October 9 Dual-Use Rules postponed by 1 Year, perhaps?; Malaysia-US RE "Deal"; Kachin to stop RE Exports?; US throw more money at RE junior; and the lot.
Rare Earth 27 October 2025 #185
Note
The Oracle of Singapore
Occasionally we are surprised by our own contents. We wrote on 17 August 2024:
Again another tit-for-tat in trade regulation
China employs a ‘kill the chicken to scare the monkey (杀鸡儆猴)’ strategy. Kill the chicken: With export licensing imposed on gallium and germanium, going by the first trimester 2024 numbers, a temporary de-facto embargo on Germany has been implemented. Antimony is next. We now deem it quite possible that China will do the same with rare earth - referring to them as dual-use goods with the known consequences.
We don’t have and never had a crystal ball.
China rare earth permanent magnet exports
Q1-Q3 REPM exports from China:
2024: 43,046 t
2025: 40,219 t
2,827 t (6.6%) less than the first 3 quarters of 2024:
USA minus 1,346 t yoy
Korea minus 390 t yoy
Germany minus 157 t yoy
The export value dropped 13.9%, i.e. rare earth permanent magnets became cheaper compared to the same period last year. Everybody enjoys the fruits of China’s socialist market economy.
Especially, because REPM enjoy full refund upon export of China’s 13% VAT, while rare earth compounds and rare earth metals get zero VAT refund upon export - a continuous practise which, in our view, is fully WTO-incompatible.
Annualised one may expect a drop of 4,500 t of REPM export between full years 2024 and 2025.
China’s MOFCOM, in close cooperation with China Customs, trying to squeeze a camel (hundreds of millions of magnets for export to 130 countries) through the eye of a needle, is certainly a major part of the the negative REPM export growth.
Great Powers’ interests
What the US do with their tariffs and what China does with rare earths and other deferred restrictions is taking positions.
But what are their interests?
We see the economic interests of the US and China as diametrically opposed.
What China may offer is a return to the previous status quo. The US as a subservient supplier of agricultural goods from fly-over states and the US providing an open market for China’s hi-tech goods and consumer e-commerce junk. China may offer to buy more treasuries, if the US additionally serve up Taiwan, nicely draped on a silver tray.
Delayed rare earth dual-use restrictions?
In terms of rare earths the restrictions of 4 April 2025 will be here to stay, as this is the real US-defense demand, not the defense demand imagined by junior rare earth miners with photos of F35s in their corporate presentations.
If you want to get a proper idea of critical materials for defense, you may want to refer to the report Strategic raw materials for defence Mapping European industry needs of January 2023, rather than the US’ CSIS fumbling almost 2 decades old information.
The deferred implementation of the 9 October 2025 restrictions, planned for 8 November 2025, appears to have been negotiable in terms of implementation, as we had expected. During trade talks in Malaysia it seemingly was agreed to delay implementation for one year. Or was this only the US-side requesting it?
If this should be yet another misunderstanding of what China’s negotiators told the Americans, then we can’t see how tensions could be eased and if the US has the right negotiators.
Anyway, even if China offers to indefinitely suspend implementation of the 9 October rules upon the US caving in, going forward the suspension will be subject to the US behaving well and doing exactly as they are told. And it does not solve the 4 April restrictions on those rare earths that the US really depends on.
At this time we don’t see a possible compromise (a lose-lose) without one of the opponents caving-in on key demands.
Both great power leaders are under substantial, self-created pressure to settle the trade dispute, along with other “misunderstandings”.
In peril and plight so great, a compromise will seal your fate.
(“Bei Gefahr und in höchster Not, bringt der Mittelweg den Tod”)
Alexander Kluge, German philosopher and film director
And more US rare earth follies
Exim Bank closed a definite financing agreement with privately held RZ Resources, who are nursing a mediocre HMS project in Australia with an equally mediocre content of monazite.
Generally monazite is available for prompt shipment from multiple international, i.e. western sources. One does not need to wait years and years until some junior miner down under gets his act together.
Availability of monazite is not the problem, the processing is - also because of the regulatory environment and related inability to deal with resulting, highly toxic, radioactive waste products.
We begin to wonder just how the US ends up considering throwing money at the most mediocre, fringe, or even totally unworkable rare earth projects on the planet with timelines well into the coming decade, while rare earth raw materials are available immediately elsewhere.
Malaysia, US ink trade deal enhancing America’s access to rare earths
Malaysia inked a trade deal with the US with President Donald Trump in attendance on the sidelines of the 47th Asean Summit on Oct 26, locking in a 19 per cent tariff rate that was agreed back in August.
The deal included several concessions made by Prime Minister Anwar Ibrahim’s administration, including in the supply of critical minerals to the US, a key plank of ongoing trade negotiations between Washington and Beijing that centres on curbs of advanced technology supply chains.
A joint statement on the “agreement on reciprocal trade” confirmed a report in The Straits Times in July that Kuala Lumpur had made concessions on several issues – such as recognising American halal certification and the supply of rare earths, critical minerals used in advanced technological applications – to bring down the initial tariff of 25 per cent.
“Malaysia has committed to refrain from banning, or imposing quotas on, exports to the United States of critical minerals or rare earth elements,” said the statement.
Some background:
Beginning of 2025 Malaysia banned the export of non-separated rare earth products.
There was one exception: The only legal, licensed and active miner of rare earths in Malaysia who produces mixed rare earth carbonate and exports to China.
In September a Singapore-listed mining company became its largest shareholder.
All principal western rare earth hopefuls are scratching on the door of this company begging for product. Also Americans.
Others end up signing “deals” with the Malaysian version of US snake-oil salesmen.
It will be interesting at the Metal Events 21st International Rare Earth Conference in Kuala Lumpur next week.
Price divergence of NdPr and separated Pr and Nd
Analysts recently have been fretting about a divergence of NdPr oxide and separated praseodymium and neodymium oxide prices.
Basics
A fundamental truth about the rare earth oxide market in China is that this is absolutely working according to supply and demand (if you look for manipulation, go to the ores).
Another fundamental truth about the rare earth oxide market is that it happens in a socialist market economy (doped with Xi Jin Ping Thought in the New Era), which all analysts continuously fail in recognising. In such an economy making a profit is wanted, but capitalist “price gouging” is illegal (= profiting more than an “acceptable” profit margin) .
Guo Liyan, deputy director of the Chinese Academy of Macroeconomic Research’s Economic Research Institute, said that in a socialist market economy, the price mechanism plays an important role in optimising resource allocation and balancing supply and demand.
What “price-gouging” constitutes is defined by the China Price Law (1997) as “gaining exorbitant profits in violation of laws or regulations” (can be applied to anything under the sun). The law is administered by the Price Department under the National Development & Reform Commission (previously known more adequately as State Planning Commission).
Another agency acting on the market is the State Administration for Market Regulation under the State Council.
In rare earths you have essentially pass-through prices in China, which at all relevant stages base on price formulas reflecting the next step downstream product market price. And vice-versa. This guarantees price-stability at “reasonable” profit margins.
If you are a manufacturer in China the only way to increase the absolute amount of profits is to expand production capacity. Enter China’s overcapacities, also those in sintered NdFeB magnets.
The problem
The price development of unseparated NdPr and separated Pr and Nd seems to diverge from the above model.
What people are complaining about is that separated praseodymium oxide and neodymium oxide prices are up 30% year-on-year, while the unseparated NdPr oxide price is only up 18% year on year.
But it is actually the NdPr price sinking faster than Pr and Nd prices, opening the gap between NdPr and separated Nd and Pr:
What and why NdPr?
90% of all neodymium (Nd) and praseodymium (Pr), whether separated or not, goes into NdFeB magnet production.
Since NdPr oxide has only one lonely application, NdPr METAL-making for NdFeB magnets (a market almost non-existent outside China and Japan), you are looking at the other 10% of the market for applications of separated Pr and Nd.
Both, output and consumption of separated Pr and Nd are comparatively small. And that is at the core of the phenomenon.
This price divergence actually is quite normal and happens from time to time. This is owed to the smaller and more diverse market of separated Nd and Pr.
Here our observation from 2020 to 2021:
Also this time we don’t think the gap will persist.
IMARC 2025
Much of IMARC was under the impression of the Chinese restrictions of many rare metals and the draconian, partially yet-to-be-implemented, rare earth dual use restrictions.
Junior rare earth miners presenting at IMARC don’t seem to have heard the explosions. They still do not get that the problems in rare earth rest in anything but much hyped NdPr oxide - which is among the unrestricted rare earth elements lanthanum, cerium, praseodymium and neodymium.
Any junior rare earth miner/processor who does not separate the entirety of the lanthanides plus yttrium will not be a solution to the rare earth problem. And regarding the “defense” bovine brown matter spread by junior miners: China’s dual-use list of 4 April 2025 exhaustively lists those rare earth elements of significance in defense applications. Spoiler: NdPr oxide is not among them.
Why unrestricted?
Again something that escapes western analysts, who like to base on secondary sources rather than studying the originals:
The dual-use license restrictions apply to China’s rare earth exports AND China’s imports.
China imported 3,261 t of what distinctly looks like NdPr oxide from Malaysia in 2024. It has imposed tariffs against US goods, including MP Materials’ bastnaesite concentrate, which contains a substandard, but still significant proportion of NdPr. At the same time there is no significant NdPr oxide demand in the West - except Japan. And Japan’s demand is covered by JOGMEC-financed Lynas, Malaysia.
Ca. 70% of China’s rare earth exports in terms of rare earth compounds and rare earth metals to Japan, EU and US are overproduced lanthanum and cerium, a result of the rare-earth-inherent imbalance.
Consequently, China can have no interest in restricting the trade flows of lanthanum, cerium, praseodymium and neodymium.
Why restricted?
5 years ago China laid down the principle:
China does not want to aid the production of weapons that can threaten China.
This context of the dual-use classifications of 7 rare earth elements of 4 April 2025.
As we said before, this is a political matter of principle and the US failed completely in recognising that this was not related to the trade war. The US only offered a convenient opportunity for implementing the controversial rules, to make it look like China acted defensively against tariffs.
This week’s issue of the Amvest Terraden newsletter acknowledged this underlying logic, so that the current US administration also has an American voice to refer to.
Any US-initiatives and negotiation attempts ignoring this must fail.
As to China’s rare earth technology and dual-use restrictions as well as the links to source documents, you may want to refer to this presentation:
Call for government
At IMARC there were calls for the government to go out and throw Australian taxpayer money at rare earth downstream projects.
As China has demonstrated, it views rare earths as a matter of national security and it will go at great length to disincentivise all and any downstream activities in rare earths outside China.
Australia is an easy target for China. A$218 billion (2023), one third of Australia’s overall export value, go to China. And there are also indirect China-related effects.
China’s Vice Prime Minister He Lifeng told the world:
China never uses economic coercion on other countries (APEC Finance Ministers Meeting, November 2023).
Now, whenever a Chinese official uses the words “China” and “never” in the same sentence it often contains a bit of a misrepresentation. Apart from sending diplomatic notes, China exclusively resorts to economic coercion in order to show its displeasure (“China never invaded a foreign country” is another one of such quality statements).
China’s economic coercion is preferable to sending-in the Marines, though.
Consequently, what would be there for Australia to expect if Australia state-sponsors a rare earth downstream industry? Economic misery, perhaps?
There are tangible reasons why Australia should not engage in throwing taxpayer money at rare earth downstream activities:
Different from Japan, the US and the EU, Australia’s home market for rare earth downstream products is basically non-existent.
Looking at iron ore, Australia should be among the world’s largest steel exporting countries. A product line infinitely more simple than rare earths, yet it only plays a minor role, focussed on a protected domestic market.
If Australia was to create a rare earth downstream industry at large expense of time and money, it would exclusively serve foreign interests. Australia would use Australian tax dollars to solve other nations’ problems.
Few doubt that an Australian rare earth downstream industry would be entirely uncompetitive vis-a-vis China or potentially emerging Malaysia, India and Vietnam, to name just a few. Once the current great power issues fade into history, Australia would be laden with debt for a commercially non-viable industry.
China’s entire export value of rare earth compounds hovers around US$500-600 mio per year, ca 50 different products - all of which are needed, else the West would not buy them. This should be considered before putting billions into producing finished rare earth compounds.
AUKUS partner USA has the objective to produce finished rare earth products within the continental US territory. Nothing else will provide the US’s desired security, also not Australia.
What will work?
Stick to what Australia can do best: export semi-processed raw materials.
Orientate Australia along the lines of what provenly works: Lynas.
Create a base for producing are radionuclide-free mixed rare earth carbonate supply from Australia and sell that to whoever pays the highest price. Going forward this would be a product everybody would want, no matter if in USA, EU, China and even certain others. Every single one of them currently has a difficult problem with the inevitably occuring radioactive waste from rare earth processing.
This concept would base on for-profit financing/shareholding of a select few of commercially and technically viable projects with minimum impact on, for example, farming.
Yes, we are talking monazite, the old-reliable. To add a “vision” to that, Australia could stockpile the radioactive waste, mostly thorium compounds, because the writing is on the wall.
In the not-too-distant future China will flood the world market with small, modular, scalable Thorium Molten Salt Reactors (TMSR) which all will require thorium and uranium to operate. Attending to that admittedly visionary market requires the safe and compliant storage of ready-to-use fuel, as opposed to the burial of the radioactive rare earth by-product in the barren wasteland of Yangibana, as originally proposed by now gold-mining Hastings.
JOGMEC at IMARC
The Japan Organization for Metals and Energy Security (JOGMEC) presented at IMARC that it will increase Japan Inc’s current NdPr oxide consumption from current actual consumption Nd/NdPr of ca. 5,500 t/y to 13,000 t/y.
This broadly matches JOGMEC-supported Lynas’ plan to increase NdPr oxide output to 12,000 t.
Japan Inc. is signalling two intentions:
Japan Inc., the only NdFeB manufacturer of any relevance outside China, intends to defend its current small market share vis-a-vis massive NdFeB capacity build-up in China.
By consuming every ton of NdPr Lynas plan to produce, Japan Inc. will deny China access to the substantial quantities of NdPr Lynas currently ships to China.
We expect that the quantity that Lynas is to ship Japan under the current JARE facility will be increased accordingly.
Apart from that it has become clear that JOGMEC heavily bets on the serial production of safe all-solid-state lithium batteries as a replacement for fiery Chinese lithium-ion batteries. Toyota and Nissan plan serial production of all-solid-state batteries between 2026 and 2028.
In terms of consumption that is really bad news for current battery materials companies, particularly those in graphite/spherical graphite.
