According to a report by Nikkei Asia on September 25, as the United States tightens its control over rare earth resources amid ongoing trade tensions, the price increases of rare earth metals have started to exceed the scope of minerals affected by China's export restrictions. Prices of light rare earths not targeted by China's export controls have also surged recently.

Data shows that as of September 18, the trading price of dysprosium in the European market was $840 per kilogram, about three times higher than in April. Another rare earth element, terbium, which is subject to China's export controls, reached $3,600 per kilogram in Europe, setting new historical highs multiple times.

However, prices of light rare earths not targeted by China's export restrictions have also risen sharply recently. For example, the price of praseodymium-neodymium (PrNd) in China reached $90,850 per ton at the end of August, reaching the highest level since March 2023. The price remains near the highest level in nearly two and a half years. The price of neodymium has also been rising, with the price of metallic neodymium increasing by nearly 50% since early June.

Praseodymium-neodymium is a mixture of rare earth elements mainly composed of praseodymium and neodymium, and it is the main raw material for producing neodymium-iron-boron permanent magnets. Neodymium, praseodymium, dysprosium, and terbium are the four core rare earth elements required for producing strong permanent magnets. Compared to heavy rare earths, PrNd is used in much larger quantities in permanent magnets. Due to the wide range of applications of permanent magnets, which are often used in the manufacturing of equipment such as car motors and wind turbines, the price increase will lead to increased costs across many industries.

The recent rise in the prices of light rare earths is driven by the fact that the United States, which has a small output of heavy rare earths but a large output of light rare earths, is tightening the supply. According to data from the US Geological Survey, the United States' rare earth production accounted for 12% of the global total as of 2024.

Mountain Pass Materials Company mines neodymium and praseodymium at its Mountain Pass mine in California, the only rare earth mine in the United States. Reuters

To reduce reliance on China, on July 10, the U.S. Department of Defense made a rare investment of $400 million to purchase shares, becoming one of the largest shareholders of Mountain Pass Materials Company, the largest rare earth producer in the United States. It is stated that Mountain Pass Materials Company is the only producer in the United States that possesses the entire rare earth industry chain and is the only large-scale mining and processing enterprise of rare earth ores in North America. The company owns the world's second-largest rare earth mine, Mountain Pass, in California.

The U.S. Department of Defense plans to purchase neodymium-praseodymium products from Mountain Pass Materials Company at a price of $110 per kilogram, approximately twice the market price at the time, and guarantees this minimum price for 10 years. Ephrem Ravi, global head of the metals and mining division at Citigroup, said that such cases of the U.S. government guaranteeing a minimum price are very rare.

In April this year, Mountain Pass Materials Company announced that "in response to China's retaliatory tariffs and export controls," it would stop exporting rare earth concentrates to China. In early September, the company told Nikkei Asia: "We will no longer export to China."

The United States is tightening its rare earth supply while also beginning to plot against China recently.

On August 25 local time, Trump met with South Korean President Yoon Suk-yeol at the White House, during which he once again resorted to his usual tactics, threatening with the "tariff stick," claiming that unless China continues to ensure the smooth delivery of rare earth magnets to the United States, China will face "200% tariffs, or similar penalties." He claimed that tariffs are an "unbelievable card," and once played, "it will destroy China."

Hong Kong's South China Morning Post cited reports from multiple analysts stating that Trump's repeated tariff threats regarding China's rare earth supply may have limited actual impact on China. This actually highlights the importance of rare earths in global manufacturing and indicates that China's dominant position in this field remains a powerful leverage in trade negotiations, which can be considered a strategic asset.

The Chinese Foreign Ministry spokesperson has repeatedly emphasized that China's policies on rare earths comply with international practices. We are willing to continue strengthening dialogue and cooperation with relevant countries and regions in the field of export controls, and jointly maintain the stability and security of the global supply chain.

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