Rare-earth prices are in the doldrums. China wants to keep them that way.
The U.S. and Europe would love to cut their dependence on China for rare earths. Standing in the way of that ambition are low prices and Beijing’s willingness to throw its weight around to keep the market down.
Rare-earth prices have plummeted this year and are now hovering at roughly three-year lows. The spot price of neodymium-praseodymium, a silver-gray alloy and the most profitable chunk of the market, has fallen by almost 20% since the start of January to around $50,000 a metric ton, according to data provider Argus Media. Other rare earths are down even more.
Today, these niche minerals are mainly used in permanent magnets for a range of essential household items such as TVs, refrigerators and headphones. Increasingly, though, the magnets also help turn motors in electric vehicles, wind turbines and robots. By 2030, such high-tech products are expected to account for roughly two-thirds of demand for neodymium permanent magnets, according to Adamas Intelligence, a consulting firm focused on strategic metals and minerals.
Yet despite the promise of soaring demand driven by the energy transition, prices of rare earths have spiraled downward since the start of 2022. A glut of Chinese supply is one problem. In recent years, Beijing has ramped up production of rare earths using mining quotas, leaving the industry to digest the excess.
In its first quota of 2024, China ordered its state-owned miners to produce 135,000 metric tons of rare earths, up nearly 13% from the comparable quota in 2023, according to Fastmarkets, another data provider. At the same time, demand for rare earths hasn’t lived up to expectations. The market for permanent magnets hinges on the strength of the Chinese economy, which faces a deepening
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