The rare earths supply chain is poised for greater geographical diversification as new mines and processing plants outside of China are brought into production throughout the second half of the decade, as part of on-going derisking efforts by Western governments. According to the Benchmark Rare Earths Forecast, the supply of mined rare earth oxides from non-Chinese sources is expected to grow 5.8x through to 2030, with the US and Australia accounting for the largest share of this growth.

Rare earths are critical for renewable energy, electric vehicles, and key defense applications such as F-50 aircrafts, making supply chain resilience a strategic priority. Supply growth is expected outside China in spite of a weak pricing environment, supported by bullish demand prospects and the strategic importance of developing an ex-China rare earth supply chain.

The US, in particular, is seeking to develop a rare earths supply chain independent of China—providing financing for ex-China projects through the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BLI).

The US Department of Defense (DoD) has provided the largest source of US government funding, awarding close to $500 million to establish a rare earth mine-to-magnet supply chain since 2020. The United States Export Import (EXIM) Bank has in tandem earmarked more than $1 billion of debt financing for rare earths projects in the US and other free trade agreement (FTA) economies.

Higher prices required to support ex-China projects. China’s grip over rare earths supply makes the industry a strategic geopolitical battleground, potentially allowing it to shut off exports with significant ramifications for western economies.

The country’s rare earth mining sector is predominantly owned and operated by state-owned enterprises, which are able operate at or below cost, as strategic objectives taking precedence over profit maximization. This approach has resulted in unsustainably low prices for large portions of the ex-China industry, making it more challenging for projects to secure financing from the private sector.

Benchmark analysis indicates that the anticipated ex-China supply pipeline, expected to commence in late 2026, will necessitate higher price levels. On average, the supply pipeline would need a 9% higher price scenario from 2024 to 2030.

With higher prices required to incentivise project development, the US and EU have considered intervention into critical mineral markets. These measures include mechanisms such as minimum price floors and national stockpiling to support price levels.

Western governments are also developing a joint-strategy through the US-led Minerals Security Partnership (MSP), which aims to drive investments into ex-China critical mineral projects to help bridge the private sector funding gap.