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USA Rare Earth Challenges China’s Rare Earth Dominance: A Shanghai Metals Market Analysis Cursory at Best

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Highlights

  • USA Rare Earth produces the first rare earth permanent magnets at the Stillwater, Oklahoma facility.
  • Aims to establish an independent supply chain.
  • Shanghai Metals Market acknowledges global competition in the rare earth industry.
  • Highlights efforts to diversify away from Chinese dominance.
  • USARE leverages Round Top deposits and partnerships.
  • Develops vertically integrated mine-to-magnet operation in the Western Hemisphere.

As Rare Earth Exchange recently covered, now Shanghai Metals Market (opens in a new tab) (SMM) acknowledges the growing global competition in the rare earth industry, spotlighting USA Rare Earth (opens in a new tab) (USARE) as a significant player. The company has made notable advancements at its Stillwater, Oklahoma facility, producing its first batch of rare earth permanent magnets. This facility is part of a vertically integrated mine-to-magnet operation, leveraging the Round Top deposit in Texas for heavy rare earth elements like dysprosium and terbium. USARE exemplifies efforts to establish a rare earth supply chain independent of China by sourcing additional raw materials through agreements with partners like Australian Strategic Materials.

SMM views these developments as part of a broader decoupling trend from China’s dominance, acknowledging the potential for long-term challenges to Chinese rare earth exports. However, the analysis stops short of positioning USARE as a serious immediate threat. While it recognizes the symbolic importance of USARE’s progress in the Western Hemisphere, SMM does not critically explore the scale of China’s control over the global rare earth market through state-owned conglomerates or its ability to leverage pricing and production strategies to maintain dominance.

The article also minimizes the significant barriers USARE and similar companies face, such as the capital-intensive nature of processing, the technical challenges of scaling production, and the deeply entrenched infrastructure advantages China holds via several state-owned conglomerates backed by the Chinese government.  

By focusing on USARE’s achievements without a nuanced critique of the competitive landscape, SMM presents a cautiously optimistic outlook for global diversification but avoids fully addressing the structural factors that make reducing dependence on China a steep uphill battle, to say the least. Could it be that the Shanghai-based media does not want to inform the reader just how unequal the playing field might be?

The Media

Feng Yin founded SMM in 1999. In 2015, it secured a $17.6 million private equity investment from Greenwoods Investments (opens in a new tab) and Ginkgo Gofar Group (opens in a new tab).

Tech & Data for VC & Investment Banks (opens in a new tab)

As of recent reports, SMM’s CEO is Adam Fan.  While specific details about the company’s ownership structure are limited, SMM operates as a private entity within China’s dynamic metals market, maintaining extensive networks and deep-rooted relationships in the nonferrous, ferrous, and electric vehicle metal industries.

Michael Jiang is the executive vice president along with UK-based Yanchen Wang (opens in a new tab).

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