Which ASX Stocks Could Benefit as Rare Earth Prices Surge on Tightened US Supply Chains?

Prices of neodymium and praseodymium (NdPr) oxides – two rare earth elements essential for super-strong magnets – have surged to their highest levels in more than two years.

The rally follows US rare earth producer MP Materials halting raw material exports to China, creating a significant gap in supply.

China currently controls around 90% of global rare earth refining and 70% of mined output.

Chinese Supply Void

MP’s shipments had historically accounted for up to 9% of China’s NdPr oxide supply and, with these volumes removed, Chinese factories face a supply void just as seasonal demand for electric vehicles, wind turbines, and consumer electronics peaks.

Benchmark prices in China have jumped to 632,000 yuan/tonne (around US$88/kg), a 40% rally from July levels.

Analysts expect this move to reinvigorate global exploration and development projects outside of China, particularly as Western nations prioritise secure, diversified supply chains.

Why NdPr Matters

Neodymium and praseodymium are the building blocks of neodymium-iron-boron (NdFeB) permanent magnets – the strongest type of commercial magnet available.

These magnets are indispensable for:

• Electric vehicles (EVs): traction motors and drivetrains.
• Wind turbines: high-efficiency permanent magnet generators.
• Consumer electronics: speakers, headphones, hard drives, smartphones.
• Defence & aerospace: drones, radar, precision-guided weapons, jet engines.

NdPr oxide is rarely separated and is typically sold as a combined product.

With limited substitutes, analysts expect demand to climb steadily alongside electrification and defence spending.

Which ASX Companies Could Benefit?

Australia is already a key global supplier of rare earths, and several ASX-listed companies have direct exposure to NdPr price movements.

• Lynas Rare Earths (ASX: LYC): The only major rare earths producer outside China, with its Mt Weld operation in WA a significant source of NdPr. Lynas is well-positioned as a secure supplier into Japan and the US
• Arafura Rare Earths (ASX: ARU): Developing the Nolans Project in the NT, focused heavily on NdPr, with offtake agreements already in place with Hyundai and Siemens Gamesa.
• Iluka Resources (ASX: ILU): Diversified miner building the Eneabba refinery in WA, backed by the Australian Government to process rare earth oxides including NdPr.
• Hastings Technology Metals (ASX: HAS): Owner of the Yangibana Project in WA, targeting NdPr-rich concentrates.
• Australian Rare Earths (ASX: AR3): Advancing the Koppamurra Project in SA/Vic, with ionic clays hosting NdPr.
• VHM (ASX: VHM): Developing the Goschen Project in Victoria, with a material NdPr component.

Implications for Investors

The 40% price rally reflects more than just seasonal Chinese demand—it underscores the rising geopolitical premium attached to “friendly supply chains.”

With the US and its allies intent on reducing reliance on China, Australian producers – already seen as reliable partners – are strategically positioned.

Investors should watch for:

1. Binding offtake agreements between ASX companies and Western OEMs.
2. Policy tailwinds from US and Australian governments prioritising secure critical minerals supply.
3. The pace of EV and wind turbine demand recovery, which directly drives NdPr consumption.

Outlook

NdPr prices had languished for several years due to oversupply, but the recent rally shows how fragile and strategically important these supply chains are.

While short-term volatility is likely, the medium-term trajectory is higher, as global demand outpaces supply growth.

For Australian investors, this means that companies with direct exposure to NdPr – particularly Lynas, Arafura, and Hastings – are ready to benefit from stronger pricing, rising Western investment, and growing recognition of rare earths as critical to both the energy transition and national security.