Western rules push rare-earth buyers away from China, Lynas says

Are U.S. and European rules finally changing the West’s dependence on Chinese rare earths, or only forcing buyers to change paperwork while the supply chain stays centered on the cheapest producer?

Lynas Rare Earths chief executive Amanda Lacaze said customers are already changing purchasing decisions to comply with procurement restrictions being introduced or expanded in the United States and Europe. The U.S. Defense Department’s DFARS rule on the restriction on acquisition of certain magnets, tantalum and tungsten now covers samarium-cobalt magnets, neodymium-iron-boron magnets, tantalum metals and alloys, tungsten metal powder and tungsten heavy alloy, with key compliance dates stretching to January 1, 2027 for some supply-chain inputs.

The European Union is pushing in the same direction through its Critical Raw Materials Act. The European Commission approved the first 47 strategic projects under that framework on March 25, 2025, while the European Parliament’s research service says the EU gets all of its heavy rare earths and 98% of its rare-earth magnets from China. That dependence helps explain why Brussels has paired sourcing rules with strategic projects and stockpiling efforts.

China’s leverage was reinforced in 2025, when Beijing tightened export controls on selected medium and heavy rare-earth related items. The controls, announced on April 4, covered materials including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium, a reminder to automakers, defense contractors and magnet makers of how exposed they remain to Chinese supply. China is still the largest and cheapest producer of rare earths and related magnets, but that cost advantage is now colliding with national-security policy.

Lynas, headquartered in Perth and operating a processing facility in Malaysia, is the largest rare-earth producer outside China and stands to gain if buyers decide resilience is worth the premium. The company said in its 2025 annual-report materials that its 2025 growth initiative is largely complete, suggesting it is positioning itself for a broader shift in sourcing if non-Chinese demand accelerates.

Lacaze also argued that governments will have to stay more interventionist if they want a competitive supply chain outside China, including possibly setting floor prices. Australia is revising policy around a strategic reserve, and Australia’s resources minister said in March that the reserve would “no doubt” include some element of a floor price. The direction of travel is clear: industrial policy is no longer peripheral to rare earths, and buyers in electric vehicles, defense systems and other strategic sectors are being pushed to choose between lower costs and supply-chain security.