Rare earth magnet users jolted into paying premium prices for ex-China supply3 Jul 2025 12:36
Companies starting new plants in Europe, the U.S. and Asia had previously reported difficult talks on deals that embedded the higher costs to make magnets outside China, which benefits from cheaper labour costs and economies of scale as well as government support via tax refunds.
But the crisis has led many customers to soften or drop objections about paying those premiums as they scramble to hammer out deals, according to a dozen industry participants including automakers, magnet makers, rare earth producers, consultants and government officials interviewed by Reuters.
Suleman's company, Neo Performance Materials (NEO.TO), opens new tab, launched output of permanent magnets at its Estonia plant in May. Now, he said, "everybody wants to talk about how (they can) satisfy their demand out of our facility".
He said he has no worries about lining up enough customers who will pay a premium - $10 to $30 per kg, with EVs typically holding 2-4 kg of magnets per vehicle - over the price they usually pay for Chinese magnets.
A FINE BALANCE
Despite the new willingness to pay a premium, it will take many years or even decades to build up production outside of China, which accounts for 90% of global permanent magnet supply, industry participants said.
And the question of how much more should be paid for rare earths and magnets outside of China is a tricky one.
Too high a premium for mined rare earths could see consumers cutting down their use, while premiums that are too low would not be enough to allow for construction of ex-China projects, analysts and consultants say.
Automakers are willing to pay more to guarantee ex-China supplies, but they are also in the midst of an EV price war that has left them with razor-thin margins, and will still be queasy at what they regard as excessive premiums, according to industry participants.
One executive at a rare earths company said their firm has held discussions with automakers that are prepared to pay $80 per kg for neodymium-praseodymium oxide (NdPr), a rare earth needed for magnets used in motors and generators - a figure Reuters has not independently verified.
That is already a significant - near 30% - premium over the Chinese price of $62 based on data from price reporting agency Fastmarkets.
"The purchasing departments have it in their DNA to save each cent or fraction of a cent, but things are changing," said the executive, who declined to be identified because he is not authorised to speak to the media.
"They’re realising they're losing more by having to close a plant for a month than paying a premium to guarantee supplies.”
Critical minerals consultancy Project Blue says that for NdPr, a price of $75 to $105 per kg is needed to support enough production to meet demand.
https://www.reuters.com/sustainability/climate-energy/rare-earth-magnet-users-jolted-into-paying-premium-prices-ex-china-supply-2025-07-01/
With RBW's $40 cost, whats the profit on $80 NdPr * 2000 tpa.
+ 30%
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