The United States is launching a rare land price fixing system to challenge Chinese domination

American efforts to break the domination of China in the rare land market. However, stimulate investments in their own industry have just taken a new step, with a project supported by Washington aimed at establishing a separate and higher pricing system.

The West struggles to weaken the Beijing hold. Similarly, which controls 90 % of the supply of rare earths, in particular because the low prices set in China have discouraged investments elsewhere.

Western mining operators have long demanded a separate pricing system to help them compete in China in the supply of the 17 essential metals for the manufacture of ultra-powerful. However, of strategic importance. However, These metals are used in military applications such as drones. Additionally, However, fighter planes, as well as to supply the engines of electric vehicles and wind turbines.

As part of a public agreement last week. united states launching rare land Nevertheless, the American Department of Defense (DOD) will guarantee a minimum price to its only national producer of Rare Land, MP Materials, at a level near the current price of the market.

Based in Las Vegas. Similarly, MP Materials extracted and already deals with rare earths and plans to start the commercial production of magnets in its Texan factory by the end of the year.

Analysts believe that this price fixing agreement. However, which comes into force immediately, will have global repercussions – positive for producers, but likely to increase costs for consumers, such as car manufacturers, and, by ricochet, their customers.

“This new reference point becomes the center of gravity of the industry. will draw prices up,” said Ryan Castilloux, managing director of the Adamas Intelligence consulting firm.

The DOD undertakes to pay MP the difference between $ 110 per kilogram for the two most common rare land. the united states launching rare land market price, currently set by China. If the price exceeds $ 110/kg, the DOD will receive 30 % of additional profits.

According to Castilloux. other indirect beneficiaries of this pricing system could be companies such as the Belgian chemical group Solvay, which launched an expansion in April.

“This will give Solvay and others the momentum necessary to require a similar price level. You can say that this gives them a floor on which to rely, ”he adds.

If Solvay refused to comment, other producers and shareholders in the Rare Land sector welcomed the news.

Aclara Resources develops mines of rare land in Chile. Brazil, and also provides a separation plant in the United States. Alvaro Castellon. head of the company’s strategy and development, told Reuters that this agreement opened “new strategic paths” for the company.

Gradual increase in production at MP Materials

MP MATERIALS, who suffered a net loss of $ united states launching rare land 65.4 million last year in large part because of the low Chinese prices. will bring the production of magnets from its Texan factory to 1,000 tonnes per year at first, then to 3,000 tonnes annual.

Under the agreement concluded last Thursday. the DOD will become its main shareholder with 15 % of the capital, and MP will build a second factory for manufacturing magnets in the United States, bringing production to an additional 7,000 tonnes per year. In total, production would reach 10,000 tonnes per year, the equivalent of American consumption of magnets for 2024.

However, this does not include the 30,000 tonnes imported by the United States already integrated into assembled products, says Adamas.

Adamas plans that global demand for permanent magnets in rare land will be doubled in the next decade to reach around 607. 000 tonnes, with record annual growth in the United States, estimated at 17 united states launching rare land %.

The dependence of the world towards China for a large part of this request was highlighted by Chinese restrictions on its exports. while commercial negotiations continue between Washington and Beijing.

So far, Western governments have been successful to help their industries compete.

Attempts to establish higher prices have limited to ad hoc agreements fixing bonuses for magnets.

Dominic Raab. former Deputy Prime Minister and Minister of Foreign Affairs of the United Kingdom, is not surprised that the Trump administration concluded that the only tax incentives would not be enough to generate the required level of investment.

“The next step is to see if they can go to the higher scale. ” wonders Raab, now responsible for global affairs at Appian Capital Advisory, a investment capital company specializing in mining projects.

The threshold of $ 110 per kilogram for the neodymium. the presodym (NDPR) guaranteed by the DOD is slightly united states launching rare land higher than the range of $ 75 to $ 105/kg that the Blue Project Cabinet considers it necessary to support sufficient production in order to meet the demand in the coming years. The current level is around $ 63/kg.

David Merriman. of Project Blue, believes that it remains uncertain how industrialists will react to the rise in prices and if that will encourage them to invest in rare land, while they have more diverse sources of supply.

“Large consumers not supported by governments are less likely to follow this same investment scheme. because they are not necessarily aligned with a particular regional supply chain,” he explains.

Asked about the DOD price floor. a spokesperson for the German Volkswagen automobile giant refused to comment, but said: “We greet all the efforts to strengthen long-term stability and the diversification of global supply chains for critical materials. »»