In the rare earth sector, the United States faces a serious challenge: its production capacity cannot compete with China

According to reports, the global rare earth market has been experiencing significant fluctuations, with European and American countries facing severe challenges due to rare earth shortages. Senior executives and representatives from the automotive industries in Europe, the United States, and India have spoken out, stating that China's export controls on rare earths have created a risk of shortages, potentially leading to a halt in automotive manufacturing. This phenomenon not only highlights the irreplaceable strategic value of China's rare earth resources but has also driven overseas rare earth prices to soar, while domestic rare earth companies have benefited across the board amid these shifting market conditions.

Nearly 70% of the world's rare earths are produced in China. From cutting-edge technologies such as fighter jets and nuclear reactor control rods to everyday electronic devices, rare earths are ubiquitous and serve as the “vitamins” of modern industry. Despite years of efforts by the United States to reduce its reliance on Chinese rare earths, the country has implemented a series of measures to strengthen its own rare earth supply chain. For instance, the U.S. Department of Defense set a target in its 2024 Defense Industrial Strategy to establish a complete rare earth supply chain by 2027 to meet defense needs. However, the reality is fraught with challenges, including the lack of commercially viable natural reserves, a shortage of specialized engineers, and a limited number of relevant companies, all of which severely hinder the United States' progress in building a stable rare earth supply chain.

Additionally, the U.S. lags behind China by 20 years in heavy rare earth separation and purification technology. While the U.S. has attempted to leverage foreign capital, such as signing agreements with Saudi Arabia's largest mining company to develop rare earths and collaborating with Australia's Lynas Rare Earths, the largest rare earth producer outside China, and rare earth production capacity is also under development in Brazil, South Africa, Japan, and Vietnam, these efforts are unlikely to yield results in the short term and cannot immediately address the urgent needs of U.S. companies.

China's export control policy on rare earths is not a complete ban, but rather a strengthening of approval processes and regulatory measures. According to the “Interim Measures for the Total Control of Rare Earth Mining and Separation (Draft for Public Comment)” issued by the Ministry of Industry and Information Technology in February 2025, rare earth mining and separation enterprises must be large rare earth groups and their affiliated companies established by the state, and other organizations and individuals are not permitted to participate. This policy further consolidates the dominant position of leading companies such as Northern Rare Earth and China Rare Earth Group, while also bringing imported minerals under regulatory control, impacting companies reliant on imports. In 2024, the growth rate of rare earth mining quotas slowed significantly to 5.88%, far below the over 20% growth rates of previous years, with supply continuing to tighten.

However, demand has seen explosive growth. Industries such as humanoid robots and new energy have seen a significant increase in demand for rare earth permanent magnet materials. A single humanoid robot typically requires more than 40 servo motors, with each motor needing 50–100 grams of neodymium-iron-boron material, resulting in a total usage of 2–4 kilograms. For example, Tesla's “Optimus” robot requires approximately 3.5 kilograms of high-performance neodymium-iron-boron material per unit. Goldman Sachs predicts that by 2030, humanoid robot shipments will reach 890,000 units, corresponding to a demand for rare earth permanent magnet materials of 3,115 tons. By 2025, humanoid robots will enter mass production. If sales reach 10 million units in the long term, the potential market size could be approximately 200,000 to 400,000 tons, equivalent to creating another rare earth permanent magnet market.

In the new energy vehicle sector, each new energy vehicle consumes approximately four times more neodymium-iron-boron than a traditional vehicle. By 2025, global demand for rare earth magnetic materials in new energy vehicles is expected to reach 58,000 tons, with China accounting for 34,000 tons. Additionally, demand in sectors such as wind power and industrial motors is also growing steadily. Goldman Sachs forecasts that global demand for rare earth permanent magnets will grow at a compound annual rate of 12%, with new energy vehicles accounting for 35% of this demand.

Overseas rare earth prices have begun to rise. Data from Argus, an international energy and commodities price assessment agency, shows that the European assessed prices for dysprosium oxide and terbium oxide have surged significantly. As the impact of China's rare earth export restrictions continues to unfold, overseas rare earth prices are expected to maintain their upward trend.

Domestic rare earth companies are seizing development opportunities amid the shifting global rare earth landscape. The combination of supply contraction and robust demand has clearly established an upward trend in rare earth prices. Industry leaders with resource barriers and technological advantages, such as North Rare Earth and China Rare Earth, will leverage policy advantages and market positions to gain a larger market share and profit margins under the dual favorable conditions of increased overseas demand and domestic supply regulation. Meanwhile, relevant companies will also allocate more funds to research and development, driving innovation in rare earth application technologies. This will further consolidate China's dominant position in the global rare earth industry chain, enable it to seize the initiative in international competition, and achieve sustainable development.