Rare earths: between commodity cycles and geopolitics (2010 → 2025)

REE (rare earth elements): from the 2010 shock to supply-chain re-globalization and the race for magnets.

Rare earth elements (REE) — from lanthanum to dysprosium and neodymium — are quiet but crucial: they power magnets in EV motors and wind turbines, sonars, radars, precision electronics and many defence systems. The market is relatively small in value, yet strategically huge. Today — much like in 2010 — it’s not only a demand story but primarily about access to processing and trade policy.

2010–2015: supply shock, price spike, and a “return to mean”

2010: amid the Senkaku/Diaoyu dispute, China — dominant in mining and especially REE processing — effectively halted exports to Japan, triggering a price spike and global buying panic. It cemented the notion that Beijing can leverage REE as a pressure tool. World Economic Forum

2015: after a WTO dispute, China removed export quotas on rare earths (and tungsten, molybdenum), deflating the price bubble; some ex-China projects couldn’t withstand cost pressure (e.g., Molycorp bankruptcy in June 2015). WTO The Guardian

As a result, thematic miners/processors ETFs (like REMX) saw a long bear market after the 2010–2011 surge. Note: REMX underwent reverse splits in 2020, making naive price-level comparisons tricky without adjustments. MIAX

2023–2025: from de-globalization to re-globalization of supply chains

Today looks like 2010 again — but broader and more systemic. China introduced and expanded export controls on graphite, gallium, germanium, antimony — and keeps announcing new rules for REE and magnet technologies (licensing, tech-transfer limits, “trace content”, etc.). It’s a leverage instrument in a wider tech confrontation. Reuters

  • EU: adopted the Critical Raw Materials Act (March 2024), setting diversification & onshoring goals — EU demand for REE is set to multiply by 2030. EU Council
  • USA: is rebuilding the full chain (mining → refining → magnets), yet experts warn China’s dominance in magnets will likely persist into 2030. IEA

Who controls the value-add?

The key is not ore, but refining and magnets manufacturing. By end-2024, China produced the clear majority of REE-based permanent magnets and dominated processing — which is why export curbs ripple through EV to defence. IEA

What are the production shares for magnets?

  • China: about 85–90% of global NdFeB magnet output (the core segment for EVs, wind, robotics). Order-of-magnitude figures from IEA and industry analyses. IEA
  • Europe (EU+UK): low single-digit share globally; about 98% of EU demand for finished magnets is covered by imports from China. IEA
  • USA: currently very small; rebuilding from a low base. MP Materials (Fort Worth, TX) has started NdPr metal production and a pilot line for sintered magnets; with DoD support and partnerships (e.g., Apple), the target is roughly 10k t/year combined US capacity over the next years (phased, into ~2028). IEA

EU: where it stands and what is changing (Estonia + France)

Today: the EU starts from a very low base — roughly 98% of finished REE magnet demand is met by imports (mainly from China). IEA

New EU capacities (first steps from 2025):

  • Neo Performance Materials — Narva (Estonia): sintered NdFeB magnets launched; ~2k t/year initially, with a plan to expand to ~5k t/year. After scaling, this could cover ~1–15% of EU demand (depending on stage and application mix). Location matters geopolitically — EU production near the NATO–Russia border shortens chains and reduces political-supply risk for European auto/defence. IEA
  • Solvay — La Rochelle (France): separation and refining of REE oxides (NdPr, Dy, Tb) being commissioned/expanded; the company targets roughly 30% of Europe’s feedstock needs for magnets by 2030. This tackles the mid-stream bottleneck without which EU magnet makers cannot scale. IEA

EU takeaway: Estonia (magnets) and France (oxides) won’t “replace” China globally, but they do reduce Europe’s dependency and align with CRMA goals (diversification, resilience). EU Council

How does this show up in markets?

Below is the VanEck Rare Earth/Strategic Metals ETF (REMX) chart with full history since 2010. Remember: this tracks a basket of companies (mining/processing), not spot metal prices — cyclicality and volatility can be higher.

Source: TradingView (REMX). ETF = basket of companies, not metal prices.

What 2010–2015 taught us — and what’s different in 2025

Similarity: in both periods, policy/regulatory shocks (not only demand) drove strong moves in prices and equity valuations.

  • 2010: a one-off supply shock surprised the market, with a quick swing back to oversupply after WTO outcomes. WTO
  • 2025: we face systemic supply-chain bifurcation (EVs, defence, electronics) and a long march toward parallel ecosystems (West vs. China). Controls now cover technologies and components, not just raw material. Financial Times

Market outlook

  • 0–12 months: high volatility; headlines on licensing, controls and state support will swing prices more than single quarterly datapoints. Reuters
  • 1–3 years: rising demand for magnets and onshore projects. US/EU/Japan accelerate CAPEX in refining & magnets — yet commissioning clean capacity takes time; environmental/social costs and skilled-labour shortages are key risks. EU Council
  • 3–7 years: potential “two-track” market: more expensive but safer (West) vs. cheaper yet politically risky (China). Lower global volatility but higher marginal prices due to CAPEX & ESG norms. Reuters

Sources & further reading

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