Something to think about relating to China's move to restrict #rareearths exports and Trump's reaction to what has always been on the table given increasing US sanctions against Chinese tech firms...
The only major rare earth mine producing in the US today is $MP Materials Corp.(MP)$ Mountain Pass mine. It has an annualized production of about 60,000 metric tons of rare earth concentrate. That might sound big but this still needs to be further processed to produce rare earth oxides (REO) for commercial use.
Of the 60,000, MP needs 80% (48,000 tons) to extract and refine only about 2,400 metric tons of Neodymium-Praseodymium (NdPr) oxide, which is highly sought after for the EV, battery, and renewable energy industries. It has the highest value of rare earth oxides. These NdPr sales account for 67% of MP's revenues. The rest is from the sale of less valuable, unprocessed rare earth concentrates.
That 2,400 metric tons of NdPr oxide is barely enough to meet the rare earth demands of America's EV industry based on 2024 sales of 1.6 million units. A host of other vital industries require just as much or even more NdPr to sustain operations and growth, including defense, renewable energy, and semiconductor equipment.
Some sources point to 45,000 mt of US rare earth production in 2024, mostly from MP. But the amount of processed REO, as you can see, is much smaller. That's why the US still has to import 80% of its estimated 40,000 mt of REOs each year, mostly from China. And if China shuts the flow, no other country can fill this enormous gap.
A lot of people argue that the US has plenty of rare earth resources, and that all it needs to do is invest heavily in mines and processing technology to get out of China's iron grip on REOs. In theory, that makes sense. But it's not as easy to execute in the real world.
Take $LYNAS RARE EARTHS LTD(LYC.AU)$ for instance. It's the largest REO producer in the world outside of China. It's producing NdPr at a rate of 6,000 mt per year. And it does this by shipping ore from its Mt. Weld mine in Western Australia to their processing facility in Malaysia (one of the largest of its kind in the world). That facility alone is worth $800 million.
But it's not just as easy as pouring a billion dollars to build a plant and say, "I don't need China anymore." You need to have a good supply of rare earth deposits containing large amounts of neodymium and praseodymium - and the ability to process these - to make a dent in China's market dominance.
The only major mine now being developed in the U.S. is the Halleck Creek mine operated by American Rare Earths. That could bring about 4,500 mt of NdPr per year. But the mine hasn't even started construction. And the earliest it will come online will be 2029. By then, demand for rare earths of this kind will have probably doubled.
In short, the US has few short- and medium-term options when it comes to rare earth supplies. And just like Trump uses semiconductors to try containing China's development, it only makes sense for Beijing to use rare earths to contain America's development. The best way forward is for both leaders to come together and get this sorted out... because the alternative is just going to drive the world deeper into the abyss.
For whom haven't open CBA can know more from below:
🏦 Open a CBA today and enjoy privileges of up to SGD 20,000 in trading limit with 0 commission. Trade SG, HK, US stocks as well as ETFs unlimitedly!
Find out more here：
Comments