• U.S. rare earth production surged from 4,300 to 8,900 metric tons in 2025, but import reliance rose to 67% despite domestic gains, signaling continued fragility.
• Heavy rare earths like dysprosium and terbium remain 100% import-dependent with no commercial-scale U.S. production, creating a strategic bottleneck for defense and EV applications.
• Record concentrate production of 51,000 metric tons masks the real challenge: downstream separation, metal-making, and magnet manufacturing capacity remain critically underdeveloped.

The U.S. rare earth story is finally moving in the right direction, and the latest U.S. Geological Survey (USGS) Mineral Commodity Summaries 2026 data (opens in a new tab) reinforce that. But the same tables also deliver a sobering message for investors and policymakers: the U.S. is building capacity—not yet command. The headline numbers look encouraging, yet the most strategic segments of the supply chain remain thin, import-exposed, and vulnerable to shocks. Note American treasure trove MP Materials is producing the vast bulk of the output as of the end of 2025.

What the USGS Numbers Say—and What They Don’t

USGS reports a sharp jump in U.S. production of rare-earth compounds and metals (expressed in rare-earth oxide equivalent) from 4,300 metric tons in 2024 to an estimated 8,900 metric tons in 2025. That is meaningful progress. It reflects years of capital, permitting, and operational learning, finally showing up in national statistics.

But investors should avoid a common translation error: “compounds and metals (REO equivalent)” does not automatically mean full-spectrum, separated, market-ready oxides across the board. It can include mixed or intermediate chemical forms reported as REO-equivalent for consistency. Treating the figure as proof of complete refining independence overstates what the data can support.

Import Reliance Fell—Then Rose Again

Another misunderstood talking point is “import reliance was cut in half.”  Directionally, yes: net import reliance fell from over 90% in 2023 to 53% in 2024, then rose to 67% in 2025, even as domestic output increased. That reversal matters. It suggests the system is still fragile, dependent on trade flows, and not yet structurally de-risked.

USGS also flags a major blind spot: rare earths embedded in imported finished goods—motors, magnets, electronics—can make headline import metrics look safer than real exposure.

The Hard Wall: Heavy Rare Earths

Here is the strategic cliff: heavy rare earths remain 100% net import reliant. USGS indicates that while minerals containing heavy rare-earth elements may be mined domestically, there was no sustained commercial-scale production of heavy rare-earth compounds or metals in 2025. That’s the choke point. Dysprosium and terbium are essential for high-coercivity magnets used in defense systems, drones, EV drivetrains, and industrial motors. Progress on light rare earths does not substitute for this gap.

Concentrate Records Aren’t the Finish Line

The USGS also reports a record mineral concentrate production of 51,000 metric tons of REO in 2025 (up from 45,500 in 2024). That’s real momentum—upstream. But strategic leverage comes downstream: separation, metal-making, alloying, magnet qualification, and manufacturing at scale. Those layers remain the U.S. bottleneck—especially for heavies.

A Reality Check from the Ore Body

In background discussions, one major U.S. producer, our American treasure trove MP Materials,  has emphasized a blunt truth: the ore body drives the mix. Roughly ~80%+ of many concentrates can be cerium and lanthanum—high-volume but low-value products in persistent oversupply—while NdPr is the economic engine. MP Materials sells NdPr oxide (not separated Nd and Pr), because most modern magnet recipes accept NdPr oxide and the natural Nd:Pr ratio typically fits market specs. On heavies, as _Rare Earth Exchanges_™ has pointed out, the company’s SEG+ stream includes ~4% dysprosium and terbium on a total rare earth oxide basis—small by percentage, meaningful by absolute volume when paired with high head grade and third-party feedstocks.  See the company’s literature (opens in a new tab).

REEx Take

The USGS data support optimism—but only disciplined optimism. The U.S. is building a foundation it did not have five years ago. But use of the word “de-risked” is still premature. Embedded imports mask real exposure. Heavy rare earths remain the strategic cliff. And downstream capability—not concentrate tonnage—will decide whether America’s rare earth comeback becomes durable.

See the latest USGS report (opens in a new tab).

• U.S. proposes multilateral price floors for critical minerals to keep non-Chinese producers viable after China's 2024 export restrictions exposed supply chain vulnerabilities across defense, automotive, and semiconductor sectors.
• China controls over 90% of global rare earth processing capacity, with refining infrastructure requiring 5-7 years to build—making price defenses a time-buying measure rather than a structural solution.
• A temporary accommodation between U.S. and China on rare earth access is approaching expiration, with uncertain prospects for extension as Washington pushes allies like South Korea toward a more binding commercial framework.

After China temporarily restricted rare earth exports last year—jolting U.S. defense, automotive, semiconductor, and battery supply chains—Washington is proposing a multilateral trade bloc to blunt Beijing’s leverage. At a February 4 ministerial hosted by Secretary of State Marco Rubio, U.S. officials outlined a plan to defend minimum prices for critical minerals among allies, using tariffs or other measures if China undercuts markets. The objective is straightforward: keep non-Chinese producers economically viable long enough to scale.

What’s Firm—and What’s Still Vapor

Vice President J. D. Vance was unusually direct, arguing that volatile prices and alleged predatory underselling have made Western investment uneconomic. The proposal envisions price floors across production stages, triggered when market prices fall below agreed thresholds. Rubio linked the idea to complementary tools—strategic stockpiles such as Project Vault and coordinated public finance—to give the concept institutional weight.

These signals are real. So is the motivation: China’s export controls exposed how dependent the U.S. remains on rare earth inputs. What remains undefined are the mechanics—specific floor levels, enforcement rules, loss-sharing, and timelines aligned with industrial reality.

The Choke Point Everyone Knows—but Few Can Fix

Hankyoreh gets the central constraint right: refining and separation, not mining. China controls over 90% of global rare earth processing, built on decades of solvent-extraction expertise, precise temperature control, and skilled labor. The reporting notes that building refineries and achieving consistent yields typically takes five to seven years, making hopes for rapid stabilization optimistic at best. Price defenses can buy time; they cannot substitute for chemistry, engineers, and IP.

Allies in the Middle

South Korea’s position (opens in a new tab) captures the dilemma. Closer alignment with a U.S.-led bloc could reduce dependence on China and add resilience, but it carries economic and diplomatic trade-offs. Rubio praised Seoul’s leadership in the Minerals Security Partnership (MSP)—now potentially giving way to a more binding commercial framework—signaling Washington’s intent to move from coordination to enforcement.

About the Source

Hankyoreh is a major South Korean daily newspaper known for detailed foreign policy reporting and a progressive editorial stance. Its coverage often reflects allied concerns while scrutinizing U.S. strategy—useful context for readers weighing tone and emphasis.

REEx Take

This initiative is a credible counterpunch—but it risks overestimating what pricing policy can achieve without midstream muscle. Price floors buy time; processing capability wins markets. Until the West closes the refining gap, China’s dominance remains structural, not tactical.

At present, the United States and China are operating under a temporary accommodation on rare earths, following a limited reprieve granted by Beijing after last year’s export controls disrupted global supply chains. This arrangement has eased immediate pressure on select U.S. industries, but it is explicitly time-bound. As the deadline on this reprieve approaches, the path forward remains uncertain. Whether China extends, modifies, or withdraws this accommodation will have significant implications for pricing, availability, and downstream manufacturing resilience. Rare Earth Exchanges™ will monitor developments closely as the expiration window narrows and strategic signals from both governments emerge.

Source: Hankyoreh (South Korea)

• Brazil's Serra Verde secured $565M DFC financing to expand its Pela Ema ionic clay project from 5,000 to 6,500 tpa TREO capacity, with a U.S. government equity option included.
• Serra Verde ended long-term Chinese offtake agreements in December 2025, joining MP Materials in reducing dependence on Shenghe Resources and pivoting to Western buyers.
• The project represents a rare Western de-risking win: already in commercial production with heavy rare earths (Dy, Tb, Y) critical for defense and EVs, outside Chinese control.

Brazil’s Serra Verde (opens in a new tab) has crossed a strategic threshold that many Western rare-earth projects never reach: commercial production, sovereign-backed financing, and a clean exit from long-dated Chinese offtake. This week, the U.S. International Development Finance Corporation (DFC) (opens in a new tab) confirmed a $565 million financing package for Serra Verde’s Pela Ema ionic clay project in Goiás, Brazil, including an option for the U.S. government to acquire an equity stake. Proceeds will refinance existing loans and fund Phase I optimization and expansion, lifting total rare earth oxide (TREO) capacity from 5,000 tpa to ~6,500 tpa by end-2027. Pela Ema entered commercial production in 2024.

Why This Deal Matters

This is not a greenfield promise. Pela Ema (opens in a new tab) already produces mixed rare earth carbonate (MREC) enriched in dysprosium (Dy), terbium (Tb), and yttrium (Y)—critical inputs for defense systems, EV traction motors, wind turbines, and advanced electronics. Ionic clay deposits are typically lower grade than hard-rock peers, but they offer faster ramp-up, simpler metallurgy, and steadier operating profiles—attributes increasingly prized by Western buyers seeking reliability over theoretical peak output.

From China to the Western Stack

The most consequential signal predates the financing. In December 2025, Serra Verde renegotiated and dramatically shortened its Chinese offtake agreements—originally expected to run roughly a decade—so that they now expire at the end of 2026. That move places Serra Verde alongside MP Materials (and more recently VHM Ltd) in stepping away from long-term dependence on Shenghe Resources. Over the past year, that shift has become a defining pattern as Western capital offers more attractive financing and faster downstream alignment.

What the U.S. Gets

For Washington, this is near-term leverage, not a ten-year option. Serra Verde delivers existing, scalable heavy rare earth supply outside China—precisely where U.S. vulnerabilities are most acute. With Chinese offtake ending this year, industry expectations are that new offtake agreements will be signed in 2026, likely with U.S. buyers or with processors in jurisdictions that already host separation capacity (e.g., Malaysia, Australia, Estonia, France).

Context: China Still Moves the Board

The backdrop underscores the stakes. Even as Western-backed projects consolidate, Shenghe finalized its acquisition of Peak Rare Earths and the Ngualla project in Tanzania in September 2025—a reminder that China continues to lock up upstream optionality even as some downstream contracts unwind.

REEx Take

This is what a credible rare-earth “de-risking” win looks like: producing asset, heavy rare earth mix, shortened China exposure, and Western capital with optional equity. Serra Verde won’t end China’s dominance—but it meaningfully narrows the gap where it matters most.

• China's Baotou Rare Earth Research Institute has deployed the country's first fully domestic high-temperature vibrating sample magnetometer (VSM).
• The VSM is capable of measuring permanent-magnet performance up to 800°C and 6 tesla.
• The deployment aims to reduce dependence on Western and Japanese suppliers.
• The new instrument enables higher-fidelity testing of NdFeB and SmCo magnets under extreme conditions.
• This move potentially strengthens China's dominant position in rare-earth magnet manufacturing by improving R&D cycles and quality control.
• Better metrology tools for magnetic materials have direct commercial implications for aerospace, EV motors, wind turbines, and emerging magnetocaloric applications.
• Performance claims from Chinese domestic media should be independently verified.

China’s Baotou Rare Earth Research Institute has put into service what it calls the country’s first high-temperature vibrating sample magnetometer (VSM) built entirely from domestically produced modules. According to the report, the system can precisely measure permanent-magnet performance under extreme conditions—up to 800°C and 6 tesla—and is being positioned as a step toward breaking foreign “monopolies” in high-end magnetic measurement tools.

Note the Chinese refer to a small cluster of Western and Japanese suppliers that dominate high-field, high-precision magnetic measurement systems, especially VSMs, SQUID magnetometers, and PPMS platforms.

The Claims

In a demonstration, an NdFeB sample reportedly showed stable magnetic performance at 150°C, with clear test curves produced by the new equipment.

Technically, the institute says the instrument is designed primarily for NdFeB and SmCo magnets, using superconducting excitation to reach 6T and to operate over a wide temperature range (up to 800°C). The narrative draws a contrast with older domestic “closed-loop” systems that typically rely on conventional electromagnets and top out around 3 tesla, and with imported high-end systems that often emphasize ultra-low-temperature measurements and are costly.

The claimed breakthrough is not a new magnet chemistry, but higher-fidelity testing capability—capturing subtle performance changes of rare-earth magnets under high-temperature/strong-field conditions and enabling more precise characterization across temperature- and field-sweep experiments.

Implications

For Western and U.S. readers, the commercial implication is straightforward: metrology is industrial power. Better measurement tools shorten R&D cycles, improve quality control, and accelerate iteration in magnets used in aerospace, EV traction motors, wind turbines, and emerging applications such as magnetocaloric (“magnetic refrigeration”) materials.

If the performance and reliability claims hold up, the new system could strengthen China’s already dominant position in rare-earth magnet manufacturing by improving upstream validation and downstream product qualification, making it easier for Chinese producers to deliver magnets with tighter specifications for high-heat-duty cycles.

The institute also emphasizes spillover benefits to nearby magnet manufacturers, suggesting the instrument will serve as a regional testing hub that improves data quality for industrial customers.

Disclaimer: This item is translated from Baotou News Network, a Chinese outlet. As the report originates from Chinese domestic media, key claims (performance specifications, “first in China” status, and comparative statements about foreign systems) should be verified independently before being relied upon for technical or investment decisions.

• China signals measured opposition to EU-U.S. critical minerals partnership while maintaining 'market principles' rhetoric, avoiding direct threats or escalation despite tracking Western diversification efforts closely.
• The one-year reprieve on rare earth export restrictions China granted the U.S. in 2025 is nearing its end, with American supply chains still years away from achieving resilience in separation, metals, and magnet manufacturing.
• Beijing's calm diplomatic tone may reflect confidence rather than concession, as it holds leverage over critical minerals while the U.S. and allies race to accelerate midstream capacity before potential supply disruptions.

China’s Foreign Ministry signaled (opens in a new tab) firm but measured opposition on Tuesday to reported discussions between the European Union and the United States over a proposed critical minerals partnership aimed at reducing reliance on Chinese supply chains. And of course, the USA on Wednesday, February 4th, hosted the 2026 Critical Mineral Ministerial (opens in a new tab) involving many dozens of nations.

Speaking at a regular press briefing, Foreign Ministry spokesperson Lin Jian was asked by a Bloomberg reporter to comment on news that several foreign ministers were meeting in Washington to consider an also the EU-backed framework for cooperation on critical minerals.

Lin responded that China’s position “has not changed,” emphasizing that all countries share responsibility for maintaining the stability and security of global critical-mineral supply and industrial chains. He added that China believes parties should play a “constructive role” in safeguarding those systems.

Addressing references to a possible EU–U.S. memorandum of understanding, Lin reiterated Beijing’s long-standing stance: countries should adhere to market-economy principles and international trade rules, strengthen communication and dialogue, and work together to keep global industrial and supply chains “stable and unimpeded,” in order to support steady global economic growth.

Notably, Lin did not directly criticize the EU or the United States, nor did he threaten retaliation or name China explicitly as the target of diversification efforts—an omission that appears deliberate.

Why This Matters for Business and the West

The significance here is not what China said—but how it said it.

• Acknowledgment without endorsement: Beijing implicitly confirms it is tracking—and taking seriously—EU–U.S. coordination on critical minerals.
• Rules-based framing: By invoking “market principles” and “international trade rules,” China positions itself as a defender of the existing trade order, even as Western policymakers argue that the current system is structurally distorted by state-directed capacity.
• No escalation—for now: The absence of threats or new export measures suggests Beijing is observing first, not reacting publicly.

For U.S. and European firms, this reinforces that supply-chain diversification is being interpreted as a geopolitical signal, not a neutral industrial policy.

The One-Year Reprieve: A Quiet Clock Is Ticking

What went unsaid at the podium—but looms large for industry—is that China effectively granted the United States a one-year reprieve on rare earth access following the tightening of export licensing and controls in 2025. While never branded as a formal exemption, licensing flexibility and continuity of shipments functioned as a temporary pressure release valve, allowing U.S. defense (at least partially), automotive, and advanced-manufacturing supply chains to avoid immediate disruption.

That window is now nearing its end.

Despite unprecedented policy activity in Washington and allied capitals, the U.S. is not close to resilience across the rare earth value chain—particularly in separation, metals, alloys, and magnet manufacturing. New projects remain years from scale. Recycling helps at the margin. Stockpiles buy time—but do not replace production.

The Strategic Question No One Wants to Answer—Yet

As the reprieve winds down, a set of uncomfortable questions emerges:

• Will China quietly tighten licensing again, using “market rules” rather than bans?
• Will pricing, delays, or compliance frictions become the preferred pressure tools?
• Can the U.S. and its allies accelerate midstream capacity fast enough to avoid a supply shock?

Beijing’s calm tone may signal confidence—notconcession.

Bottom Line

China is publicly urging cooperation and market discipline while privately holding the most powerful lever in the system. As EU–U.S. coordination accelerates, Beijing is signaling it intends to contest the mechanics of diversification without triggering an immediate confrontation.

Time, however, is not neutral—and the grace period is almost over.

Disclaimer: This news item originates from reporting by Sina Finance, a media outlet in China owned by New Wave Holdings Limited (controlled by Charles Chao (Cao Guowei)). The information and official statements cited should be independently verified and interpreted within the broader context of trade, export-control, and diplomatic developments.

• Northern Rare Earth Group is diversifying rare-earth applications beyond traditional materials into:
  • Healthcare
  • Textiles
  • Agriculture
  • Hydrogen energy
• Developed nearly 10 specialized compounds and over 30 solid-state hydrogen storage materials in 2025.
• Filed 158 patent applications in 2025.
• Led or participated in 69 standards in 2025.
• Involved in work on international standards for praseodymium-neodymium metal, critical for EV and wind turbine magnets.
• Demonstrated commercialization of a hydrogen-powered two-wheel vehicle using solid-state storage, achieving:
  • 90+ km range
  • Zero emissions
• Showcased cross-sector innovation from lab to market.

A major rare-earth producer based in Inner Mongolia reports rapid progress in expanding rare-earth applications beyond traditional materials into healthcare, textiles, agriculture, and hydrogen energy—signaling a deliberate push to move the industry up the value chain through cross-sector innovation, standards leadership, and faster commercialization of R&D.

According to a February 3, 2026 report from Baotou News Network, Northern Rare Earth Group says it used reforms to its R&D–production–sales model in 2025 to optimize product mix and accelerate commercialization. The company reports development of nearly 10 rare-earth compounds tailored to specific end markets and more than 30 solid-state hydrogen storage materials, while expanding “Rare Earth + Healthcare,” “Rare Earth + Textiles,” and “Rare Earth + Agriculture” use cases.

The company frames technology as its core growth engine. In 2025, it claims to have solved two core technical challenges, launched six new products, developed three new processes and four new equipment systems, and advanced six pilot demonstration lines, aiming to turn laboratory advances into scalable industrial output.

Standards and IP as Competitive Levers

The report emphasizes the growing influence of global standards. At the September 2025 meetings of ISO/TC 298 (Rare Earth Technical Committee), the company tracked seven active standards, initiated eight new projects, and advanced three new proposals. Notably, it is leading work on an international standard for praseodymium-neodymium (Pr-Nd) metal, a critical input for permanent magnets used in EVs, wind turbines, and defense systems.

In 2025, the firm says it filed 158 patent applications (including one international invention patent and 125 domestic invention patents) and participated in 69 standards, with leadership roles in roughly 34% of national and industry standards—a signal of growing rule-setting ambition, not just production scale.

From Lab to Market

Commercialization is demonstrated by a hydrogen-powered two-wheeled vehicle developed by a subsidiary, now in internal use. The vehicle uses an in-house solid-state hydrogen storage canister that holds 80–90 grams of hydrogen, delivering a range of over 90 kilometers, zero tailpipe emissions, and strong cold-weather performance.

The company also reports building a multi-layered innovation platform spanning basic research, applied technology, pilot production, and industrial deployment—supporting EVs, aerospace, advanced textiles, and micro-motor systems.

Western POV

The update underscores a broader pattern: rare earths are being repositioned as enabling technologies across multiple industries, not just mining outputs. Leadership in standards, IP, and cross-sector applications could translate into downstream leverage over magnets, hydrogen systems, and specialty materials—areas where Western supply chains remain exposed.

Disclosure & Verification Notice: This article is a translation and summary of a state-owned regional media outlet (Baotou News Network). All claims reflect company and government statements and should be independently verified. Performance metrics and technology outcomes may emphasize strategic positioning aligned with national industrial policy.

• Major 2025 milestones achieved by China Northern Rare Earth Group:
  • 158 patent filings
  • Leadership in ISO rare-earth standards
  • Breakthroughs in biological recovery and recycling technologies
• Expansion beyond mining into downstream applications, including:
  • EV components
  • Hydrogen storage
  • Aerospace materials
  • Cross-sector innovations in medical, textile, and agricultural uses
• Strategic push into standards, IP, and advanced processing widens the competitive gap with Western supply chains
• Signals China's ambition to control the entire rare earth value chain

China Northern Rare Earth Group (part of state-owned Baogang Group) reports significant progress in technology development, standard-setting, and commercialization, underscoring Beijing’s continued push to tighten control not just over rare-earth mining, but over advanced processing, materials science, and downstream applications that matter directly to global supply chains.

According to a February 3, 2026 report from Baogang Group media, the state-owned rare-earth giant says it solved two “core technologies” in 2025, launched six new products, developed three new processes, and deployed four new equipment systems, while advancing six demonstration production lines. The company frames innovation as its central growth engine, explicitly linking R&D output to industrial competitiveness.

Downstream Innovation = Patents

A key focus is standards and intellectual property leadership. Northern Rare Earth states it is actively shaping international rare-earth standards through ISO/TC 298, including leading work on an international standard for praseodymium-neodymium (Pr-Nd) metal—a critical input for permanent magnets used in EVs, defense systems, and industrial motors. In 2025 alone, the company claims 158 patent filings (including 125 invention patents) and leadership roles in roughly one-third of China’s national and industry rare-earth standards.

On the technology front, the company highlights progress in rare-earth recycling, bio-metallurgy, micro-motor systems, and functional materials, including pilot production lines targeting EVs, aerospace, advanced textiles, and magnetostrictive acoustic devices. Of particular note is its claimed breakthrough in biological recovery of rare earths from tailings and waste, a capability with potential cost and environmental advantages over conventional processing.

Taking to Market

Northern Rare Earth also showcased commercialization efforts, including a hydrogen-powered two-wheel vehicle using a solid-state hydrogen storage canister developed by its subsidiary. The company claims the system enables long-range, cold-weather performance and zero emissions—signaling ambitions beyond rare earths into adjacent energy technologies.

Strategically, the company emphasizes expanding cross-sector applications such as “rare-earth medical,” “rare-earth textiles,” and “rare-earth agriculture,” while preparing for China’s next five-year planning cycle with deeper integration of R&D, manufacturing, and global innovation networks.

Why this matters for the West

The update reinforces a critical reality: China is certainly not standing still. It is consolidating power not only in refining and magnets, but in standards, IP, recycling, and advanced materials, areas where the U.S. and allies remain structurally behind. For Western supply chains, this widens—not narrows—the competitive gap. This “owning the future” downstream raises significant concerns Rare Earth Exchanges™ continues to chronicle.

Disclosure & Verification Notice: This article is translated and summarized from Baogang Group–affiliated, state-owned Chinese media (Baogang Daily). Claims should be independently verified. Performance metrics, patents, and “breakthroughs” are company-reported and may reflect strategic messaging aligned with national industrial policy.

• India's 2026 Union Budget announced dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu to build integrated mine-to-magnet capacity and reduce 90% reliance on Chinese rare earth processing.
• While India's monazite-bearing coastal sands offer a real geological advantage, corridors alone don't equal capacity—refining, separation, and magnet manufacturing require capital, technical expertise, and years to scale.
• Odisha's Orissa Sands Complex holds commercially attractive beach-sand deposits, but radioactive monazite processing regulations and lack of downstream infrastructure mean raw-material dependency may persist without rapid execution.

India’s 2026 Union Budget announced dedicated “Rare Earth corridors” to cut dependence on China and build a domestic critical-minerals ecosystem. On paper, the plan targets the real bottleneck—processing and magnets, not just mining. This Rare Earth Exchanges (REEx) analysis separates what is solid from what is aspirational, flags assumptions and bias, and explains why investors should watch execution, not headlines.

Odisha—one of India’s contemplated rare earth corridors

What New Delhi Actually Announced

According to reporting (opens in a new tab) by Rashmi Ranjan Mohanty (OTV, Feb. 3, 2026), India will support four mineral-rich states—Odisha, Kerala, Andhra Pradesh, and Tamil Nadu—to develop integrated rare-earth corridors linking mining, processing, R&D, and manufacturing. The goal is to reduce reliance on China-led supply chains and support sectors from EVs and renewables to defense and electronics.

This follows a November 2025 incentive package (~₹7,280 crore) aimed at building 6,000 metric tons per year of domestic permanent-magnet capacity.

The Part the Article Gets Right

The diagnosis is accurate. Rare earths are not scarce in the ground; they are scarce in refining, separation, and magnet manufacturing—where China controls ~90% of capacity. India’s monazite-bearing coastal sands are real, sizable, and strategically located near ports. April 2025 Chinese export restrictions that disrupted India’s auto and EV sectors underscore the vulnerability.

Corridors that integrate mine-to-magnet capacity—rather than isolated mines—are the correct industrial design.

Where Optimism Leaps Ahead of Proof

The recent news out of India leans heavily on potential. Corridors do not equal capacity. Refining rare earths—especially heavy rare earths—requires capital, technical know-how, environmental controls, and years of learning curves. None of the reporting specifies timelines, technology partners, or whether India can rapidly scale separation and sintered magnet production to global quality standards.

There is also a subtle nationalist framing: China’s dominance is correctly cited, but the article understates how hard it is to replicate decades of downstream integration.

Why Odisha Matters—and Why That’s Not Enough

Odisha’s mineral sands (monazite, ilmenite, zircon) make it a logical anchor. But mining without metallurgical mastery simply recreates dependency one step downstream. Investors should ask: Who builds and operates the separators? Who makes the alloys and magnets? And who buys them at scale?

Odisha Profile

Odisha sits at the heart of India’s rare earth strategy, hosting some of the country’s most significant and accessible REE deposits concentrated along its coastalbelt from Dhamra to Gopalpur, with the flagship Orissa Sands Complex(OSCOM) at Chhatrapur in Ganjam district covering more than 2,400 hectares.

These beach-sand deposits are rich in monazite—a rare-earth phosphate mineral containing thorium and uranium—alongside ilmenite, rutile, zircon, sillimanite, and garnet, with high heavy-mineral grades of roughly 10–12% found just 1.5 meters below the surface, making them commercially attractive. Following the Union Budget 2026–27, Odisha has been designated a Rare Earth Corridor, aiming to integrate mining, processing, research, and downstream manufacturing, including permanent magnets for EVs, defense, and electronics, to reduce reliance on China.

However, the opportunity comes with constraints: monazite processing is tightly regulated due to radioactivity, environmental risks such as saline intrusion require strict oversight, and India must still scale advanced refining and magnet-making infrastructure if Odisha’s geological advantage is to translate into true supply-chain power rather than continued raw-material dependency.

REEx Takeaway for Investors

India’s corridor strategy aligns with global reshoring efforts in the U.S., EU, and Japan. It is directionally right and geopolitically rational. But corridors are infrastructure concepts, not supply chains. Until processing and magnet plants are financed, permitted, built, and staffed, China’s leverage remains intact.

Citation: Rashmi Ranjan Mohanty, OTV, Feb. 3, 2026

• Chinese researchers developed the first industrial-academic database of nearly 2,000 real NdFeB magnet samples.
• Use of machine learning and active learning optimizes composition faster and cheaper than traditional trial-and-error methods.
• The AI system creates a continuous learning loop that identifies uncertain areas, requests only the most useful data, and retrains.
• This innovation bridges the gap between industry's cost focus and academia's performance goals.
• This breakthrough indicates China is advancing beyond manufacturing scale to algorithmic advantage in rare-earth magnets.
• Rare-earth magnets are a critical chokepoint for U.S. and European electric vehicle and wind turbine supply chains.

Chinese researchers report a major step toward AI-driven manufacturing of high-performance rare-earth magnets, a critical component in electric vehicles and wind turbines, not to mention other major products. By combining nearly 2,000 real industrial magnet samples with advanced machine-learning and “active learning” techniques, the team claims it can optimize magnet composition and processing faster, cheaper, and more reliably than traditional trial-and-error methods. If validated and scaled, this approach could tighten China’s lead in NdFeB magnet manufacturing, a strategic chokepoint for the U.S. andEurope.

What’s New — and Why It Matters

According to a February 2, 2026 announcement from the Computer Network Information Center of the Chinese Academy of Sciences (opens in a new tab), working with the Ganjiang Innovation Institute of the Chinese Academy of Sciences (opens in a new tab), researchers have built what they describe as the first “industrial–academic dual-domain” database for sintered NdFeB magnets. The dataset contains nearly 2,000 samples drawn from real manufacturing environments rather than idealized lab conditions.

Using high-performance computing and multiple machine-learning models (random forests, gradient boosting, and classical and quantum-inspired support vector regression), the team tested how data selection strategies affect prediction accuracy and manufacturing outcomes in a virtual experiment setting.

Reviewing the Materials

The Chinese Society of Rare Earths included an infographic that illustrates an active learning production loop:

• Data preparation: Raw magnet data are cleaned, standardized, and splitinto training, validation, and test sets.
• Model training: Multiple AI models predict magnet performance based on composition and processing parameters.
• Active learning loop: Instead of training once, the system repeatedly selects the most informative new samples, retrains the model, and stops early when gains level off.
• Outcome: Faster convergence on optimal magnet recipes with fewer costly physical experiments.

In simple terms: the AI learns where it is uncertain, asks for only the most useful new data, and improves continuously—cutting time and cost.

Strategic Signal for the West

The study explicitly highlights a tension: industry prioritizes cost and stability, while academia pushes performance limits. The Chinese team claims its framework bridges this gap, offering a scalable path to factory-ready AI optimization. For the U.S. and EU—still struggling to localize NdFeB magnet supply—this signals that China is moving beyond scale alone toward algorithmic manufacturing advantage, potentially widening the competitive moat.

The peer-reviewed results were published in npj Computational Materials and funded by major Chinese state research programs.

Disclaimer: This news item originates from media affiliated with a state-backed Chinese research ecosystem. While technically plausible and published in a reputable journal, all claims should be independently verified before being used for investment or policy decisions.

• California study shows nitrogen dioxide pollution declined 1.1% for every 200 zero-emission vehicles added between 2019 and 2023, using high-resolution satellite data to demonstrate measurable local air quality improvements.
• While EV adoption reduces tailpipe emissions and urban air pollution, the study omits upstream environmental costs, including battery production and mining burdens for lithium, cobalt, and rare earth magnets.
• Growing EV demand strengthens electrification momentum but intensifies pressure on critical mineral supply chains, highlighting the need for allied mining and processing capacity to avoid trading dependencies.

A new California study finds that as neighborhoods added more electric and plug-in hybrid vehicles, local air pollution fell. Using satellite data, researchers showed nitrogen dioxide—a harmful pollutant from burning fossil fuels—declined about 1.1% for every 200 zero-emissions vehicles added between 2019 and 2023. The takeaway is simple: more electric vehicles on the road are already improving the air people breathe.

The Signal Beneath the Satellites

The study, published in The Lancet PlanetaryHealth by researchers at the Keck School of Medicine at USC, uses high-resolution TROPOMI satellite data to address a long-standing problem in air-quality research: the scarcity of ground-based monitors. Methodologically, this is a strength. The team controlled for pandemic-era traffic drops, fuel prices, and work-from-home shifts, and even validated findings against traditional monitoring data.

From an evidence standpoint, the result is credible: tailpipe emissions matter, and removing them reduces localized NO₂ exposure.

Where the Story Is Solid—and Where It Drifts

The reporting is accurate on what it measures: local combustion-related pollution from light-duty vehicles. It does not overclaim national climate benefits, nor does it suggest EVs eliminate all pollution. Importantly, heavy-duty trucks, shipping, and industrial sources are excluded—rightly so.

But the narrative framing leans gently optimistic. Cleaner urban air does not equal a clean supply chain. The study is silent on upstream emissions, electricity generation mix, or the environmental cost of producing EV batteries and motors.

The Mineral Elephant in the Room

This is where the reality of rare earth and critical minerals intrudes. EV adoption scales demand for lithium, nickel, cobalt, graphite, and rare earth magnets made from neodymium, praseodymium, dysprosium, and terbium. As Rare Earth Exchanges™ community members know so well, many of these materials remain heavily concentrated in China, particularlyin midstream processing.

So while California’s air gets cleaner, mining, refining, and chemical burdens are often exported elsewhere. That is not misinformation—but it is an omission that matters for investors and policymakers.

Why This Matters for the Rare Earth Chain

This study strengthens the demand-side case for electrification. It does not solve the supply-side problem. If EV adoption accelerates—as this data may encourage—pressure on critical mineral supply chains intensifies. Cleaner air at home increases urgency abroad: build allied mining, separation, and magnet capacity, or trade one dependency for another.

Source: Press release, Jan. 23, 2026; The Lancet Planetary Health.

• The Trump administration's Project Vault will establish a $12 billion shared stockpile of critical minerals—including rare earths, gallium, and cobalt—to protect U.S. manufacturers from supply disruptions and price shocks tied to China.
• The initiative is backed by a $10 billion Export-Import Bank loan and $1.67 billion in private capital.
• Major firms like GM, Boeing, and Google are involved, with commodity traders managing procurement and storage.
• Project Vault provides strategic shock absorption and fills a gap left by the military-focused National Defense Stockpile.
• It delays rather than solves scarcity, buying time for Western supply chains to develop independent mining and processing capacity.

The Trump administration wants to spend $12 billion to build a shared stockpile of critical minerals—rare earths, gallium, cobalt, and others—so U.S. manufacturers are less vulnerable to sudden shortages or price spikes, especially those tied to China. Called Project Vault, the plan mirrors the Strategic Petroleum Reserve, but for materials used in cars, electronics, energy systems, and jet engines. Instead of each company stockpiling on its own, firms would share inventory and costs, reducing panic during supply disruptions.

Inside the Machinery, Not Just the Headline

As reported (opens in a new tab) by Bloomberg, Project Vault would combine a $10 billion Export-Import Bank loan with $1.67 billion in private capital, supported by long-term purchase commitments from major manufacturers such as GM, Boeing, Stellantis, Corning, and Google. Commodity traders, including Traxys and Mercuria, would handle procurement and storage.

This is not a state takeover. It is structured risk pooling: inventory risk moves from individual corporate balance sheets into a credit-backed, shared facility—standard logic in commodity finance, scaled up by government backing.

Where the Case Is Strong

The diagnosis is correct. China’s export controls on gallium, germanium, and related materials exposed how thin Western buffers really are. History supports the concern: nickel’s price shock after Russia’s invasion of Ukraine is a textbook example of how geopolitical events can destabilize industrial inputs overnight.

It is also accurate that the U.S. National Defense Stockpile mainly serves military needs. Civilian manufacturers—from autos to semiconductors—have had no equivalent safety net. Project Vault addresses a real structural gap.

Where Tensions and Contradictions Appear

Supportive as this is to Western resilience, it comes with trade-offs. Stockpiles do not create supply; they only delay scarcity. Without parallel acceleration of mining, separation, and magnet manufacturing, the U.S. still draws down material ultimately sourced or processed abroad—often in China.

There is also a philosophical tension: stabilizing prices for buyers can dampen price signals that would otherwise incentivize new Western supply. In extreme cases, a stockpile can mask shortages rather than solve them. And fixed-price repurchase commitments work—until inventories are exhausted. At that point, geology and processing capacity, not financial engineering, decide outcomes.

Why This Matters for the Rare Earth Chain

Project Vault is best understood as strategic shock absorption, not industrial self-sufficiency. It buys time for allied supply chains to mature. For investors, that distinction matters. The real long-term value still lies in projects that move from ore to oxide to metal to magnet—at scale, outside China.

Source: Bloomberg, Feb. 2 2026; administration of President Donald Trump.

• China's new-energy vehicle (NEV) startups saw deliveries drop sharply month-over-month in January 2026.
• Key companies affected included:
  • Huawei-linked HarmonyOS (-35.3% MoM)
  • Xiaomi Auto
  • NIO (-43.5% MoM)
  • XPeng (-46.7% MoM)
• The synchronized slump triggered immediate price wars in February.
• Brands including Xiaomi, NIO, Avita, and XPeng launched aggressive incentives such as:
  • 0.49% APR financing for up to 84 months
  • Reduced down payments
  • Tax subsidies
• These measures signal intensifying competitive pressure and demand fatigue.
• The downstream demand collapse poses risks such as:
  • Overproduction risk that could impact upstream batteries and permanent magnets
  • Pressure on global pricing
  • Complications for Western efforts to build competitive domestic EV supply chains
• China seeks to monetize its rare-earth-anchored advantage.

China’s new-energy vehicle (NEV) startups opened 2026 with a stumble. January deliveries fell across the board month-on-month, triggering a swift wave of price cuts and ultra-low-interest financing in early February from brands including Xiaomi Auto, NIO, and peers. While most automakers still posted year-on-year growth, the sequential collapse from December was steep—a sign of demand fatigue just as China seeks to monetize its rare-earth-anchored EV supply chain at scale.

The Numbers Don’t Lie: A Synchronized Pullback

The January data show a uniform slowdown. Huawei-linked HarmonyOS Intelligent Mobility retained the top spot with 57,900 deliveries, up 65.6% YoY but down 35.3% MoM from December’s 89,600. Leapmotor delivered 32,100 vehicles (+27% YoY; -46.9% MoM) while simultaneously reaffirming a 1-million-vehicle target for 2026—nearly double last year’s output. Xiaomi Auto reported 39,000 deliveries, well above last year but down sharply from 50,000+ in December.

The “Weixiaoli” group also retreated in unison. Li Auto delivered 27,700 vehicles (-37.5% MoM), NIO 27,200 (-43.5% MoM), and XPeng Motors 20,000 (-46.7% MoM). Traditional automaker EV brands fared no better: Dongfeng’s Voyah posted 10,500 deliveries (-34.2% MoM), while SAIC’s Zhiji fell to 5,017, roughly half its late-2025 monthly run rate.

Policy Headwinds and Seasonal Reality Check

State-affiliated media attribute the downturn to a convergence of factors: the expiration of NEV tax exemptions, the uneven rollout of vehicle replacement subsidies, and Spring Festival timing, which pulled demand into December and left January seasonally weak. Data from the China Passenger Car Association (CPCA) reinforce the slowdown: national retail passenger-car sales from January 1–18 fell 28% YoY and 37% MoM.

Price Wars, Reloaded

The market response was immediate. February opened with aggressive incentives: Avita rolled out ¥8,000 tax subsidies and 7-year low-interest loans; NIO launched 0.49% APR financing for up to 84 months; Xiaomi followed with a 7-year low-interest plan featuring reduced down payments. XPeng and others had already moved earlier with similar offers—suggesting competitive pressure is intensifying, not easing.

Why the West Should Pay Attention

Downstream EV demand is where China converts its rare-earth, magnet, and battery supply-chain dominance into cash flow. January’s synchronized slump—visible in the sales chart showing universal MoM declines—signals a growing risk of overproduction, a trend Rare Earth Exchanges™ has repeatedly documented. If discounting becomes structural, margin pressure will flow upstream into batteries, permanent magnets, and critical minerals, reshaping global pricing dynamics and complicating U.S. and European efforts to build competitive, higher-cost domestic supply chains.

Disclaimer: This item is translated and summarized from reporting by Chinese state-affiliated media. The information has not been independently verified and should be confirmed through independent sources before being used for investment, procurement, or policy decisions.

• China Northern Rare Earth's magnet subsidiary reports January breakthroughs in:
  • NdFeB alloy flake production stability
  • Customer response times
  • Smart-manufacturing integration
• The company is accelerating a 50,000-ton per year NdFeB alloy expansion with automated MES systems to improve:
  • Yield
  • Quality traceability
  • Process control at scale
• Operational upgrades may widen the cost-and-quality gap for:
  • Western magnet supply chains
• Complicating U.S./EU efforts to localize production for:
  • EVs
  • Wind turbines
  • Defense

China Northern Rare Earth Group’s magnet materials subsidiary says it opened the year with steadier operations and improved efficiency, pointing to “notable breakthroughs” in three areas: reliable production of NdFeB (neodymium-iron-boron) alloy flakes, faster customer response, and accelerated smart-manufacturing upgrades. In the company’s telling, January performance improved both output stability and quality—positioning it for full-year targets.

What’s Behind the Improving Efficiency?

The update is business-relevant because it describes a tighter commercial operating model around a volatile NdFeB market. The company claims it has built a rapid “market assessment → strategy adjustment → execution feedback” loop to react faster to pricing and demand shifts.

It also emphasizes deeper coordination with upstream suppliers to protect production continuity, while simultaneously leaning into downstream customer customization—aimed at improving customer stickiness and cushioning market swings. Translation for Western readers: they’re trying to run magnets like a modern, demand-driven industrial business, not just a materials plant.

Major Upgrades Forthcoming

The most consequential detail for the U.S. and Europe is the production and automation push tied to a 5 million-kg (50,000-ton) per year NdFeB alloy flake expansion project. The company says it is accelerating integration of an MES (Manufacturing Execution System) with an automated batching line—improving data capture, process handoffs, and quality traceability. If those upgrades translate into higher yield, tighter tolerances, and fewer defects, it strengthens China’s ability to scale magnet feedstock with consistent quality—an area that matters for EV motors, wind turbines, robotics, and defense supply chains.

No single new technology is disclosed, but the “breakthrough” here is operational: capacity expansion plus digital process control. For the West, that combination can mean a wider cost-and-quality gap—and a harder climb for U.S./EU efforts to localize magnet supply chains if Chinese producers continue to industrialize faster and at larger scale.

Disclaimer: This news item originates from media affiliated with a Chinese state-owned entity. The information has not been independently verified and should be confirmed through independent sources before being used for investment, procurement, or strategic decisions.

• Tesla is converting its Fremont factory from Model S/X production to Optimus humanoid robots.
• The company is targeting approximately 1 million units per year.
• This move signals a strategic shift toward AI and robotics over legacy premium electric vehicles (EVs).
• Humanoid robots are motor-dense products that require NdFeB permanent magnets in every joint.
• The production of these robots creates a new demand vertical that adds to existing EV and wind turbine magnet consumption.
• Scaling the production of Optimus will force Tesla into China's actuator and magnet supply ecosystem.
• China's ecosystem is known for concentrated refining and cost-competitive motion control components.
• This shift will tighten U.S. dependence on China's rare earth midstream, despite efforts to localize.

Tesla is signaling a hard pivot: its Fremont, California factory—the birthplace of the Model S and Model X—will be reoriented toward building Optimus humanoid robots, with Elon Musk describing a wind-down of S/X production “next quarter” and a long-run ambition to scale to ~1 million robots per year at the site.

This is not just a product shuffle. It’s a factory reallocation from legacy premium EVs toward a robotics throughput bet—paired with a broader “AI company” narrative that also includes robotaxis (Cybercab) and a deeper capital intensity profile.

The Real Commodity Inside a Humanoid: Magnets, Motors, and Margins

Humanoid robots are not mostly metal and plastic—they are motors everywhere: hips, knees, shoulders, wrists, hands, and often multiple degrees of freedom per joint. That means servo motors and actuators, and in modern high-power-density designs, that usually means NdFeB permanent magnets—the same strategic material class that already haunts EV drivetrains and wind turbines.

The _Rare Earth Exchanges_™ lens is simple: if Optimus becomes “realvolume,” it becomes a new magnet-demand vertical that sits on topof (not instead of) EVs, wind, defense, and industrial automation. Industry analyses increasingly flag humanoids as a meaningful future contributor to NdFeB demand growth.

The China Robotics Gravity Well: If Tesla Scales, China Still Touches the Bill of Materials

The user’s underlying concern—Tesla may further use China robotics—is not far-fetched, but the key is to separate verified contracts from China-market rumor cycles.

What’s concrete

China’s advantage isn’t just mining. It’s the stack: refining, magnet making, precision electromechanical supply chains, and cost-optimized actuator ecosystems. The IEA has highlighted how concentrated rare-earth refining is—an exposure that matters more when new “motor-dense” markets (like humanoids) scale.

The “Sanhua actuator order” story—and the warning label

Chinese reports in late 2025 claimed Tesla placed a very large actuator order with Sanhua Intelligent Control for Optimus components—figures around $685M circulated widely in China-market coverage and English-language re-reporting. But there was also reporting that Sanhua denied the “massive order” rumor after a share-price surge—an important reminder that Chinese equities can turn supply-chain gossip into a fireworks show.

REEx takeaway: even if a specific rumored PO is contested, the directional logic remains: scaling humanoids pressures Tesla toward high-volume, cost-competitive actuator supply, and China is where much of the world’s actuator and precision motion ecosystem is deepest today.

 Why This Matters for Rare Earths: Robots Increase the “China Leverage Multiplier”

When a Western OEM shifts a flagship plant toward humanoid robots, the strategic question becomes: Where do the magnets, alloying, and motor subcomponents come from—at scale, at cost, and on schedule?

China’s leverage is not abstract. Recent reporting and analysis have described how export controls and licensing friction around rare earths/magnets can create real-world disruption risk—especially for industries that can’t easily substitute away from high-performance magnet grades (often involving NdPr, and for high-temp performance, Dy/Tb).

A Fremont-to-Optimus conversion therefore has a second-order effect: it nudges the world toward a future where humanoid robotics demand and EV demand compete for the same constrained magnet supply chain—still heavily China-centered.

The Strategic Fork in the Road: Build Robots in California, Source the “Muscles” from Asia?

Tesla’s Fremont bet creates an uncomfortable but clarifying binary for U.S. industrial policy and for investors tracking the rare-earth midstream:

1. If Optimus scales and Tesla leans on China's actuators/components, China’s role expands from “EV competitor” to embedded supplier in the U.S. humanoid buildout.
2. If Tesla tries to localize, it collides with the thin reality of ex-China magnet capacity and the slow grind of separation + alloy + sinteredmagnet scale-up.

Either way, humanoids don’t weaken the rare-earth story—they tighten it.

REEx bottom line

Fremont turning into an Optimus factory is a headline about robots, but it’s also a quiet headline about rare earth magnets, actuator ecosystems, and whether the U.S. is about to import the “robot body” supply chain the way it imported large parts of the clean-energy hardware stack.

Highlights

• Vimag Labs secured $5M led by Accel to commercialize magnet-free electric motor technology using software-defined controls, aiming to match permanent-magnet efficiency without rare earth dependence.
• The company's electronics-driven architecture targets rare earth supply risks concentrated in China, though scalability to mass-market EV applications remains unproven.
• Investor capital is flowing toward rare earth alternatives, signaling downstream innovation as a key pressure point reshaping the magnet supply economy.

Bengaluru-based Vimag Labs (opens in a new tab) has raised $5 million in a funding round led by Accel (opens in a new tab), backing its push to commercialize magnet-free electric motor and control systems. Thecompany claims its software-defined, electronics-driven architecture candeliver efficiencies comparable to permanent-magnet motors—without relying on rare earth elements, whose refining and magnet production remain heavily concentrated in China.

What’s accurate is the problem statement. High-performance EV and industrial motors today overwhelmingly depend on NdFeB permanent magnets, embedding rare earth supply risk, price volatility, and geopolitical exposure into downstream manufacturing. Alternatives like induction motors exist, but historically lag in efficiency and power density in demanding applications. Vimig’s approach—electronically generating magnetic fields via advanced controls—aims to close that gap.

What remains unproven is scale. Efficiency parity in lab or pilot settings does not automatically translate to mass-market EV drivetrains, where cost, thermal management, durability, and supply-chain maturity decide winners. Magnet-free architectures reduce rare earth dependence, but they do not eliminate broader materials, power electronics, or semiconductor constraints.

The strategic signal matters, however. Capital is flowing toward technologies that route around rare earth bottlenecks rather than confront them head-on. For investors, this is not a death knell for rare earths—but a reminder that downstream innovation is one of several pressure points reshaping the magnet economy.

Source: Economic Times, January 2026

• Cyclic Materials announces an $82 million rare earth recycling campus in McBee, South Carolina.
• The target is to process 600 tonnes per year of Mixed Rare Earth Oxides (MREO) by 2028, scaling up to 1,800 tonnes.
• This project is one of the most tangible U.S. midstream supply chain additions in years.
• The project integrates magnet pre-processing with hydrometallurgical facilities.
• A 10-year exclusive swarf recycling agreement with VACUUMSCHMELZE is included to reduce execution risk and shorten loops between manufacturing and recycling.
• Recycling offers faster permitting than mining and ensures strong heavy-REE recovery, serving as a supply chain multiplier rather than a replacement.
• The initiative aims to convert policy rhetoric into deliverable domestic feedstock for EVs, wind turbines, and defense systems.

Cyclic Materials’ (opens in a new tab) $82 million plan to build a rare earth recycling campus in McBee, South Carolina, lands at a moment when U.S. supply-chain rhetoric is high—and deliverable assets are scarce. The project pairs a “Spoke” magnet pre-processing facility with a large hydrometallurgical “Hub,” aiming to convert end-of-life magnets into Mixed Rare Earth Oxides (MREO). If executed as described, this would be one of the most tangible midstream additions to the U.S. rare earth ecosystem in years.

What Holds Up Under the Microscope

Several claims align with known constraints in the rare earth supply chain. Recycling magnets is faster to permit and scale than greenfield mining, especially for heavy rare earths embedded in NdFeB magnets.

A designed capacity of 600 tonnes per year of MREO—scaling to 1,800 tonnes—does not replace mining, but it meaningfully augments domestic feedstock. The exclusive 10-year swarf recycling agreement with VACUUMSCHMELZE anchors demand and logistics, reducing execution risk. Co-location in South Carolina shortens loops between magnet manufacturing and recycling—an efficiency China mastered decades ago.

Investors: Where the Optimism Leans Forward

Claims equating output to “six million hybrid transmissions per year” are illustrative, not contractual. MREO is not a finished magnet, nor separated oxides ready for alloying; yields, element mix, and downstream separation still matter. Operations are slated for 2028—credible, but not immediate relief for today’s shortages. Federal and state incentives are mentioned but not specified; investors should separate project economics from policy tailwinds until details are public.

The Quiet Bias to Watch

The narrative frames recycling as a near-term substitute for mining. It isn’t. Recycling is a multiplier, not a replacement. Its strength lies in speed, circularity, and heavy-REE recovery—not in total volume. The article’s managerial optimism risks blurring that line, but stops short of misinformation.

Why This Matters

By pairing capital, offtake, and process know-how, Cyclic Materials advances the one segment the U.S. lacks most: midstream resilience. South Carolina emerging as a magnet-recycling node is notable—and investable—because it converts rhetoric into kilograms.

Profile

Founded in 2021, Cyclic Materials is a Toronto-based cleantech company building a circular, Western-anchored supply chain for rare earth elements critical to electric vehicles, wind turbines, electronics, and defense systems. Using its proprietary Mag-Cycle™ and REEPure™ technologies (opens in a new tab), the company recovers high-quality recycled Mixed Rare Earth Oxides (rMREO) and other valuable metals from end-of-life products such as EV motors, wind turbines, electronics, and MRI machines, reducing dependence on traditional mining and lowering environmental impact. Cyclic operates a Hub100 center of excellence in Kingston, Ontario, and its first U.S. commercial Spoke facility in Mesa, Arizona, and in January 2026 secured $75 million in Series C funding to accelerate global expansion. Recognized by MIT Technology Review, Fortune, and Fast Company in 2025, and partnered with industrial players across North America, Europe, and Asia, Cyclic Materials is positioning itself as a strategically important recycled-materials supplier for AI, robotics, advanced manufacturing, and defense supply chains.

Sources

Company press release, January 29, 2026.

• Advanced Electric Machines announces partnership with Asian automotive OEM for magnet-free electric motors.
• Partnership aims to eliminate dependency on neodymium and dysprosium, reducing exposure to China's supply chain.
• AEM's reluctance-based motor technology is credible but still unproven at scale.
• Efficiency data for the technology remains undisclosed.
• AEM is facing financial struggles, including declining revenues and widening losses after a major customer collapse.
• Automakers are funding rare-earth alternatives as a strategic hedge rather than an imminent replacement.
• This strategic move creates optionality, weakening the demand concentration of rare earths at the margin.

Advanced Electric Machines (AEM), (opens in a new tab) a UK startup positioning itself at the center of the rare-earth-free electric motor narrative, has announced another development partnership—this time with an unnamed Asian automotive OEM—following a previously disclosed seven-figure deal with a Tier-1 supplier. The headline is attractive: magnets out, rare earths out, supply-chain risk reduced. The details, however, deserve careful parsing.

This is meaningful news—but not quite the breakthrough some readers may assume.

What Holds Up Under Scrutiny

The core claim is sound. Advanced Electric Machines develops magnet-free electric motors that eliminate neodymium and dysprosium—two rare-earth elements closely linked to Chinese processing dominance. That aligns with well-established industry facts: permanent-magnet motors remain one of the most China-exposed components in EV drivetrains.

AEM’s focus on reluctance-based motor architectures is also credible. These designs are known, manufacturable, and already deployed at scale in certain industrial and automotive contexts. The company’s SSRD (Super Speed Reluctance Drive) targeting passenger vehicles by decade’s end fits realistic automotive development timelines.

The strategic motivation cited by OEMs—reducing exposure to concentrated supply chains—is legitimate and consistent with broader industry behavior.

Where the Story Starts to Stretch

Several claims lean forward of the evidence. AEM has not disclosed its full operating principle, efficiency curves, or cost parity versus permanent-magnet motors at scale. That matters. Magnet-free motors historically trade material security for lower power density or higher system complexity.

The push to replace copper windings with compressed aluminium is also speculative at this stage. Aluminium windings are feasible, but they introduce conductivity penalties, thermal challenges, and packaging trade-offs. No public data yet shows this approach outperforming copper in automotive duty cycles.

The suggestion of “queues of global manufacturers” should be read as optimism, not proof. Development contracts are not production commitments.

The Financial Subtext Investors Should Not Ignore

AEM’s financials add context. Revenues declined sharply after 2022, and 2024 losses widened materially, driven in part by the collapse of a major customer. This does not invalidate the technology—but it reinforces that commercial execution remains unproven.

These announcements signal interest, not inevitability.

Why This Matters for the Rare Earth Supply Chain

The notable point is not that rare-earth-free motors are imminent replacements for permanent-magnet systems. It is that automakers are actively funding optionality. Even partial substitution weakens rare-earth demand concentration at the margin—especially in Europe and Asia.

This is not the end of rare earth magnets. It is the beginning of strategic hedging.

Source: Information via email (German); reporting by Cora Werwitzke, 28 Jan 2026

• China's central state-owned enterprises spent RMB 1.1 trillion ($158B) on R&D in 2025, nearing the total U.S. federal R&D budgets and indicating a state-directed innovation push comparable to Western government efforts.
• Strategic emerging industry investment reached $360B in 2025, accounting for 41.8% of total SOE investment, with funds directed towards semiconductors, AI compute clusters, EVs, and advanced equipment to decrease reliance on Western technology chokepoints.
• Central SOEs control $13.7 trillion in assets, with profits up 56.2%, illustrating Beijing's strategy to utilize state-directed capital and industrial scale to transform global supply chains, procurement standards, and downstream pricing power.

China’s state-sector champions just published a “scorecard” designed to signal one thing to global capital: that Beijing’s innovation machine is scaling fast—and it’s being financed like a national security program.

At a State Council press conference on Jan. 28, China’s state assets regulator (SASAC) said centrally controlled state-owned enterprises (SOEs) spent RMB 1.1 trillion on R&D in 2025 (about $158B at ~6.95 RMB/USD). For context, the U.S. federal government’s total R&D request/levels are often cited around the $200B range (depending on definition and fiscal year), while total U.S. economy-wide R&D spending (public + private) is far higher—near $940B in 2023. The implication: China is fielding an SOE-only R&D war chest that begins to rhyme with the U.S. federal-scale effort.

The infographic data above underscores the “bigness” strategy. SASAC says central SOEs ended 2025 with assets exceeding RMB 95 trillion (≈ $13.7T) and an average 6.9% annual asset growth during the “14th Five-Year Plan” period. They reported value added of RMB 51.3 trillion (≈ $7.4T), up 44.6% versus the prior plan period, and total profits of RMB 12.7 trillion (≈ $1.83T), up 56.2%—numbers meant to sell “scale + efficiency,” not just raw industrial heft.

Where is Funds Flowing?

The more market-relevant headline is where the money is going. Central SOEs’ strategic emerging-industry investment reached RMB 2.5 trillion in 2025 (≈ $360B) and accounted for 41.8% of total investment, while strategic emerging-industry revenue exceeded RMB 12 trillion (≈ $1.73T).

This is a direct bid to accelerate domestic control over semiconductors, advanced equipment, EV supply chains, AI, and even quantum—areas where the West has relied on chokepoints and export controls. Plus AI gets special emphasis: China’s “big three” telecom operators reportedly built four “10,000-card” compute clusters to support large-model training—an unmistakable signal that compute, grid power, and hardware supply chains are being orchestrated top-down.

For the U.S. and allies, the takeaway is less “China innovation is rising” (old news) and more: state-directed demand is being weaponized to lock in future industrial standards, potentially reshaping global procurement, rare earth magnet demand (EVs, robotics, wind), and downstream pricing power.

 Disclaimer: This item is sourced from Chinese state-affiliated media (People’s Daily) and a state-linked industry association. Details should be verified with independent sources before acting on them.

• China's Rare Earth Price Index reached 247.4 on January 28, 2026—147% above the 2010 baseline—signaling decisive upward pricing momentum after stabilization through 2024 and acceleration into early 2026.
• Rising Chinese rare earth prices directly impact Western manufacturers in EVs, wind turbines, defense, and AI infrastructure, triggering higher magnet input costs, tighter contracts, and reduced spot-market availability.
• Despite billions invested in ex-China supply chains, Chinese pricing remains the global benchmark because China controls majority separation, metal-making, and magnet capacity—functioning as the marginal supplier that sets market prices worldwide.

The China Rare Earth Industry Association released its latest Rare Earth Price Index on January 28, 2026, reporting a reading of 247.4—more than 2.4× the 2010 baseline and the strongest signal yet that pricing momentum inside China’s rare earth market has decisively turned upward.

What the Index Actually Measures

This is not a single commodity price. The index is a composite benchmark calculated from daily, real-time transaction data reported by 20+ rare earth companies across China. Those data are averaged and fed into the Association’s price-index model, then normalized against a base period of calendar year 2010 (index = 100). In practical terms, today’s reading indicates that aggregate rare earth transaction prices in China are running roughly 147% above the 2010 reference level.

Why This Print Matters Now

The accompanying trend chart—spanning early 2023 through January 2026—tells a clear story. Prices fell sharply through 2023, reflecting post-pandemic demand normalization and inventory liquidation. The market stabilized across much of 2024, then re-accelerated through late 2025 into early 2026, culminating in the current 247.4 reading. That trajectory points to tightening domestic conditions, firmer pricing power among producers, and renewed procurement urgency within China’s rare earth ecosystem.

Implications for U.S. and Allied Supply Chains

For Western manufacturers, the signal is actionable even without element-by-element detail. A rising China-linked index typically precedes higher magnet input costs—especially for NdPr-dependent supply chains—along with tighter contract terms, reduced spot-market availability, and less flexibility for smaller buyers. Industries most exposed include EV drivetrains, wind turbines, industrial robotics, aerospace systems, AI infrastructure, and segments of the U.S. defense industrial base.

The Strategic Subtext

Beyond pricing, the index underscores China’s structural influence over market psychology. When domestic Chinese benchmarks move higher, export pricing and availability often follow. In effect, Beijing doesn’t just control much of the physical supply—it increasingly shapes expectations, which ripple outward into global contracting behavior.

For U.S. policymakers and procurement leaders, the message is consistent with recent developments in standards-setting and export management: price risk, specification risk, and timing risk remain intertwined. Diversification efforts may reduce dependence, but they have not yet insulated Western markets from China’s internal pricing cycles.

Why Chinese Rare Earth Pricing Still Matters—Even in an “Ex-China” Supply Chain Era

The United States and its allies are investing billions to build an “ex-China” rare earth supply chain, but Chinese pricing remains the gravitational center of the global market and will continue to do so for the foreseeable future. This is not a political argument; it is a structural one.

Why? China still controls the majority of global rare earth separation, metal-making, and magnet production capacity, which makes it the marginal supplier—the producer that ultimately balances global supply and demand. In commodity markets, the marginal supplier sets the price. Until non-Chinese capacity can meet global demand reliably and at scale, Chinese domestic pricing will continue to anchor global benchmarks in myriad ways.

Even projects marketed as “China-independent” remain deeply price-indexed to China. Most Western offtake agreements, project financings, and downstream contracts are explicitly or implicitly tied to Chinese reference prices, with premiums or discounts layered on top. This is even with price floors now emerging, such as the U.S. Pentagon deal inked with MP Materials ($110 kg NdPr). Bankability, valuation models, and internal rates of return are still built around China-derived pricing signals. When China’s price index rises, the global floor rises with it—regardless of where the material is mined or processed.

China also controls supply elasticity in a way no emerging Western supply chain can yet match. Chinese producers can ramp output up or down far faster than new projects in the U.S., Australia, or Europe, which face permitting delays, environmental review, capital constraints, and workforce shortages. This gives China unmatched influence over short-term pricing dynamics: when Chinese supply tightens—whether deliberately or organically—prices move quickly, long before alternative supply can respond.

Rare earth pricing is further reinforced downstream. It is not just about oxides, but about magnets, motors, and finished components and assemblies. China continues to dominate NdFeB magnet manufacturing and motor integration. Western automakers and defense contractors may source oxides elsewhere, but many still re-import China-priced components, effectively pulling Chinese cost structures back into ostensibly diversified supply chains.

Beyond physical supply, China shapes market psychology. Its price indices function as leading indicators watched by procurement teams, traders, and investors worldwide. Rising domestic prices trigger inventory hoarding, contract renegotiations, and preemptive buying across global markets. Even buyers that never touch Chinese material are reacting to Chinese price signals because their suppliers, financiers, and competitors are.

Finally, Western rare earth supply chains—while real and improving—remain young, capital-intensive, and operationally fragile. They lack the depth, redundancy, and shock-absorption capacity of China’s integrated ecosystem. In this phase, Chinese pricing acts as a stress test: when prices rise, weak projects fail; when prices fall, capital retreats.

Bottom line: until Western supply chains mature across mining, separation, metals, and magnets, Chinese pricing will remain an unavoidable reference point, risk signal, and psychological anchor of the rare earth market. Building supply outside China is essential—but pretending Chinese prices no longer matter is not a strategy. It is wishful thinking.

Disclaimer: This item is sourced from state-linked Chinese industry media associated with the China Rare Earth Industry Association. Index values, methodology, and inferred market impacts should be independently verified using third-party pricing services, customs and export data, and non-Chinese market intelligence before informing investment or procurement decisions.

• The U.S. government is acquiring a 10% equity stake in USA Rare Earth for $1.6 billion.
• This includes $1.3 billion in CHIPS Act debt financing and discounted shares at $17.17.
• The move represents a strategic shift from grants to direct ownership in critical mineral assets.
• USA Rare Earth's Round Top deposit in Texas targets heavy rare earths such as dysprosium for defense and EV magnets.
• The production is planned to start in 2028.
• USA Rare Earth plans to have integrated magnet manufacturing in Oklahoma by late 2024.
• This deal is similar to equity investments in Lithium Americas, Trilogy Metals, and MP Materials.
• The strategy is part of a new U.S. industrial policy playbook leveraging balance sheets and cap table positions.
• The goal is to secure supply chains that are currently dominated by China.

The deal, translated and stripped of drama. According to Chinese-language reporting published by the China Rare Earth Industry Association and covered by Rare Earth Exchanges™, the U.S. government plans to acquire an approximately 10% equity stake (on a fully diluted basis) in USA Rare Earth (USARE). The move sits within a $1.6 billion federal support package intended to stand up a domestic mine-to-magnet supply chain.

Citing as well the Financial Times, Washington is to receive 16.1 million common shares plus warrants for an additional 17.6 million shares, both priced at $17.17 per share—roughly a 25% discount to USARE’s prior $22.71 close. The implied equity valuation is ~$3.4 billion.

In parallel, the government is offering $1.3 billion in debt financing through a Commerce Department facility enabled by the CHIPS and Science Act. Investor briefings are expected, and another $1 billion may be earmarked for similar critical minerals investments.

Industrial Policy by Capitalization Table

This is not a one-off. It follows earlier government-linked transactions involving Lithium Americas and Trilogy Metals, and a multibillion-dollar arrangement with MP Materials at Mountain Pass. The pattern is clear: equity + debt + offtake-adjacent support to de-risk assets Washington deems strategic. This is industrial policy executed through balance sheets, not just grants.

Round Top: Why This Asset Matters

USARE’s Round Top deposit near Sierra Blanca, Texas—targeting late-2028 production—is unusually rich in heavy rare earths, notably dysprosium, essential for high-temperature permanent magnets used in EVs, wind turbines, and defense systems.  A 2019 technical report projected a 20-year mine life and ~2,213 tpa of rare earths, including ~1,900 tpa of heavy rare earths. In January last year, the project produced 99.1%-pure dysprosium oxide—a real, if early, milestone.

The broader vision includes a 5,000-tpa magnet plant in Stillwater, Oklahoma, targeted for initial commercialization this year, and a processing and separation lab in White Ridge, Colorado.

What’s Solid—and What’s Framed to Persuade

Solid: pricing discount, CHIPS-enabled debt, Round Top’s heavy-REE profile, and Washington’s expanding equity playbook.

Speculative: timelines. Mine-to-magnet integration at scale remains chemically, capital-, and talent-intensive. Equity does not erase those constraints.

Narrative framing to note: state-linked Chinese reporting casts U.S. action as reactive; the structure suggests a deliberate shift from subsidies toward partial ownership.

Why Investors Should Care

This is precedent, not just funding. The U.S. is signaling a willingness to sit on the cap table to secure critical materials—especially heavy rare earths that China still dominates midstream. That changes risk calculus, valuation logic, and exit assumptions.

Sources: China Rare Earth Industry Association, citing Mining.com, Financial Times, and Reuters.

Rare Earth Exchanges™

• U.S. allies are cautiously reopening trade channels with China due to tariff threats and diplomatic unpredictability under Trump, seeking optionality over allegiance.
• China's control over rare earth processing, magnet production, and critical mineral supply chains gives Beijing structural leverage over EVs, defense, and electronics manufacturing.
• This represents transactional détente in the Great Powers Era 2.0, where allies tolerate China exposure to navigate supply-chain bottlenecks Washington hasn't resolved.

Wall Street Journal yesterday reported (opens in a new tab) that U.S. allies—stung by tariff threats and diplomatic volatility under President Donald Trump—are cautiously reopening channels with China. Canada trims EV tariffs. Britain restarts trade talks. Europe toys with price floors over punitive duties. On the surface, this is a trade diversification story. Underneath, it is a supply-chain anxiety story—one where rare earths quietly matter.

On the Money

The article accurately captures the hedging behavior of middle powers. Faced with an unpredictable Washington, allies are seeking optionality, not allegiance. China’s economic gravity—despite geopolitical risk—makes it unavoidable. The piece also correctly notes Beijing’s willingness to use trade as leverage, including last year’s rare earth export restrictions. That detail is not incidental; it is the sharpest reminder that trade realignment collides with material reality.

Where the Story Skims the Surface

What goes underplayed is why China retains leverage even as trust erodes. It isn’t just market size—it’s control over critical inputs. Rare earth separation, magnet production, and processing depth give China a veto-like influence over EVs, wind turbines, defense systems, and electronics. Allies flirting with Beijing are not chasing cheap goods alone; they are navigating bottlenecks Washington has yet to resolve.

The article frames rare earths as one pressure tool among many. In practice, they are the pressure point—low-visibility, high-impact, and hard to substitute quickly.

The Investor Reality Check

This is not a return to pre-2012 globalization. It is a transactional détente shaped by fear of being squeezed between two giants. Part of the emergence of the Great Powers Era 2.0. 

For investors, the implication is blunt: expect more hedging, more bilateral deals, and more tolerance for China exposure—until rare earth chokepoints tighten again. When they do, trade diplomacy will snap back to industrial reality.

Bottom Line

China doesn’t need allies to admire it—it only needs them to depend on it. As long as rare earth midstream capacity, critical-mineral chokepoints, and a disproportionate share of global manufacturing remain concentrated inside China, Beijing’s leverage is structural and enduring—no matter how often Western capitals invoke the language of “de-risking.” Rare Earth Exchanges™ has repeatedly cautioned that China is moving to control the innovation downstream.

Citation: Wall Street Journal, Jan. 26–27, 2026

• China's official Rare Earth Price Index rose to 242.7 on January 26, 2026—more than 2.4× the 2010 baseline—signaling a structural repricing driven by tighter export controls, producer consolidation, and accelerating global demand for magnet-intensive technologies.
• Heavy and magnet-critical rare earths lead price momentum:
  • Terbium remains extremely tight at ¥13,950–14,350/kg
  • NdPr showed incremental strength to ¥677–697/kg for mixed oxide
  • Dysprosium softened slightly due to inventory normalization rather than weakening demand
• The index trajectory reinforces urgent supply chain risks for Western OEMs dependent on Chinese rare earths, particularly for high-performance permanent magnets used in EVs, wind turbines, defense, and aerospace—highlighting the critical need for ex-China processing, recycling, and manufacturing capacity.

China’s official Rare Earth Price Index (opens in a new tab) rose to 242.7 on January 26, 2026, according to data released by the Association of China Rare Earth Industry. The index—benchmarked to a 2010 base year of 100 and calculated from daily transaction averages across more than 20 Chinese rare earth producers—continues an upward trend that began in mid-2025. The pattern increasingly resembles a structural re-pricing rather than a short-term cyclical rebound.

Price Momentum: Heavy Rare Earths Lead

Product-level pricing confirms that heavy and magnet-critical rare earths remain the primary drivers, while light rare earths are broadly stable:

• Dysprosium (Dy) softened slightly:
  • Dy₂O₃: ¥6,245–6,305/kg (≈ $867–876/kg)
  • Dy metal: ¥7,730–7,830/kg (≈ $1,074–1,088/kg)
    This appears driven by short-term inventory normalization rather than weakening demand.
• Terbium (Tb) remains extremely tight:
  • Tb₄O₇: ¥13,950–14,350/kg (≈ $1,937–1,993/kg), underscoring continued scarcity in ultra-critical magnet inputs.
• Holmium (Ho) and Erbium (Er) prices were largely unchanged, signaling stable demand from specialty magnet, laser, and electronics applications.
• Neodymium–Praseodymium (NdPr) showed incremental strength:
  • Mixed rare earth oxide (Nd₂O₃ 75%): ¥677–697/kg (≈ $94–97/kg)
  • Nd-rich alloy: ¥825–845/kg (≈ $115–117/kg)
    Gains reflect sustained downstream magnet demand tied to EVs, wind turbines, robotics, and automation.
  • Note: The USA federal government established $110 per/kg for NdPr for MP Materials—the Trump administration has signaled that other companies may benefit from such a pricing floor.
• Gadolinium (Gd) products and samarium/cobalt-linked materials also firmed, reinforcing a key REEx theme: defense, aerospace, nuclear, and high-temperature magnet applications are exerting outsized pricing influence.

What the Index Is Signaling

At 242.7, the index implies that average rare earth prices are more than 2.4× their 2010 baseline, even before inflation adjustment. The steady climb since late 2025 aligns with:

• tighter export and compliance controls,
• consolidation among licensed producers,
• accelerating global demand for magnet-intensive technologies, and
• early signs of strategic and precautionary stockpiling.

Why This Matters for Western Markets

For U.S. and allied supply chains, the signal is unambiguous: China’s domestic pricing power is strengthening, particularly in Dy, Tb, NdPr, and mixed oxides essential for high-performance permanent magnets. OEMs dependent on spot or short-term contracts face rising cost volatility and supply leverage, while the index trajectory reinforces the urgency of ex-China processing, recycling, and magnet manufacturing capacity.

Disclaimer: This price review is based on data published by the Association of China Rare Earth Industry, a China-based, state-influenced industry body. Prices, FX assumptions, index methodology, and market interpretations should be independently verified using third-party, non-Chinese sources before being relied upon for investment, procurement, or policy decisions.

• China's rare earth dominance stems from integrated ecosystems linking mines to separation, magnets, and manufacturing—not merely resource abundance or geology.
• Western rare earth processing was hollowed out by industrial policy and short-term capitalism, not ESG constraints alone, while China leveraged state capital and long-term vision.
• Korea's call for a rare earths complex is sound but requires decade-long commitment, guaranteed offtake, and allied coordination to avoid collapsing back into Chinese dependency.

The Korea JoongAng Daily column argues that rare earth dominance flows not from geology, but from integration—mines linked to separation, magnets, and end-use manufacturing (opens in a new tab). On this central point, the author is correct as the Rare Earth Exchanges™ community is fully aware. China’s advantage is not merely resource abundance but ecosystem design, exemplified by hubs such as Bayan Obo Mining District and downstream magnet clusters. The Two Rare Earth Bases China paradigm, now on an accelerated trajectory with patients, innovation and monetization across relevant sectors.

The article correctly highlights the chemical difficulty of separating 17 near-identical elements and the industrial importance of solvent-extraction know-how accumulated over decades. This is aligned with global expert consensus and with REEx’s own supply-chain mapping.

The ESG Mirage and the Cost Story

Environmental constraints are portrayed as the West’s primary barrier. That framing is directionally true but incomplete. ESG hurdles matter, as seen in controversies surrounding Lynas Rare Earths operations in Malaysia, but they are not the decisive constraint.

The deeper truth: China’s advantage stems from state-coordinated capital, tolerance for long payback periods, vision to strategy to execution, and the willingness to run loss-leading separation capacity to defend downstream dominance. ESG alone did not hollow out Western processing—industrial policy did. Not to mention the short-termism associated with modern-day capitalism.

Where the Narrative Overreaches

The column leans into a deterministic tone: China’s system is portrayed as effectively unassailable. That crosses from analysis into strategic fatalism. While it is true that China produces roughly 85–90% of rare earth permanent magnets, the suggestion that alternative ecosystems are futile understates recent progress in Australia, the U.S., and Japan—albeit fragmented and underscaled.

Speculation also appears in references to thorium reuse via molten salt reactors. This remains experimental and commercially unproven, not a current cost-offset mechanism.

Korea’s Dilemma: Vision vs. Execution

The call for a “Korea-style integrated rare earths complex” is intellectually sound. Korea sits downstream of rare earth value creation—EV motors, semiconductors, displays—but lacks refining and magnet sovereignty. The article is right to warn that mine-only strategies collapse back into Chinese dependency.

What’s missing is time, capital, and alliance math. Integration requires a decade-long commitment, guaranteed offtake, security-priced inputs, and coordination with allies—not editorial urgency alone.

Why Relevant Now?

A notable topic, reflective of a broader Asian reassessment: rare earths are no longer a procurement issue, but a national industrial architecture problem. Korea is asking the right question. Whether it can execute before the next “valve turn” is the unanswered risk investors must price.

Citation

Lee, C-m. “Building a Korea-style integrated rare earths complex.” Korea JoongAng Daily, Jan 26, 2026.

• Ellen MacArthur Foundation's January 2026 report reveals that circular economy strategies can reduce EV battery material demand and environmental harm.
• The strategies cannot dismantle China's near-monopoly over critical mineral processing without deliberate investments in ex-China refining capacity.
• The study identifies a critical gap: recycling helps in the long-term but won't meaningfully offset primary supply dependence before 2035.
• Batteries recycled in Europe or North America may still rely on Chinese processing infrastructure.
• The report challenges the narrative that recycling alone equals supply-chain security.
• Resilience requires coordinated industrial policy, including regional processing hubs, standardized battery passports, and allied capital alignment.

A major January 2026 report led by Wen-Yu Weng (opens in a new tab), Executive Lead for Critical Minerals at the Ellen MacArthur Foundation, delivers a sweeping diagnosis of the electric-vehicle (EV) battery supply chain—and an uncomfortable conclusion for policymakers. Titled Leading the Charge: Turning Risk into Reward with a Circular Economy for EV Batteries and Critical Minerals (opens in a new tab), the study argues that while circular economy strategies can dramatically reduce risk, cost, and environmental harm, they do not by themselves dismantle China’s near-monopoly over rare earth and critical mineral processing.

Drawing on 15 years of research and collaboration with automakers, battery manufacturers, recyclers, logistics providers, policymakers, and investors, the report reframes EV batteries as strategic material assets and calls for system-level redesign rather than incremental fixes. Leading the Charge - Jan 2026

Study Scope and Methods

The Foundation did not conduct new mineral surveys or market forecasts. Instead, it synthesized existing global data from the IEA, UNEP, World Bank, and industry case studies, combined with direct engagement across the EV battery value chain. The framework centers on five “circular loops” (intensive use, life extension, second life, high-quality recycling, and data governance) and three decision layers (product design, business models, and system-level policy). The goal: identify where value leaks, where risks accumulate, and where interventions actually scale.

Key Findings

The report confirms several realities that REEx readers will recognize:

• Material intensity is exploding. A typical EV contains over 200 kg of critical minerals—six times more than a combustion vehicle. Demand for lithium, nickel, cobalt, graphite, and rare earth-adjacent inputs is rising far faster than new supply can be responsibly developed.
• Processing, not mining, is the choke point. Mining occurs across dozens of countries, but refining and chemical processing remain geographically concentrated—overwhelmingly in China. Circularity reduces how much material is needed, but it does not automatically relocate where that material is refined.
• Recycling helps—but later. Before 2035, most recycled feedstock comes from manufacturing scrap, not end-of-life EVs. This creates a timing gap: recycling cannot meaningfully offset primary supply or processing dominance in the near term.
• Design decisions lock in dependence. Battery architectures optimized for performance (cell-to-pack, cell-to-chassis) often sacrifice repairability and recyclability, reinforcing reliance on centralized processing hubs.

The China Processing Question

The most consequential implication is what the report does not overclaim. Circular economy strategies can cut mineral demand, dampen price volatility, and reduce environmental harm—but they do not inherently break China’s control over midstream processing, especially for rare earths and battery-grade materials. Without deliberate investment in ex-China refining, separation, and chemical conversion capacity, circular flows risk being “re-routed” back through the same dominant processors.

In plain terms: a battery recycled in Europe or North America may still rely on Chinese processing expertise, equipment, or intermediate chemicals.

Implications for Investors and Policymakers

The study quietly challenges a popular Western narrative—that recycling alone equals supply-chain security. Instead, it suggests resilience requires coordinated industrial policy, including regional processing hubs, standardized battery passports, long-term offtake contracts, and capital alignment across allies. Circularity lowers risk; it does not substitute for strategy.

Limitations and Contested Ground

The report is intentionally non-quantitative and avoids scenario modeling. Critics may argue it underplays geopolitical coercion risks or overestimates the speed at which circular business models can scale. Others will note that rare earth elements, while adjacent to EV supply chains, are less directly addressed than lithium-ion battery metals. These gaps matter—but they do not invalidate the central warning.

REEx Takeaway

Leading the Charge is not anti-China, nor is it naïve about markets. Its core message aligns with REEx analysis: material efficiency without processing sovereignty is a half-solution. Circularity is necessary. It is not sufficient.

Citation

Ellen MacArthur Foundation (2026). Leading the Charge: Turning Risk into Reward with a Circular Economy for EV Batteries and Critical Minerals

Leading the Charge - Jan 20

• BYD aims to sell 1.3 million vehicles outside China in 2026, representing approximately 24% growth from 2025's 1.05 million overseas deliveries and approaching Tesla's total global volume of 1.64 million.
• Accelerating Chinese EV exports amplify demand for critical materials—NdPr magnets, power electronics, and Dy/Tb inputs—while China maintains dominance across separation, alloying, and magnet manufacturing.
• Nation-states must enforce coordinated industrial policy and ex-China capacity buildout to avoid being simultaneously flooded with Chinese products yet captive to Chinese material supply chains.

BYD’s plan to sell 1.3 million vehicles outside China in 2026 is a clean data point in a bigger REEx theme: China’s industrial system is managing overproduction by pushing harder into export markets while trying to stimulate domestic demand through “digitization,” ongoing “greenification,” and ambitious urban upgrade programs. Theinvestor implication is not limited to autos. More exported EVs meanmore traction motors, power electronics, and NdFeB magnets—and because China dominates key downstream steps, export volume can translate into pricing and supply leverage unless nation-states deliberately diversify and secure mine-to-magnet capacity.

What’s new

At a Shanghai media briefing, BYD’s Li Yunfei said the company aims to sell 1.3 million cars outside China in 2026, compared with 1.05 million overseas deliveries last year (roughly ~24% growth).

That target is below what Citigroup said it understood from management discussions: 1.5–1.6 million overseas sales in 2026.

Export scale comparison: BYD vs Tesla

To understand the scale: BYD’s overseas volume in 2025 (1.05 million) is already approaching the magnitude of Tesla’s total global 2025 deliveries (about 1.64 million).

This comparison matters because it illustrates how Chinese exports can reshape pricing and competitive dynamics across open markets (Europe, ASEAN, Latin America) even where tariffs exist—especially when exports help relieve domestic margin pressure tied to overcapacity.

REEx supply-chain lens: magnets and power electronics are the multiplier

More EV exports generally pull forward demand for:

• NdPr-based permanent magnets (traction motors and auxiliaries)
• Power electronics (inverters, onboard chargers, DC-DC converters)
• Dy/Tbinputs in higher-temperature motor designs

REEx’s core warning remains: if China’s export engine accelerates while it maintains dominance in separation, alloying, and magnet manufacturing, global markets can be “flooded” on the product side while staying “captive” on the materials side—unless nation-states collectively enforce industrial policy, offtake security, and ex-China capacity buildout. The recent Canada— China deal is not optimal from a USA-centric lens, for example. The tension between the USA and NATO over Greenland may not be optimal.  More tight collaboration and coordination among NATO members (traditionally allies economically, politically, and culturally) is likely a net positive, given the severity of the unfolding situation.