US Executive Order Ignites Global Rare Earth Supply Chain Overhaul Amid Surging Prices

The United States issued a landmark Section 232 Executive Order in January 2026 targeting processed critical minerals and their derivative products (PCMDPs), declaring excessive reliance on foreign sources a direct national security threat. This vulnerability stems from China's control over 90% of global rare earth processing, leading to price volatility, supply disruptions, and weakened domestic manufacturing. The order mandates negotiations for trade agreements, including potential price floors and import adjustments, to secure reliable supply chains and boost US mining and processing. Why this matters: Geopolitical tensions, including China's 2025 export curbs slashing shipments to Japan and South Korea by over 90%, have exposed Western vulnerabilities in defense, semiconductors, and clean energy sectors, forcing a structural pivot from market-driven to security-led supply strategies.[6][2][10]

Rare earth prices, particularly neodymium-praseodymium (NdPr), have surged to $123/kg, exceeding the US government's $110/kg support threshold for MP Materials, suspending subsidies but validating the price floor mechanism as a tool for market stabilization. This rally, the highest since July 2022, reflects tightening supply amid export controls and rising demand from EVs, wind turbines, and defense, though tempered by slower-than-expected US EV adoption. Investors should note how this 'price-floor era' incentivizes domestic production while exposing midstream processing bottlenecks, not raw supply shortages.[3][9]

Geopolitically, the US is forging alliances to diversify: pacts with Uzbekistan and Japan ($36bn in critical minerals projects), backing Mozambique's major rare earth project, and partnering with France on uranium enrichment relevant to broader critical chains. India and France are deepening rare earth cooperation, leveraging India's untapped reserves and France's refineries like Solvay's Atlantic facility and Caremag's Lacq plant, positioning Europe as a non-Chinese hub.[1][3][2]

Domestically, Wyoming's Senate approved $16 million in grants to accelerate processing at high-grade deposits like Bear Lodge and Halleck Creek, addressing the core bottleneck where mining exists but separation tech lags. Defense Metals' Wicheeda pilot tests and startups like Milvus innovating rare earth substitutes underscore technology's role in resilience.[5][3]

These developments explain why supply chains are fragmenting: Governments prioritize 'friendshoring' over pure efficiency, risking market balkanization but enhancing strategic autonomy for investors eyeing North American and allied assets amid Africa's rising output and China's graphite export ceilings.