The West, particularly the United States, is trying to reduce its dependence on China’s dominance in the rare earths market—especially for neodymium and praseodymium used in permanent magnets. Under a U.S. Department of Defense agreement with MP Materials, a price-floor mechanism protects domestic production, but the reference price currently comes from Chinese price indexes, reflecting China’s control over global pricing. To truly escape this reliance, Western markets and exchanges are working to develop independent pricing benchmarks and futures contracts so that supply chains and pricing aren’t tied to China’s influence. They write:
A sharp rally in the price of rare earths has propelled the market above the floor price guaranteed by the U.S. government in its ground-breaking deal with domestic producer MP Materials.This is good news for the U.S. taxpayer since the government will not have to subsidise MP Materials’ (MP.N), opens new tab output of neodymium and praseodymium (NdPr) as long as prices remain above the critical threshold of $110 per kg. […]
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