Materials the difference between US$110/kg and the market price. This floor price will extend to the NdPr content in all relevant products that MP Materials will manufacture, including the permanent magnets that the DoD will purchase.6
MP Materials hopes to benefit from the economies of scale and learning curve improvements that have eluded most other non-Chinese companies. The company expects its production costs for NdPr oxides to decline significantly to US$40/kg due to the state support.
The 10,000 tons of permanent magnets that MP Materials will eventually produce is equivalent to total US consumption of magnets in 2024. This does not include the 30,000 tons of magnets already installed in assembled products imported into the US.7US magnet demand is growing and would be much higher in any prolonged Great Power conflict.
Setting a powerful precedent
Early messaging from the Trump Administration has assuaged concerns that the MP Materials deal will be an exclusive arrangement.
At a White House meeting in late July attended by permanent magnet manufacturers and recyclers, senior officials explicitly told attendees that the MP Materials deal was not "a one-off".
Making comparisons to the US efforts to rapidly develop Covid vaccines, officials said that the White House was working on an integrated strategy which would include more floor price agreements, protective tariffs, and efforts to encourage permanent magnet recycling.8
Days later, Australian Resources Minister Madeleine King strongly signaled that Canberra will follow suit in creating a floor price, building on the government’s recently announced rare earths stockpile.
Anecdotally, there are strong suggestions that European capitals are also considering similar measures. Industry watchers are predicting that the DoD’s floor price will give companies like Franco-Belgian Solvay more leverage in negotiating state support and offtake agreements.9
Herculean task
Western governments have come to a belated appreciation of the need for unorthodox measures to support an economically marginal yet critical industry.
That’s the easy part.
As yet, it is unclear whether the additional floor prices in the works in the US and elsewhere will crystallize into a formal ex-China alternative to the Asian Metals Index. The creation of a viable rival pricing platform would certainly make it much easier for suppliers and customers to navigate the global market.
Washington would be well advised to coordinate with allied and friendly governments to hone in on one area of the supply chain where China’s dominance is most pronounced.
Eventually, there will probably be enough NdPr oxide to meet Western magnet demand. The metallization of oxides, magnet production itself, as well as the mining and processing of heavy rare earths, present much thornier bottlenecks.
China’s rare earths dominance did not arise just because of subsidies, price distortion, and lax environmental standards.
Metallization and magnet production are highly complicated industrial processes that China has mastered over decades. Outside China and mostly Chinese-controlled companies in Vietnam, there is only a smattering of companies capable of producing rare earth metals.
To ramp up rare earth metal and magnet production, MP Materials was forced to scour the world to find non-Chinese machinery and engineers with relevant experience.10
Greater US cooperation with Japan and Korea will be important to fostering a broader industry ecosystem. Both countries account for the bulk of ex-China magnet production. Japan proposed transferring technology for permanent magnets in tariff talks with Trump, but it is unclear if this offer made it to the final deal.11
The single biggest obstacle is likely the lack of non-Chinese producers of heavy rare earths. Heavy rare earths, particularly dysprosium and terbium, are crucial to manufacturing high-performance permanent magnets capable of operating at high temperatures. Although there are companies trying to innovate around this problem, it remains relatively early days.
Until Lynas in May this year began separating heavy rare earths sourced from its Western Australian mine in Malaysia, there was no commercial-scale production of separated heavy rare earths outside China. The best geology for heavy rare earths is in China, Laos, and Myanmar, though there are several promising developments in Australia. Mountain Pass itself has limited economically recoverable heavy rare earth reserves.12
Up to 80,000 parts used in DoD systems are made with rare earths and critical minerals subject to Chinese export controls.13
Conclusion
This only underscores the necessity of a meticulous and coordinated allied approach to identify and resolve the most important pain points in Western supply chains.
China’s own actions will be another critical determinant. An unimpeded flow of magnets and rare earths could perversely disrupt diversification efforts by engendering complacency.
In the near term at least, assuming MP Materials can successfully scale up magnet production, the US will have made genuine progress in constraining one of China’s most potent geopolitical weapons. But that is a big assumption.
***
[1] Tkacik, "Magnequench: CFIUS and China's Thirst for U.S. Defense Technology", Heritage Foundation.
[2] Patey, "Mr. Magnet", The Wire.
[3] Hodgson & Johnson, "European companies look to France for domestic rare earths sector", Financial Times.
[4] Emont, "America’s War Machine Runs on Rare-Earth Magnets", Wall Street Journal.
[5] Ker, "Taxpayers make bet on rare earths green premium", Australian Financial Review.
[6] Staff writers, MP Materials deal explainer, Payne Institute.
[7] Onstad, "US rare earths pricing system", Reuters.
[8] Scheyder & Renshaw, "Exclusive: Trump administration to expand price support", Reuters.
[9] Op. cit., Onstad.
[10] Emont, "America’s Biggest Rare-Earth Producer Makes a Play", Wall Street Journal.
[11] Miki & Yamazaki, "Japan to propose China countermeasure package", Nikkei Asia.
[12] Op. cit., Payne Institute.
[13] Staff writers, "China is chocking supply of critical minerals", Wall Street Journal.
Ummm, unless I missed something, Socialism is when the government owns the capital...the means of production.
Now that you're invested, you may wanna listen in on this upcoming earnings report...
Conference Call Details
Event: MP Materials Q4 2025 Financial Results Conference Call and Webcast
Date: Thursday, February 26, 2026
Time: 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time)
Webcast: https://investors.mpmaterials.com/
Replay: A webcast replay will be available approximately one hour after the call has concluded.
