MELBOURNE, May 6 - New procurement rules being rolled out in the United States and the European Union are already nudging customers toward rare earth suppliers beyond China, according to Amanda Lacaze, chief executive of Lynas Rare Earths.
China remains the world’s dominant and lowest-cost producer of the metals and magnets used across sectors from automotive to defence, and has long served as the default global source. But measures Beijing took last year to restrict some exports - a response to U.S. tariffs - left international automakers and other industries exposed to supply risks and prompted policy reactions abroad.
Since those restrictions, Washington has signalled support for higher prices for non-Chinese producers as a means to accelerate alternative supply. Convincing global customers to accept higher-cost, non-Chinese options has been challenging while cheaper Chinese supplies remain available. Despite that, Lacaze said forthcoming procurement rules are changing commercial behaviour.
"In both cases, we are observing changed purchasing decisions so that consumers can comply with the regulations," she said at the Macquarie Australia Conference in Sydney. Lacaze pointed to U.S. rules due to take effect next year that will govern procurement, including limits on purchases of particular magnets, tantalum and tungsten, and to the European Union’s introduction of sourcing restrictions under its critical raw materials framework.
Perth-headquartered Lynas operates a processing plant in Malaysia and is the largest rare earths producer outside China. Lacaze urged governments to take a more activist approach to encourage a sustainable rare earths industry outside China, calling for measures such as government-set floor prices beyond those currently being considered by a handful of countries.
Australia is also updating policies related to the creation of a strategic reserve, an initiative that the country’s resources minister said in March will "no doubt" include an element of a floor price as Australia positions itself to strengthen supply relationships with allied nations.
Contextual note: The comments reflect Lynas management views on how regulatory developments are influencing customer procurement choices and the company’s position as a non-Chinese supplier with processing capacity in Malaysia.