Restructuring of the U.S. Rare Earth Supply Chain: In-Depth Analysis of Investment Opportunities and Geopolitical Impacts

Based on the above comprehensive research and analysis, I now provide you with a systematic and detailed report:

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The U.S. push for rare earth supply chain restructuring reflects the deep intertwining of geopolitical games and industrial security strategies. According to the latest market dynamics, the U.S. is entering a new era where ‘resource nationalism’ replaces globalization [1]. China controls approximately 60-80% of the world’s rare earth processing capacity, a strategic advantage that gives it significant discourse power in key sectors such as new energy vehicles, wind power generation, and national defense and military industries.

In January 2026, after the new U.S. administration took office, it explicitly elevated rare earth supply chain security to a national strategic level. Key policy developments include:

• Tariff Policy Adjustment
  : Starting January 1, 2026, the U.S. will impose an additional 25% Section 301 tariff on permanent magnets imported from China. Without alternatives, this will impose significant cost increase pressure on U.S. manufacturing [1]
• Government Investment Support
  : The U.S. Department of Defense has invested $400 million in MP Materials to help expand its magnet factory, and signed a price floor guarantee contract of $110 per kilogram to ensure the company’s core position in the U.S. supply chain [1]
• Ally Cooperation Expansion
  : The U.S. is considering investing in critical mineral mining projects in Greenland, and strengthening rare earth supply chain cooperation with ‘friendly countries’ such as Australia and Canada [2]

Indicator	Value	Description
China’s rare earth processing capacity share	~72-80%	Dominates the global supply chain
U.S. dependence on Chinese rare earths	~65-78%	Gradually declining but still at a high level
Rare earth metal market size (2025)	$7.2 billion	Expected to reach $12.6 billion by 2035
Compound Annual Growth Rate (CAGR)	6.5%	Forecast period 2026-2035

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MP Materials is the only U.S. company that owns and operates a scalable rare earth mine (Mountain Pass Mine in California), and is the core target for U.S. rare earth supply chain autonomy.

Indicator	Data	Evaluation
Market Capitalization	$10.99 billion	Leader of U.S. rare earth sector
Current Stock Price	$62.00	+217.46% YTD
52-Week Trading Range	$49.76 - $100.25	High volatility
Analyst Consensus	BUY (90.9% recommend buy)	Extremely optimistic
Median Target Price	$77.00	+24.2% upside potential
2026 Strategic Progress	Heavy rare earth separation facility expected to enter production in mid-year	Key growth driver

• Secured a price floor guarantee contract of $110 per kilogram from the U.S. Department of Defense, forming a ‘sovereign credit swap’
• Fort Worth magnet factory is expected to fully expand capacity by the end of 2026
• Received support from downstream customers such as Apple Inc.
• Q3 2025 financial report shows narrowed losses, with magnet precursor revenue reaching $22 million

• Still in a loss-making state (net profit margin -50.55%)
• High valuation (P/B 4.54x) implies high market expectations
• Sharp stock price volatility (3-month decline of -20.86%)

Critical Metals’ stock once surged 15% to a new high since October 2025, driven by news that the U.S. government is considering investing in Greenland’s mineral projects [3]. The company is the main vehicle for critical mineral development in Greenland, representing the U.S.'s strategic intention for resource deployment in the Arctic region.

Lynas is the world’s largest rare earth supplier outside China, with funding support from the Japanese government and processing facilities in Malaysia.

Indicator	Data
Market Capitalization	AUD 13.19 billion
Current Stock Price	AUD 14.10
Annual Gain	+98.59%
5-Year Gain	+212.64%
Current Ratio	2.83
Financial Status	More robust than MP Materials

• Australia is a ‘friend-shoring’ country of the U.S., with low political risk
• Benefiting from order transfer amid Western supply chain restructuring
• Possesses stable cash flow and profitability

Although U.S. supply chain restructuring may weaken China’s dominant position, Chinese rare earth enterprises still have significant investment value due to their technical accumulation and resource integration capabilities.

Indicator	Data
Market Capitalization	RMB 178.62 billion
Current Stock Price	¥49.41
Annual Gain	+131.86%
P/E	83.46x
ROE	9.26%
Current Ratio	2.72

• Leading enterprise in China’s light rare earth quota system, with the greatest resource elasticity
• Benefits from valuation revaluation driven by the increased strategic scarcity of rare earths
• Sustained growth in demand for downstream permanent magnet materials

Company	Ticker	Core Logic
Jinli Permanent Magnet	300748.SZ	Core supplier to Tesla, scarce high-end capacity
Zhongke Sanhuan	000970.SZ	Leader in rare earth permanent magnets, technologically advanced
Ningbo Yunsheng	600366.SH	Capacity advantage in high-performance magnetic materials

represents the ‘urban mine’ recycling route, which is an important supplement to supply chain security and continues to receive increased policy attention [3].

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According to announcements from China’s Ministry of Commerce and General Administration of Customs [4]:

Time	Measure	Products Involved
April 4, 2025	Export Control	7 types of medium and heavy rare earths including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, yttrium
January 6, 2026	Strengthened Control	Prohibited export of dual-use items to Japanese military users/for military purposes
January 6, 2026 (Proposed)	Tightened Review	Tightened license review for exports of medium and heavy rare earth-related items to Japan

According to estimates from Nomura Research Institute [4][5]:

Restriction Period	Economic Loss	GDP Impact
3 months	¥660 billion	-0.11%
12 months	¥2.6 trillion	-0.43%

• Automotive Industry
  : Japanese automakers such as Toyota, Nissan, and Honda are almost 100% dependent on imports of heavy rare earths (dysprosium, terbium) from China for their electrification production lines
• Electronics and Precision Instruments
  : Production disruptions
• Machinery Manufacturing
  : Supply chain disruption risks
• Defense Industry
  : Pressure on Mitsubishi Heavy Industries, Kawasaki Heavy Industries, etc.

On January 7, 2026, the Nikkei 225 Index fell 556.10 points (-1.06%), and the automotive sector generally fell by around 3% [4].

• Rare earth prices receive support, with praseodymium-neodymium oxide prices expected to remain in the range of RMB 450,000-550,000 per ton
• Accelerated inventory consumption by Japanese enterprises, increased supply uncertainty
• Rising costs for downstream manufacturing, profit pressure

• Global rare earth supply chain accelerates ‘dual-track’ development – ‘Western resource circle’ and ‘Chinese resource circle’ operate in parallel
• Increased volatility in rare earth prices, rising geopolitical risk premium
• Accelerated development of alternative technologies and recycling industry chains

• China’s rare earth market share may gradually decline from 80% to around 70%
• Western emerging rare earth projects face cost pressure (break-even point $90-100 per kg vs. China’s pricing of $60 per kg)
• Technological innovation may reduce dependence on some rare earth elements

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Based on 2025-2026 market analysis [1][6]:

Phase	Price Range	Main Driving Factors
2026 Q1	RMB 500,000-600,000 per ton	Policy expectations and inventory adjustments
2026 Q2-Q3	RMB 550,000-650,000 per ton	Emergence of supply gaps
2026 Q4	RMB 500,000-600,000 per ton	New capacity deployment balances supply and demand

• Current price: ~RMB 572,900 per ton (+26.05% YTD)
• Average price: ~RMB 525,000 per ton
• Price range: RMB 418,000-593,000 per ton

• China’s quota system maintains supply control
• Steady capacity expansion of Lynas in Australia
• MP Materials’ magnet factory ramps up production in 2026
• Western new projects face cost constraints, cautious capital expenditure

• New energy vehicles: 15-20% annual growth, the largest source of incremental demand
• Wind power: Accelerated offshore wind power installation
• Robot industry: Humanoid robots drive demand for high-performance magnetic materials
• National defense and military industry: Geopolitical tensions increase strategic reserve demand

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Priority	Target	Investment Logic	Expected Return	Risk Level
★★★★★	MP Materials	Core target for U.S. rare earth autonomy, backed by the government	+20-30%	Medium-High
★★★★☆	North Rare Earth	Leading Chinese rare earth enterprise, resource value revaluation	+15-20%	Medium
★★★★☆	Lynas Rare Earths	Beneficiary of Western supply substitution, stable operations	+15-25%	Medium-Low
★★★☆☆	Jinli Permanent Magnet	High-end permanent magnet leader, strong customer binding	+10-20%	Medium
★★★☆☆	Critical Metals	Re-valuation of Greenland mineral projects	High volatility	High

Risk Type	Details	Impact Assessment
Policy Risk	Policy reversals in the U.S., tariff implementation falling short of expectations	High
Price Risk	China maintains low-price strategy to suppress competitors	Medium-High
Execution Risk	Delayed capacity ramp-up of MP’s magnet factory	Medium
Geopolitical Risk	Unexpected easing of U.S.-China relations	Medium
Technological Substitution	Breakthroughs in rare earth alternative material R&D	Medium-Long Term

• Focus on allocating to MP Materials to gain the moat advantage of the U.S. government’s ‘floor price contract’
• Logic: In the 2026 industry downturn, only enterprises with government support can survive and expand market share

• Focus on domestic leaders such as North Rare Earth, China Rare Earth (Hong Kong Stock Exchange)
• Logic: Supply chain security needs strengthen the revaluation of domestic resource values

• Avoid Western emerging rare earth projects without cost advantages or government subsidies
• Logic: China’s pricing of $60 per kilogram is sufficient to eliminate high-cost competitors

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The restructuring of the U.S. rare earth supply chain is a ‘carefully designed low-price trap and capital strangulation’ [1]. The 2026 rare earth market is not a traditional commodity bull market driven by ‘supply shortage’, but a ‘targeted elimination’ of Western emerging production capacity.

1. Supply chain restructuring is irreversible
   : Regardless of policy changes, the ‘dual-track’ U.S.-China rare earth supply chain is a foregone conclusion
2. Shift in investment logic
   : From ‘supply-demand cycle’ to ‘geopolitical premium’, companies with ‘non-market’ profit sources are the first choice
3. Price center moves upward
   : Supply chain security premium will support rare earth prices to remain above historical averages in the long term
4. Increasing differentiation
   : The market moves towards extreme polarization, with leading enterprises capturing excess returns, while laggards face elimination

• Follow-up cooperation progress between the U.S. Department of Defense and MP Materials
• Enforcement intensity of China’s export control policies
• Progress of supply chain alternative solutions in Japan, South Korea and other countries
• Rare earth price trends and inventory changes

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[1] Sina Finance - “2026 Rare Earth Prediction: A Carefully Designed Low-Price Trap and Capital Strangulation” (https://finance.sina.com.cn/roll/2026-01-02/doc-inhewzar2095313.shtml)

[2] Wall Street News - “Trump’s Words Sent Critical Metals Surging 15%: The Rare Earth War Begins” (https://shishixinwen.news/news/wallstreet/live/3032543)

[3] Wall Street News - “U.S. Government Considers Investing in Critical Mineral Mining Projects in Greenland” (https://shishixinwen.news/news/wallstreet/live/3033470)

[4] Guancha.cn - “China Takes Action, Japan Complains” (https://www.guancha.cn/internation/2026_01_07_803002.shtml)

[5] Sina Finance - “Next is Rare Earths? Japanese Industry Panics” (https://finance.sina.com.cn/roll/2026-01-08/doc-inhfqcav4015153.shtml)

[6] Research Nester - “Rare Earth Metals Market Size and Share, 2035 Growth Forecast” (https://www.researchnester.com/cn/reports/rare-earth-metals-market/5142)

[7] UAnalyze - “MP Materials: The Only U.S. Rare Earth Concept Stock, Can It Support the Future of Supply Chain Autonomy?” (https://uanalyze.com.tw/articles/search/美國)

[8] FastBull - “Great Changes in Global Industrial Chain Restructuring” (https://m.fastbull.com/cn/news-detail/4364526_1)