Key Trends to Shape Global Rare Earth Market Dynamics in 2025
In 2024, the rare earth market experienced its third consecutive year of adjustments, with price fluctuations amplified by geopolitical factors and supply-demand dynamics. In May of last year, rare earth prices rebounded due to anticipated demand from China, with dysprosium (Dy) oxide prices increasing by 10% month-on-month, making it the strongest-performing rare earth product. Meanwhile, neodymium-praseodymium (NdPr) oxide saw a more moderate price increase. However, after this brief recovery, rare earth prices began to decline again.
At the same time, the pace of quota growth in the rare earth sector slowed, but industry consolidation has accelerated.
Rare Earth Reserves and Production
According to data from the U.S. Geological Survey (USGS), global rare earth production surged from 240,000 metric tons in 2020 to 350,000 metric tons in 2023. China remains the dominant force in global rare earth production, accounting for 240,000 metric tons, significantly surpassing the second-largest producer, the United States (43,000 metric tons). China continues to maintain a firm grip on the industry.
Global Rare Earth Production (2023):
- China – 240,000 metric tons
- United States – 43,000 metric tons
- Myanmar – 38,000 metric tons
- Australia – 18,000 metric tons
- Thailand – 7,100 metric tons
- India – 2,900 metric tons
- Russia – 2,600 metric tons
- Madagascar – 960 metric tons
- Vietnam – 600 metric tons
- Brazil – 80 metric tons
- Malaysia – 80 metric tons
In terms of reserves, China also leads globally, further consolidating its position at the top of the rare earth supply chain.
Global Rare Earth Reserves:
- China: 44 million metric tons (MT)
- Vietnam: 22 MT
- Brazil: 21 MT
- Russia: 10 MT
- India: 6.9 MT
- Australia: 5.7 MT
- United States: 1.8 MT
- Greenland: 1.5 MT
East-West Divide in Rare Earths Market
Rare earths, which are critical for high-tech applications such as electric vehicles (EVs), wind turbines, and electronics, have become a focal point in the geopolitical competition between the East and West.
Currently, China and the United States are engaged in fierce competition over rare earths, with tensions continuing to escalate. At the end of 2023, China imposed bans on the export of rare earth processing technologies, further strengthening its control over the global supply chain. October 1, 2024, China implemented stricter regulations for domestic mining, smelting, and trading through its Rare Earth Management Regulations, which introduced an export licensing system for rare earth products.
The U.S. responded by imposing tariffs on Chinese EVs and critical minerals, aiming to reduce China’s market dominance and boost domestic production capacity. However, given China’s leading position in the rare earth market, a Western strategy to exclude Chinese suppliers risks significant supply shortages.
U.S. Strategy and Investments
To counter China’s dominance, the United States has significantly ramped up its investments in the rare earth sector. In April 2024, the U.S. Department of Energy allocated $17.5 million for developing rare earth and critical mineral processing technologies.
David Merriman, Research Director at Project Blue, stated that the U.S. government has also provided funding for rare earth processing facilities and NdFeB (neodymium-iron-boron) magnet production plants. The U.S. plans to impose a 25% tariff on NdFeB magnets imported from China starting in 2026. However, since most NdFeB magnets are already embedded in components imported by U.S. manufacturers, the tariff is expected to affect only a small portion of the nation’s overall magnet consumption.
China’s Diversification Strategy and Supply Chain Risks
While the U.S. focuses on building a domestic supply chain, China has diversified its rare earth sources through state-owned enterprises investing in multiple foreign rare earth projects, particularly for heavy rare earths.
In 2024, disruptions in rare earths supply also highlighted global risks. In Myanmar, the Kachin Independence Army seized control of key rare earth mining hubs, Panwa and Chipwe, leading to supply interruptions. Myanmar accounted for over 40% of the global mining supply of dysprosium and terbium, and such disruptions could significantly affect the prices of heavy rare earths.
Project Developments and Market Consolidation
In 2023, depressed prices made new rare earth projects financially unviable, but they set the stage for mergers and acquisitions. Notable deals in 2024 included:
- Astron and Energy Fuels forming a joint venture for Australia’s Donald rare earths and mineral sands project.
- Defense Metals signing a memorandum of understanding (MOU) with the Saskatchewan Research Council (SRC) to advance Canada’s domestic rare earth supply chain.
- Ucore Rare Metals receiving $1.8 million in U.S. Department of Defense funding to commercialize its RapidSX separation technology for rare earths.
2025 Rare Earth Market Outlook
China’s dominance in the rare earth market will remain a key driver of industry developments in 2025. China exerts a powerful influence on rare earth pricing, with most international transactions tied to Chinese domestic pricing benchmarks. Maintaining stable and lower prices will support demand for key rare earth products within the Chinese market. However, concerns about concentrated supply chains are driving global consumers to diversify supply sources.
As demand for rare earths continues to grow, especially in high-tech applications like electric vehicles (EVs), drones, and robotics, the rare earth market in 2025 will face complex dynamics shaped by both supply-demand imbalances and geopolitical challenges.
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