Germany and South Korea face a critical vulnerability in their rare earths supply chains as the United States and Japan move rapidly to secure long-term agreements with the world’s limited pool of non-Chinese producers, the chief executive of Australian rare earths developer Arafura has warned.
The alert comes as China’s export restrictions on key rare earth minerals — imposed last year — continue to reverberate through the automotive and defence industries globally, accelerating a scramble among Western nations to lock up alternative supply. With only two Western producers currently operating at scale — Australia’s Lynas Rare Earths and US-based MP Materials at its Mountain Pass deposit — available supply outside China is extremely constrained.
The US has already secured Mountain Pass output through a government deal with MP Materials, covering a significant portion of American demand. Lynas this month concluded a long-term supply agreement with Japan Australia Rare Earths running through 2038, alongside a shorter-term deal with the Pentagon. With Lynas’ supply now effectively committed, Arafura CEO Darryl Cuzzubbo said his company had observed a marked increase in urgency from prospective buyers. “The EU and in particular Germany, and Korea are quite exposed — where are they going to get their supply from?” he said.
Arafura is positioning its Nolans project in Australia’s Northern Territory as one of the few remaining sources of meaningful non-Chinese supply. The project is planned to produce 4,440 metric tons per year of neodymium-praseodymium (NdPr) oxide — a key material used in rare earth permanent magnets for electric vehicles and wind turbines — from the second half of 2029, representing roughly 4% of projected global supply. The company already holds supply agreements with Hyundai Motor, Kia, Siemens Gamesa Renewable Energy and commodity trader Traxys.
Arafura is now seeking to place a further 1,200 tons of NdPr oxide to bring secured supply to 80% of planned output — a threshold required by project lenders before a final investment decision can be made and construction begins. Cuzzubbo said negotiations were underway with multiple parties, with pricing the determining factor. “We haven’t put all of our eggs into one basket — the one that gets there first on the right sort of pricing regime is the one we’re going to go with,” he said. Arafura is seeking terms in line with those achieved by Lynas, which locked in a price of $110 per kilogram of NdPr oxide in both its recent deals. China-based spot prices currently sit at around $103 per kilogram.
Beyond direct supply agreements, Arafura expects to participate in Australia’s A$1.2 billion ($836 million) strategic critical minerals reserve, which is due to begin operating in the second half of this year. Cuzzubbo called for the reserve’s floor price mechanism to be anchored to an independent international benchmark — such as that published by Benchmark Minerals Intelligence — rather than to Chinese market prices, which he argued have distorted the global market. “The market is broken — you need to create a functioning market,” he said. “A floor price will take uncertainty out of pricing, which has been very uncertain given China’s control, and that will help bring in investors.”
He also framed the reserve as a strategic tool for Australian diplomacy. “It is a bit of a bargaining chip that the Australian government can use with its allies,” he said, adding that it could help accelerate project development across the sector.
