China's planned reintroduction of rare earth export controls on November 10, 2026, is creating significant uncertainty across the global rare earth refining, recycling, and magnet manufacturing sectors, according to market participants interviewed by Fastmarkets. Under China's Announcement No. 61, the export controls will extend licensing requirements to foreign-made products containing specified Chinese-origin rare earth materials above certain thresholds, as well as products manufactured using covered Chinese rare earth technologies or incorporating Chinese-origin controlled items.
If implemented, the measures will extend much deeper into global supply chains, covering equipment and technology used for rare earth separation, strip alloy production, and magnet manufacturing. The current controls stem from China's introduction of export restrictions on heavy rare earths on April 4, 2025, marking a major turning point for the market. For decades, China has dominated the supply of rare earths required to produce sintered neodymium-iron-boron (NdFeB) magnets, particularly neodymium-praseodymium (NdPr), dysprosium, and terbium.
Following the April 2025 controls, a significant price divergence has emerged between domestic Chinese and international markets. According to Fastmarkets' assessments from August 27, dysprosium oxide in Europe traded at around 4.9 times the domestic Chinese price, with European prices at $1,250-1,675 per kg compared to $270-330 per kg fob China. Terbium oxide in Europe traded at 3.8 times the Chinese price, with European prices at $4,200-5,000 per kg versus $1,180-1,270 per kg fob China.
Japan, the largest consumer of dysprosium and terbium outside China, has been particularly affected. According to China's General Administration of Customs, no dysprosium oxide or terbium oxide has been exported to Japan in 2026, despite continued approval of some heavy rare earth exports under licence. However, China has continued to export sintered NdFeB magnets, maintaining high-value commercial exports while retaining the ability to restrict supply through its licensing system.
The higher international prices have benefited non-Chinese producers. Australian rare earths producer Lynas Rare Earths, which began producing NdPr oxide in 2013, started producing dysprosium oxide in May 2025 and terbium oxide in June 2025. The company has indicated that it has benefited from China's export controls, though it flagged higher costs from sourcing inputs outside China.
For downstream consumers such as magnet manufacturers, the situation has become increasingly difficult, with sharply higher costs and limited availability, particularly for heavy rare earth materials. The unpredictability of China's licensing system has heightened supply concerns and encouraged governments and companies to accelerate diversification efforts. In June 2026, G7 members agreed to reduce their reliance on any single rare earth supplier to below 60% by 2030.
Since April 2025, governments have committed hundreds of millions of dollars to projects spanning separation, metallization, magnet manufacturing, and recycling. Major funded projects include USA Rare Earth's $1.6 billion January 2026 commitment to develop the Round Top deposit and an Oklahoma magnet facility to produce 10,000 tonnes per year of NdFeB magnets; Australia's A$1.65 billion ($1.15 billion) June 2026 investment in Iluka's Eneabba integrated rare earth refinery; and the US providing $500 million in conditional loans to Phoenix Tailings in June 2026 for a domestic rare earth separation and metallization plant. Recycling has emerged as a critical strategy.
In April 2026, Daikin Industries, the world's largest air-conditioning manufacturer, partnered with Shin-Etsu Chemical, Hitachi, and Tokyo Eco Recycle to recover and recycle rare earth magnets from compressors beginning in 2027. UK-based HyProMag, established in 2018, is advancing recycling projects across the UK, Germany, and the US using its proprietary Hydrogen Processing of Magnet Scrap (HPMS) technology. In July 2025, HyProMag launched a £6.5 million circularity project with partners including Jaguar Land Rover to develop technologies for extracting and recycling magnets.
Belfast-based Ionic Technologies converts rare earth concentrates and end-of-life NdFeB magnets into high-purity separated rare earth oxides. The company's Belfast demonstration plant can process 30 tonnes per year of waste magnets into separated, high-purity magnet rare earth oxides, with the company reporting production of 10 tonnes of separated magnet rare earth oxides since June 2023. However, significant challenges remain.
Many recycling projects depend on Chinese equipment, chemical extractants, and technical expertise. According to Nielson Beddoe, managing director of Mkango Resources, purpose-built Chinese equipment costs roughly one-third as much as Western alternatives. Restrictions on larger reaction vessels have already affected project planning, with Mkango reporting that it can no longer source 100-litre glass reaction vessels and must now use 80-litre reactors instead.
Access to scrap feedstock is emerging as another potential bottleneck. According to the International Energy Agency, secondary supply could reduce mining requirements by 35% by 2050, with 25% from manufacturing scrap and 10% from end-of-life recycling. However, governments are increasingly restricting exports of strategically important materials.
On July 30, the US government moved to impose temporary restrictions on exports of black mass and end-of-life rare earth permanent magnets. Feedstock quality presents additional challenges. Magnets entering the recycling stream vary in size, age, performance, composition, and magnetization, complicating standardization of collection and processing.
Tim Harrison, managing director of Ionic Technologies, noted that scrap merchants cannot guarantee end-of-life magnet feedstock composition, and removing variability is key given that NdFeB value-chain partners do not want sub-standard rare earth oxides with impurities. Magnet manufacturers are also exploring ways to reduce heavy rare earth content or eliminate it altogether through alternatives such as ferrite and aluminium-nickel-cobalt magnets, though these involve performance trade-offs. The prospect of further restrictions is influencing investment decisions, but uncertainty remains regarding whether the November 2026 deadline will proceed.
There were hopes that a trade agreement could lead to lifting export controls. The US government confirmed that Chinese President Xi Jinping will visit the White House on September 24, though it declined to comment on the agenda. However, sources expressed concerns that the political situation has deteriorated and reaching an agreement will be challenging, citing tensions including the US-Iran war and expanding US sanctions.
Source: Fastmarkets
Source: fastmarkets.com