Highlights

• Dr. Soo Hyun Oh's paper frames China's rare earth dominance as deliberate vertical integration, not geological luck, with strategic control over heavy rare earths from mining through magnet manufacturing.
• The U.S. Nd-Pr price floor (~$110,000/ton) successfully stabilized input costs, but critical bottlenecks in dysprosium and terbium supply remain unaddressed, leaving magnet supply chain resilience incomplete.
• While correctly identifying rare earth magnets as a strategic industrial system requiring state intervention, the paper underestimates China's adaptive capacity through export controls and leaves unresolved how much intervention is optimal.

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In a December 10, 2025 policy paper (opens in a new tab) titled “Magnet Struggle: Strategic Moves in the Rare Earth Supply Chain,” Dr. Soo Hyun Oh, Ph.D (opens in a new tab)., Research Fellow with the North America and Europe Team at the Korea Institute for International Economic Policy (KIEP), (opens in a new tab) offers a clear-eyed assessment of the strategic competition between the United States and China over NdFeB permanent magnets—the technological backbone of electric vehicles, wind turbines, defense systems, and advanced industrial motors.

Dr. Soo Hyun Oh, Ph.D.

The paper’s central strength lies in its structural diagnosis. Oh correctly frames China’s dominance not as an accident of geology, but as the result of deliberate vertical integration across mining, separation, alloying, and magnet manufacturing—paired with long-standing control over heavy rare earth elements (HREEs) such as dysprosium (Dy) and terbium (Tb) sourced from southern China and Myanmar.

This integration, the paper argues, allows China to compete simultaneously on scale, quality, and price, anchoring global magnet supply chains in ways that market mechanisms alone cannot dislodge.

Rare Earth Exchanges™ agrees with the paper’s characterization of price cyclicality as a strategic tool, not a neutral market outcome. The repeated pattern—price spikes, non-Chinese investment, subsequent Chinese low-price pressure, and foreign project failure—is accurately described as a form of strategic foreclosure rather than ordinary commodity volatility. This framing usefully explains why decades of “let the market work” approaches have failed to sustain diversified rare earth capacity.

The paper is also right to highlight the U.S. Nd–Pr price floor as a meaningful intervention. Evidence that prices converged toward the guaranteed level (~USD 110,000/ton) suggests the policy has established a credible lower bound, reducing financing risk and improving the economics of non-Chinese separation and magnet projects.

That said, several assumptions warrant closer scrutiny. What are these assumptions?

1. The paper implicitly assumes that price stabilization alone can catalyze durable supply chains

Yet, it acknowledges—almost in passing—that the most acute bottlenecks remain in HREEs (Dy, Tb), which are not covered by the price floor. Without parallel interventions for HREE supply, magnet resilience remains incomplete.

2. The analysis underplays China’s adaptive capacity.

Export controls that now extend downstream to magnet products suggest Beijing can recalibrate faster than static policy models assume. A price floor may stabilize inputs, but it does not guarantee competitiveness against a state-backed incumbent willing to absorb. And finally...

3. While the paper concludes that rare earth supply chains cannot rely on markets alone

It stops short of specifying how much state intervention is enough—and how much risks distorting allied industries in new ways.

Overall, this is a strong, disciplined contribution that correctly reframes rare earth magnets as a strategic industrial system, not a commodity market. Its conclusions are directionally sound—but the path from stabilization to true independence remains less certain than the paper suggests.

Source: Oh, Soo Hyun (2025). Magnet Struggle: Strategic Moves in the Rare Earth Supply Chain. Korea Institute for International Economic Policy (KIEP). www.kiep.go.kr (opens in a new tab)

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