U.S. Sets Rare Earth Price Floor to Challenge China’s Market Dominance

The U.S. is intensifying efforts to reduce China’s dominance in the rare earths market by introducing a separate pricing system backed by the Department of Defense (DoD). This move includes a deal with MP Materials, the sole U.S. rare earth miner, to guarantee a minimum price of $110/kg for neodymium and praseodymium (NdPr)—roughly double the current China-set price of $63/kg.

China controls about 90% of the global rare earth supply, making it difficult for Western companies to compete due to artificially low prices. These critical metals are essential for defense technologies, electric vehicles, and wind turbines. The new U.S. benchmark is expected to shift global pricing dynamics, boosting incentives for domestic production while potentially raising costs for automakers and end consumers.

MP Materials, based in Las Vegas, plans to begin commercial magnet production in Texas by year-end. Under the new deal, the DoD will acquire a 15% stake in the company, which aims to scale up output to 10,000 metric tons annually—meeting U.S. domestic magnet demand.

Consultancies like Adamas Intelligence and Project Blue note that the pricing move could benefit other players like Solvay and Aclara Resources. However, questions remain about whether industrial buyers will absorb the higher costs or diversify supply chains. Demand for rare earth magnets is forecast to more than double globally to 607,000 tons by 2035, with the U.S. expected to grow at 17% annually.

Despite past efforts, Western governments have struggled to weaken China’s grip on the market. This pricing floor represents a major shift in strategy, moving beyond tax incentives toward more direct intervention aimed at securing supply chain resilience for strategic materials.