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While trade wars and tariffs between the United States and China dominate headlines, a more fundamental shift is quietly reshaping global industries: the skyrocketing prices of critical metals. These essential elements ranging from rare earths like dysprosium and neodymium to lesser-known but equally vital materials like rhenium, hafnium, magnesium, and selenium are experiencing price surges driven by supply shortages and soaring demand. This trend has far-reaching consequences, affecting industries from aerospace to semiconductors, and redefining global supply chains.
The ongoing tensions between the United States and China have placed rare earth elements and other critical minerals at the center of trade disputes. China dominates the rare earth industry, controlling approximately 70% of global production and 90% of processing. This has allowed Beijing to leverage its position strategically, limiting exports in response to foreign trade policies.
Recently, China imposed export bans on key minerals like gallium, germanium, and antimony after the U.S. tightened restrictions on semiconductor sales. With President-elect Donald Trump advocating for a more aggressive trade stance, including a 60% tariff on Chinese goods, Beijing could respond by further restricting rare earth exports driving prices even higher.
Even if China does not directly ban exports, these tariffs will inevitably make critical metals more expensive for U.S. manufacturers, impacting industries reliant on these materials.
The U.S. Department of Defense (DOD) has identified securing critical minerals as a national security priority. According to Adam Burstein, technical director for strategic and critical materials in the Office of the Assistant Secretary of Defense for Industrial Base Policy, adversarial actions have demonstrated the urgency of building resilience in supply chains.
Burstein highlighted that China's willingness to impose export bans underscores the necessity of increasing domestic production and securing allied supply chains. Since 2020, the DOD has awarded more than $439 million to establish domestic rare earth element supply chains and is actively pursuing partnerships with allies such as Canada, Australia, and the UK.
Rhenium, which plays a crucial role in the aerospace and medical industries, has seen its prices double since last summer. This surge is largely attributed to significant purchasing by China and a robust global demand. Meanwhile, hafnium has experienced a dramatic price increase, climbing from a range of $1,000 to $1,500 per kilogram to nearly $10,000 before stabilizing around $5,000. Interestingly, hafnium production is predominantly led by France and the U.S., suggesting that the primary driver behind its rising cost is demand rather than geopolitical factors. Additionally, other niche metals such as magnesium, selenium, lithium, and nickel are also witnessing substantial price increases, propelled by heightened defense spending and the accelerating demand for green energy initiatives.
To reduce reliance on China, Western nations are investing billions into domestic production and processing facilities. In the U.S., MP Materials has begun commercial production of rare earth magnets in Texas, marking a significant step toward re-establishing a fully integrated domestic supply chain. Additionally, the U.S. plans to impose a 25% tariff on neodymium-iron-boron (NdFeB) magnets imported from China by 2026, further incentivizing local production.
In Australia, Victory Metals is advancing its North Stanmore Rare Earth Element and Scandium Project, boasting an exploration target of 100 to 230 million tonnes of total rare earth oxides. American Rare Earths, meanwhile, is developing the Halleck Creek Project in Wyoming, which could become the largest rare earth mine in North America.
Defense Metals in Canada is collaborating with the Saskatchewan Research Council to bolster North America's supply chain, while Lynas Rare Earths has partnered with the U.S. Department of Defense to build a processing plant in Texas.
Recognizing the potential for further disruptions, the DOD has also adopted stockpiling strategies for critical minerals to cushion against sudden demand spikes or supply shortages. These efforts, combined with legislative measures aimed at streamlining permitting for new mining projects, are essential to securing the U.S. and its allies against supply chain shocks.
While short-term fluctuations in rare earth and critical metal prices will continue, the long-term trajectory remains clear demand will only increase. These materials are essential not only for advanced technologies and defense systems but also for clean energy solutions like electric vehicles and wind turbines.
As geopolitical tensions escalate and global supply chains are restructured, the Western world is taking decisive action to reduce dependence on China. However, securing a stable, diversified supply of critical minerals will require sustained investment, strategic partnerships, and innovative processing technologies.
In this evolving landscape, supply chain security will ultimately matter more than tariffs, reshaping industries and global trade dynamics for years to come.