Western allies are pouring unprecedented amounts of funding and political coordination into advancing the construction of sovereign (autonomous and controllable) rare earth magnet supply chains, utilizing their technological and ethical advantages to ensure supply security for strategic industries such as defense technology, electric vehicles (EVs), and wind turbines.
According to Reuters, MP Materials, supported by billions of dollars from the U.S. government, is integrating a complete supply chain from mining to magnet production, demonstrating the West’s determination to achieve its goals at any cost. However, scarce heavy rare earth elements – Dysprosium and Terbium – pose technological hurdles that the Western countries must overcome. For instance, these two critical high-temperature magnetic elements have low concentrations in MP Materials’ mine in California, leading the West to seek broader global partnerships and innovative technologies.
In terms of international alliances, Germany’s VAC has reached supply agreements with multiple mining companies, including partnerships with Canada’s private Torngat Metals for supply from its Strange Lake project in Quebec, and with Aclara Resources for supply from its Carina project in Brazil.
Data from rare metal supplier Fastmarkets shows that the price of Dysprosium oxide in Rotterdam has soared to $900 per kilogram, reflecting strong and sustained premium demand in Western markets for heavy rare earths from non-Chinese sources.
The Western alliance is focusing on high-value, high-standard refining and recycling links in the industry chain, completely avoiding the low-standard, high-pollution model that China relied on to establish its monopoly.
For example, U.S.-based Ramaco Resources plans to extract over 450 tons of rare earths from its Brook Mine in Wyoming starting from July 11. Additionally, the $500 million collaboration between MP Materials and Apple is establishing a closed-loop supply system to extract heavy rare earths from recycled materials. These initiatives collectively showcase the West’s resilience in securing the supply chain through simultaneous mining and recycling efforts.
Meanwhile, Australian companies Lynas Rare Earths and Iluka Resources are constructing refining plants on a large scale in Malaysia and Western Australia. Iluka Resources’ refining plant is expected to process heavy rare earth raw materials from suppliers like Northern Minerals, thereby establishing a complete and traceable supply pipeline.
Although the cost of building new refining plants in the West is 5 to 7 times higher than in China, analysts view this as a premium investment in environmental protection, sustainability, and high ESG standards. This positions Western-made magnets with a moral leadership status in the international high-end market, diminishing China’s attractiveness of relying on environmentally harmful low-cost advantages.
Analysts point out that China’s export restriction measures, whether targeting raw materials or overseas products containing Chinese rare earths, are strategic economic countermeasures. However, the result of such actions is accelerating the Western determination to exclude Chinese supply from political and market considerations.
The financial and political alliances among allies such as the U.S., Europe, and Australia provide a secure supply system that is protected by law and not subject to the arbitrary political control of any single country. In contrast, supply systems dependent on China remain exposed to sudden political risks. Moreover, the Western alliance continues to exert political pressure, as seen in Beijing’s agreement on October 30 to postpone the implementation of new regulatory measures, highlighting the West’s control of key negotiation chips in the rare earth game.
Despite consultancy firm CRU’s prediction of a shortage of 2,920 tons of Dysprosium and Terbium oxides in the global supply/demand balance by 2035, this is seen as a short-term challenge that the West must overcome before comprehensive technological and financial solutions are in place. The West is actively addressing this challenge through recycling, ally cooperation, and technological innovation.