Rare Earth Prices Soar as China Tightens Control, Sending Shockwaves Through Global Industries

Asserting price dominance as the market monopolist
Rising costs sound alarm across semiconductor and battery sectors
Chinese mining firms return to profit amid price surge

China’s sharp hike in rare earth prices has once again rattled global supply chains. With new export restrictions now extending to equipment, technology, and even assembly components, Beijing’s move is seen not merely as a resource-control measure but as a strategic show of leverage. Despite concerns from industries and criticism from the international community, optimism is growing inside China as major mining firms return to profit, buoyed by soaring prices. By grouping rare earths with semiconductors and batteries as strategic national industries, China appears willing to tolerate short-term disruption in exchange for reasserting industrial dominance.

Tightened Export Controls Under the Pretext of “Smuggling Crackdown”

According to DigiTimes on October 14 (local time), China Northern Rare Earth Group and Baotou Steel Union set fourth-quarter rare earth concentrate prices at $3,676 per ton before tax, a 37% increase from the third quarter and more than 56% higher than the same period in 2023. The move came just one day after China introduced new export restrictions on advanced technologies including AI and semiconductors—an unmistakable display of its price-controlling power.

Earlier in July, Beijing raised third-quarter concentrate prices to $2,681 per ton, up more than 14% year-on-year, through state-backed producers Beifang Xitu and Baogang Ganglian. At the time, the Ministry of Commerce vowed to curb illegal transshipment and “eradicate illicit re-exports,” signaling a two-track strategy combining tighter enforcement with price intervention.

The broader backdrop is escalating U.S.–China tensions. Washington has been accused of importing Chinese rare earths indirectly through third countries such as Thailand and Mexico. Reuters reported that between December last year and April this year, the U.S. imported 3,834 tons of Chinese antimony oxide, exceeding the previous three-year total. In response, China launched direct inspections in May, warning that “unauthorized outflows of dual-use strategic minerals are a national-security threat.” The latest price hike is therefore viewed as a dual assault—controlling both pricing and supply routes.

Beijing has also expanded its restrictions beyond raw materials to equipment, technology, and assembled products. Under new Commerce Ministry Notices No. 61 and No. 62, any product or technology containing a specified proportion of Chinese rare earths now requires an export license. Analysts see this as an across-the-board supply-chain control strategy, expected to raise costs and delay deliveries across global manufacturing. Markets anticipate that Beijing will continue leveraging its resource dominance in future trade negotiations with Washington.

Global Manufacturing Faces Inevitable Strain

As China’s resource-control strategy takes shape, tension is spreading across global industries. Rare earths are critical to electric vehicle motors, semiconductor equipment, and aircraft engines—so rising prices directly increase production and logistics costs. With export restrictions now covering materials, technology, and components, multinational firms face growing difficulty in sourcing supplies without Chinese approval.

Taiwan’s Minister of Economic Affairs Kung Ming-hsin warned that “semiconductor price hikes are now unavoidable.” Rare earths are used in alloy and magnetic forms within chip fabrication, meaning cost increases cascade from parts manufacturing to final packaging. Research firm TrendForce noted that while inventories remain sufficient for now, “extended licensing delays could start to raise real costs as early as the fourth quarter.”

The EV and battery sectors are also under pressure. Neodymium-iron-boron (NdFeB) permanent magnets—key components of high-efficiency motors—translate every price uptick directly into higher production costs. Alternative materials like ferrite magnets offer lower performance, and rare-earth-reduction designs entail energy losses, making substitution impractical. This suggests that the greater a company’s reliance on Chinese inputs, the higher the risk of production delays.

In response, major economies are scrambling to secure alternative supply chains. The U.S. and Europe are investing in mining and refining projects in Australia and Canada to reduce dependence on China, while Japan expands domestic processing capacity. Yet experts warn that achieving full self-sufficiency—from extraction to magnet production—will take years. Competition for stockpiling and long-term contracts is expected to intensify, and industries with high technological dependence may face prolonged cost pressures. Analysts broadly agree that the current price surge marks the opening phase of a global supply-chain realignment.

Domestic-Focused Industrial Strategy Aligned With “Core Resource Protection” Policy

Despite global alarm, sentiment inside China is notably upbeat. The price surge has driven major rare earth mining firms back into profitability, fueling optimism that the sector could become a catalyst for industrial restructuring. Rare Earth Resources & Technology, one of China’s leading miners and refiners, reported first-half 2024 revenue of $260 million, up 62.4% year-on-year, with net profit of $22.7 million, reversing a $34.3 million loss a year earlier. The company cited “price increases” as the main driver of its turnaround.

Rising Nonferrous Metals, another major producer, also returned to profit with $10.2 million in net income, while Shenghe Resources Holding posted $52.9 million in profit and 13.6% sales growth, leading the recovery. Although overall sales volumes fell slightly, sharp market-wide price gains boosted margins. Consequently, share prices of China’s listed rare earth companies have jumped 36–60% year-to-date, far outperforming the CSI 300 Index’s 14% rise.

China’s industry observers interpret these results as a shift from export-driven to domestic-oriented growth. By elevating rare earths to the same strategic level as semiconductors, batteries, and AI materials, Beijing is signaling a long-term plan to consolidate structural gains over short-term losses. Combining export restrictions with domestic expansion reflects an ambition to cement rare earths as part of a national industrial core that integrates extraction, refining, and advanced materials. Analysts see this as a defining moment—the transformation of China’s rare earth sector from a raw-material exporter into a pillar of national technological strategy.