Rare Earths & Critical Minerals

The rare earths and broader critical minerals macro backdrop remains defined by a tension between strategic urgency and weak spot-market economics. Governments in the US, EU, Japan, Korea, Australia and Canada continue to treat rare earths, lithium, graphite, nickel, cobalt and certain magnet materials as national-security and industrial-policy priorities, driven by EVs, grid equipment, wind turbines, defense systems and semiconductor-adjacent applications. However, pricing across much of the battery-material and magnet-material chain has remained soft versus the 2021-2022 spike, reflecting slower EV demand growth outside China, inventory digestion, and continued Chinese supply expansion.

China remains the dominant force across multiple stages of the value chain. It controls the majority of rare earth separation and magnet manufacturing capacity and is also a major processor of graphite, lithium chemicals and other refined critical materials. In rare earths specifically, China’s share of global mined supply is large, but its share of processing is even more strategically important. This has kept Western policy focused less on mining alone and more on building integrated midstream capacity: separation, refining, alloying and magnet production. Recent years have seen sustained use of export controls, licensing regimes, investment screening and local-content incentives as policy tools. China’s restrictions on gallium, germanium and graphite exports in 2023-2024 reinforced the market view that critical minerals can be used as geopolitical leverage, even when the direct tonnage impact is manageable.

In rare earth magnets, NdPr remains the core earnings driver for most listed rare-earth miners and developers. NdPr oxide prices fell sharply from 2022 highs and, based on last broadly available market context before my knowledge cutoff, remained well below peak levels through 2024, pressured by cautious downstream demand and adequate Chinese supply. Dysprosium and terbium retained strategic importance because they are used to improve high-temperature magnet performance, but these heavier rare earths remain more niche and volatile. The practical result is margin compression for upstream projects outside China, especially for single-asset developers that require high realized prices or downstream integration to earn acceptable returns.

At the same time, policy support has become more tangible. The US Department of Defense, DOE-linked funding channels, the EU Critical Raw Materials Act framework, and allied-country export credit and grant support have all aimed to de-risk domestic and friendly-jurisdiction supply chains. Australia continues to be central as a source of rare earths and lithium feedstock, while the US and Canada are trying to move from resource ownership toward processing capability. Investors are increasingly distinguishing between deposits with strategic value and projects with real commercial viability; financing has favored advanced projects with offtakes, government backing, or downstream partnerships.

Near term, the macro setup is therefore mixed. The sector benefits from strong policy sponsorship, long-duration electrification and defense demand, and persistent supply-chain diversification efforts. But it still faces cyclical headwinds from oversupply in parts of the battery-material chain, uncertain EV demand growth in North America and Europe, permitting bottlenecks, and the difficulty of competing with Chinese incumbents on cost. As of 2025-02-14, the market is best characterized as strategically bullish but economically uneven, with security-of-supply concerns supporting investment even where spot prices remain uninspiring. Note: specific price references above may be dated due to knowledge-cutoff limitations.