Highlights

• China controls over 90% of global rare earth processing, maintaining low margins to pressure international competitors.
• Production costs vary significantly by element, with neodymium and praseodymium being the most economically viable rare earth metals.
• U.S. government policies and strategic contracts are actively reshaping the rare earth production economics, providing financial incentives for domestic production.

---

Building a cost curve for rare earth production in the United States means looking at the cost to produce each rare earth element (REE)—from mining through refining, and in some cases into magnet fabrication—and comparing those costs to prevailing market prices. This is challenging in the ex-China market, where the industry is still developing and China’s state-influenced pricing dominates. Below, we examine the major REEs—lanthanum, cerium, neodymium, praseodymium, dysprosium, and terbium—their production cost drivers, and how U.S. producers compare to Chinese and other international peers.

Rare Earth Exchanges (REEx) reviews literature, media, and surveys of ongoing discussions for a brief cost curve overview.

Rare Earth Elements Overview and Importance

REE	Summary
Lanthanum (La) & Cerium (Ce)	Light rare earths, abundant in bastnaesite and monazite ores. Large volumes, relatively low value, used in catalysts, glass polishing, etc.
Neodymium (Nd) & Praseodymium (Pr)	Light rare earths often grouped as “NdPr.” Critical for high-strength Nd-Fe-B permanent magnets in EV motors, wind turbines, electronics, and defense. NdPr oxide is the primary revenue driver for most light-REE mines.
Dysprosium (Dy) & Terbium (Tb)	Heavy rare earths used in small amounts in magnets for high-temperature performance (defense). Scarcer, high-value, and traditionally sourced from Chinese ionic clays.

Why Costs Matter

China controls more than 90 % of global rare-earth processing capacity, according to USGS and Reuters data, and its state-linked producers have historically accepted slim margins—around 5–6 % for top Chinese REE companies in 2024—to keep competitors under pressure. Western mining projects generally target much higher returns to justify investment, although there is no single quantified benchmark; this is a common theme in industry analysis. Understanding cost structures element-by-element explains why some REEs are profitably produced in China but not (yet) in the U.S., and helps visualize a “cost curve” ranking producers from lowest to highest cost per unit.

The Rare Earth Production Process and Cost Structure

Mining & Beneficiation

Ore extraction (often open-pit) and concentration into a mineral concentrate. Large, high-grade deposits such as Bayan Obo (China) or Mountain Pass (U.S.) have low mining costs per kg REO due to economies of scale and co-product credits (e.g., iron ore at Bayan Obo). Mining is often a smaller share of the total cost.

Separation/Refining

The dominant cost center, particularly for heavies. Converting concentrate into high-purity REOs requires dozens of solvent extraction or ion-exchange steps. Western refineries face higher costs for energy, reagents, and environmental compliance, while China’s scale and historic regulatory laxity kept its costs lower.

Downstream Processing (Metallurgy & Magnets)

Converting oxides to metals/alloys and making magnets adds further cost. Increasingly, U.S. contracts tie oxide prices to magnet bill-of-materials formulas, sharing cost risk between miners and end-users.

Price Gaps and Break-Even Levels

• Mid-2025 market: Chinese NdPr oxide ~$60–65/kg (Asian Metal, Reuters).
• Ex-China incentive price: Project Blue estimates $75–$105/kg needed to incentivize non-Chinese supply (Reuters, July 2025).
• U.S. policy: DoD–MP Materials 10-year offtake sets a $110/kg NdPr floor, with the DoD also taking equity and providing financing—effectively underwriting profitability.
• Heavies: Mid-2025 Chinese Dy oxide ~$230/kg, Tb oxide ~$988/kg; European prices ~$800/kg Dy, $3,625/kg Tb (Energy Fuels Q2 2025) due to scarcity and provenance premiums.

Element-by-Element Analysis

Lanthanum & Cerium (Low Value, High Volume)

• Prices: 2023 averages—La₂O₃ ~$1/kg, CeO₂ ~$1/kg (USGS).
• Economics: At these prices, full separation in the U.S. is uneconomic; they’re typically produced as byproducts with NdPr revenues covering costs. Producers may stockpile or reject some La/Ce to cut waste handling costs.
• Impact on cost curve: Minimal contribution to profitability; they sit at the far right (low value, high unit cost relative to price).

Neodymium & Praseodymium (Magnet Metals)

• Chinese costs: Benchmark Mineral Intelligence reports top Chinese mines producing REO for as little as ~$11/kg (light REOs, total oxide basis). Even with higher true costs, subsidies and low margins make Chinese NdPr profitable at $50–$70/kg.
• Western viability: Reuters quotes some advisors saying certain greenfield Western projects need $140–$150/kg NdPr to be viable; Project Blue’s more recent $75–$105/kg range is considered a realistic target.
• MP Materials: Only active U.S. NdPr source. Q1 2025 unit cost slightly above $60/kg during ramp-up (about 40 % utilization). Company guidance targets “low-$40s/kg” with full 6,000 t/y capacity and cost-cutting measures like an in-house chlor-alkali plant.
• Lynas: Historic cash costs in the low-tens/kg for total REO, placing it among the lowest-cost ex-China NdPr producers; not all-in specific to NdPr.
• Cost curve: China’s integrated producers at far left Lynas next, MP in the middle with potential to shift left if targets are met, followed by higher-cost emerging projects.

Dysprosium & Terbium (High Value, Low Volume)

• China: Extracted from ionic clays; lower yield and more complex separation than light REEs. 2024 prices ~$300–350/kg Dy, ~$850–$1,000/kg Tb; true costs likely lower but still far above NdPr.
• U.S. prospects: No primary mines. MP plans heavy REE separation (with DoD support) from an industry-estimated ~200 t of stockpiled heavies (but needs more sources); Energy Fuels is piloting Dy/Tb oxide production from monazite sands, aiming for 15 t Dy and ~1 t Tb/year by 2026–27.
• Price premium: Mid-2025 European prices ~$800/kg Dy and ~$3,625/kg Tb—~3.5】 Chinese FOB (Energy Fuels).
• Cost curve: China’s heavies at the low-cost base, byproduct heavies next, dedicated heavy-rich projects (e.g., Round Top, Browns Range) at the far right with high prices required for viability.

Integrated Supply Chain Costs

Stage	Notes
Metal/alloy making	Adds $10–$20/kg for NdPr; similar or more for Dy/Tb. MP’s Texas facility is now producing NdPr alloy for magnets.
Magnet manufacturing	$20–$50/kg; cost-plus contracts common, passing REO price changes to end-users.
Recycling offsets	Recovering Nd, Pr, Dy from scrap can be cheaper than mining; U.S. examples include Noveon and Apple/MP’s recycling initiative. Volumes still limited.

Cost Curve Placement

Lowest cost – China (integrated producers)

Many large Chinese operations can produce total REO at costs reported as low as ~$11/kg (Benchmark Mineral Intelligence, total oxide basis). Even with higher true costs for NdPr oxide, subsidies, co-product credits (e.g., iron ore at Bayan Obo), and low margins allow them to profit at $30–$50/kg NdPr and heavies at a few hundred USD/kg. State intervention flattens the cost curve, keeping global prices below what most ex-China projects require.

Leftmost ex-China – Recycled or byproduct feed

Examples include imported recycled magnet material or monazite byproduct processing (e.g., Energy Fuels). Feedstock costs can be low or negative (due to uranium credits and avoidance of disposal costs), but volumes are small. Resulting NdPr equivalent costs may fall in the $35–$50/kg range, competitive with Chinese supply on a marginal basis but not scalable to a large market share.

Next up – MP Materials (guidance)

Current Q1 2025 NdPr oxide cost is slightly above $60/kg during ramp-up (~40% utilization). With full 6,000 t/y separation capacity and process optimizations (including an in-house chlor-alkali plant), company guidance targets low-$40s/kg oxide. Adding $10–$20/kg for alloy production puts NdPr alloy into magnets at ~$50–$60/kg. The DoD–MP 10-year contract with a $110/kg floor underwrites profitability and supply security.

Further up – Lynas (benchmark efficiency)

Lynas historically achieved total REO cash costs in the low-tens USD/kg (A$14–15/kg in 2013–2015; ~US$10–12 at the time). Today, NdPr-specific costs are likely in the $20–$30/kg range, reflecting grade, recovery, and separation costs. This positions Lynas as one of the lowest-cost ex-China NdPr producers, serving as a benchmark for efficiency.

Rightmost – Higher-cost U.S. projects

Emerging U.S. projects with lower ore grades or more complex metallurgy (e.g., Bear Lodge, Round Top) face much higher breakeven levels. Some advisor estimates put required NdPr prices at $140–$150/kg for certain greenfields, though Project Blue’s $75–$105/kg is seen as a more realistic target for incentivizing new supply. Heavy REEs from these projects would require even higher prices. Without long-term contracts, price floors, or government backing, these projects will struggle to reach FID.

Key Insights

• Western vs Chinese gap: U.S. NdPr costs—even at best efficiency—are several times higher than China’s market price; policy measures are bridging the gap.
• Low-value REEs: La and Ce remain byproduct-only in the U.S.
• Heavies: Dy/Tb will stay high on the curve due to scarcity and chemistry; initial U.S. output viable only with high prices or subsidies.

Government Role

Government action is actively redrawing the cost curve. The DoD–MP NdPr deal guarantees profitability regardless of market dips. Heavy-REE processing grants lower effective costs and enable production that would be uneconomic commercially. The gap between a “private sector” and “subsidized” curve in the U.S. underscores that policy now shapes rare-earth economics as much as geology or technology.

Benchmarks to Watch

• Lynas: Baseline for ex-China efficiency.
• MP Materials: $40/kg NdPr target—if missed, expect calls for more support.
• Project Blue price target: $90/kg NdPr for sustainable ex-China supply—movement toward this level would signal market alignment with Western cost curves.

Sources:

U.S. Geological Survey (2024), Mineral Commodity Summaries – Rare Earths (average annual REO prices, production data)pubs.usgs.gov (opens in a new tab). Reuters (July 2025), “China’s tightest rare-earths headlock is financial” (Western vs Chinese required prices, margins)reuters.com (opens in a new tab)reuters.com (opens in a new tab). Reuters (July 2025), “US rare earth pricing system poised to challenge China’s dominance” (DoD $110/kg NdPr floor; Project Blue price range)reuters.com (opens in a new tab)energypolicy.columbia.edu (opens in a new tab). Rare Earth Exchanges (Aug 2025), Ex-China Rare Earth Pricing: Breaking Free from Beijing’s Grip via Contracting (details on new pricing mechanisms like floors, baskets, and provenance premiums) MP Materials Q1 2025 Earnings Call (transcript) – NdPr production cost ~$60/kg currently, targeting low-$40s with scaleinvesting.com (opens in a new tab). Energy Fuels Q2 2025 Results (press release) – Dy/Tb price disparity (China vs Europe) and pilot production plansinvestingnews.com (opens in a new tab)investingnews.com (opens in a new tab). Thorium Energy Alliance analysis (2020) – historical cost claims (Molycorp’s <$3/kg vs Lynas $14/kg)thoriumenergyalliance.com (opens in a new tab), illustrating past optimism vs reality. Benchmark Mineral Intelligence (2023) – insight that best global REE mines have costs ~$11/kg REOsource.benchmarkminerals.com (opens in a new tab) (implying Chinese operations’ cost efficiency).

©!-- /wp:paragraph -->