The original crisis

In September 2010, a Chinese fishing trawler collided with two Japanese coast guard vessels near the disputed Senkaku/Diaoyu Islands. The diplomatic dispute that followed escalated quickly. Within weeks, China had effectively halted rare earth exports to Japan. The embargo lasted approximately sixty days.

The market reaction was immediate. Rare earth element prices rose by roughly 600 per cent within months. Dysprosium, terbium and yttrium saw the steepest increases. Japanese manufacturers, particularly in the electronics and automotive sectors, faced production constraints. Western governments started writing strategy documents.

The crisis ended when the dispute was resolved and exports resumed. Most of the strategy documents were filed and forgotten.

In the fifteen years between then and now, the structural problem the 2010 crisis exposed was not fixed. The U.S. has not produced dysprosium domestically since 1998. Roughly 90 per cent of the world's heavy rare earths are refined inside a single Chinese province. As of mid-2026, fewer than 12 per cent of the world's dysprosium supply comes from outside China, and that figure is not expected to shift materially before the end of the decade.

The 2025 shock

In April 2025, China formalised what 2010 had previewed. Seven specific heavy rare earth elements were placed under export licence: dysprosium, terbium, yttrium, scandium, samarium, gadolinium and lutetium. Each element now requires Beijing's approval to leave the country.

In May 2026, U.S. and Chinese negotiators signed a 90-day tariff truce in Switzerland. Part of the agreement was the restoration of rare earth export licences to American buyers. The licences have not yet arrived. Western buyers are still waiting.

The market is reacting again. Dysprosium prices doubled within the first quarter of the April 2025 controls. Terbium hit a record spot price in 2026. U.S. manufacturers began pausing production lines in May. F-35 deliveries have started slipping behind schedule because of permanent magnet supply constraints.

The 2010 pattern is repeating. The difference this time is that the answer is partly built.

Where the demand sits

Heavy rare earth dependency is not a niche industrial story. The same handful of elements sit inside multiple foundation industries:

Defence: F-35 fighter jets carry around 920 pounds of rare earth content per aircraft. Apache helicopters, Tomahawk cruise missiles, Patriot air defence and Virginia-class submarine sonar all use permanent magnets with heavy rare earth content. Roughly 30 per cent of Pentagon weapons programmes have some level of heavy rare earth exposure.

Healthcare: MRI scanners use neodymium-iron-boron permanent magnets, doped with dysprosium and terbium for thermal stability. The magnet inside a hospital MRI scanner is functionally similar to the magnet inside an F-35 actuator. Hospital diagnostic capacity at scale depends on the same supply chain as military airframe capacity.

Electric vehicles: Permanent magnet synchronous motors are the dominant drivetrain in the modern EV market. Without dysprosium doping, neodymium magnets demagnetise above approximately 150 degrees Celsius. The motor stops at operating temperatures. EV makers across the U.S., Japan and Europe depend on the same magnet supply chain.

Renewable energy: Direct-drive offshore wind turbine generators use roughly 600 kilograms of rare earth magnet content per turbine. Onshore wind, while less magnet-intensive, still represents material demand.

The 2025 controls did not affect a niche sector. They affected the magnet supply chain that sits inside every one of those industries.

The pricing question

The financial commentary on the rare earth supply situation has been muted. Spot prices have moved, but the broader equity market has not yet repriced the supply risk in the way it repriced the oil supply risk during the 1973 embargo or the semiconductor supply risk during the 2021 chip shortage.

There are two reasons. The first is that rare earth markets are opaque. Most rare earth contracts are bilateral and confidential, which means the price signal is delayed compared to liquid commodity markets. The second is that the Western response is still in formation. The Pentagon stockpiling programme is disclosed but not complete. The Defense Production Act funding is approved but not fully deployed. The pre-feasibility studies on non-Chinese projects are scheduled but not finished.

The supply shock is being absorbed slowly. The market may not have finished pricing it in.

The Western answer being built

A non-Chinese heavy rare earth supply chain is being constructed in three pieces: mining, separation/refining, and magnet manufacturing. Of the three, the mining piece is furthest along.

There are a small number of credible non-Chinese heavy rare earth mining projects that combine three features: a disclosed JORC-class resource, a non-acid-cracking processing route, and external validation through offtake or government procurement clearance.

North Stanmore is one of them. The project sits six kilometres north of Cue in Western Australia's Midwest and is owned by Victory Metals (ASX:VTM).

What North Stanmore is, in disclosed numbers

Reported in accordance with the JORC Code 2012:

  • 320 million tonnes total mineral resource (176 million Indicated, 144 million Inferred)
  • 50+ million tonnes of high-grade zone within the broader resource
  • Production target of 2.4 million tonnes per annum
  • More than 20 years of mine life from the high-grade zone alone
  • 38 per cent heavy rare earth to total rare earth ratio (against an ex-China sector average closer to 10 per cent)
  • 80 per cent rare earth recovery in 30 minutes in metallurgical testwork
  • 48-times flotation upgrade to 5.9 per cent TREO
  • 70 per cent recovery on dysprosium, 75 per cent on terbium, 70 per cent on yttrium

The processing route bypasses acid cracking. The deposit is secondary regolith clay, which means the rare earths sit in a phase recoverable by flotation alone - the only such commercial-scale project on the ASX.

External validation

Three markers separate the project from earlier-stage exploration:

  • Sumitomo Corporation offtake covering future production
  • U.S. System for Award Management approval clearing Victory Metals for DoD and EXIM Bank funding
  • Pre-feasibility study scheduled for 2026, pilot plant scheduled for 2027

Each of those markers represents a commitment by an external counterparty that the project is worth engaging with at the development stage. None of them constitute commitments to a financial outcome.

Sources: ASX:VTM announcements (refer to LR 3.1 for material information); Reuters and Bruegel reporting on the 2010 China-Japan rare earth embargo; Strategic Metals Invest and Argus Media dysprosium and terbium price data 2026; Congressional Research Service rare earth content estimates for U.S. defence platforms; International Energy Agency wind turbine rare earth content data; USGS Mineral Commodity Summary 2024; China Ministry of Commerce April 2025 export control order.

Information is general in nature only and does not constitute financial advice. Past performance is not indicative of future performance. Forward-looking statements involve risks and uncertainties and actual results may differ materially. Mineral resource estimates are reported in accordance with the JORC Code 2012. Refer to the ASX:VTM resource announcement of 12 March 2025 for the Competent Person Statement and full technical disclosure. Speak with a qualified financial, legal and tax adviser before making any investment decision.