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August 24, 2025
4 min read

Rare Earths: The Oil of the Robot Century

19B market today, 200-500B next 3-5 years.

Rare EarthsRoboticsFinance

Rare Earths: The Oil of the Robot Century

Everyone is still staring at ChatGPT like it’s magic. Reality check: LLMs are just giant transformers. Same architecture since 2017. They remix what’s already known. They do CRUD apps, boilerplate code, summaries, explanations. They don’t invent.

Scaling laws are flattening. Each new model costs billions more and feels a little better than the last. That’s the AI bubble people are worried about. But it won’t pop like dotcom. It will rotate.

The next wave is robots.

Robots don’t need AGI. They just need to move boxes, deliver food, clean floors, take care of old people, run warehouses. That alone is a massive economic shock. Embodied AI is where automation gets real.

Robots run on permanent magnets. Magnets run on rare earths. Neodymium, praseodymium, dysprosium, terbium. China controls 80 percent of refining and 90 percent of magnet manufacturing. The entire global market is 19 billion dollars today. That is microscopic compared to what happens if millions of robots get deployed.

Supply takes 7 to 10 years to build. You cannot spin up refineries overnight. Governments know this. The Pentagon has already flagged rare earths as a security priority. Expect stockpiles, subsidies, export bans, trade wars. Oil shaped the 20th century. Rare earths will shape the 21st.

The trade is simple. Own the ETF for broad exposure. Own a moonshot like USA Rare Earth for asymmetric upside. If they actually pull off a full mine to magnet supply chain inside the US, it will be a generational trade.

Rare earths are sitting at 19 billion today. This could be a 200 to 500 billion dollar market. Markets will price it in early, the same way lithium went 10x before EV adoption fully hit.

Nvidia was the shovel seller of the LLM rush. Rare earth miners are the shovel sellers of the robot century. If you believe robots are inevitable, this is the play.

Risks

Supply Glut

Risk: China could flood the market with rare earths, collapsing margins and crushing miner valuations (similar to the 2010s).

Response:

  • Extremely low probability since RE is now used for military (drones, robots). As Tesla CEO Elon Musk recently confirmed, "China wants some assurances that these aren't used for military purposes, which obviously they're not. They're just going into a humanoid robot," he said. Demonstrating how China is already treating rare earths as strategic military assets removing the possibility of a supply glut.

Supply Chains

China-Included Chain

  1. Mine & Concentrate

    • China Northern Rare Earth (CNRE), China Rare Earth Group (CREG)
    • Also outside China: Lynas (AU), MP Materials (US)

  2. Separate to Oxides (NdPr, Dy, Tb)

    • CNRE / CREG (China, dominant)
    • Also: Lynas LAMP (Malaysia)

  3. Reduce to Metals (Nd/Pr/Dy/Tb)

    • Multiple Chinese refiners (affiliates of CNRE/CREG)
    • Also: Santoku (JP), Less Common Metals – LCM (UK)

  4. Alloy (NdFeB alloy)

    • China: JL MAG, Zhong Ke San Huan, Ningbo Yunsheng, Zhenghai, DMEGC
    • Also: Santoku (JP), LCM (UK), Neo Magnequench (powders)

  5. Magnet Manufacturing (sintered/bonded NdFeB)

    • China: JL MAG, San Huan, Ningbo Yunsheng, Zhenghai, DMEGC
    • Japan/EU: Proterial (Hitachi Metals/NEOMAX), Shin-Etsu, TDK, Vacuumschmelze (VAC)

Non-China U.S. Chain (operating & near-term)

  1. Mine & Concentrate (US)

    • MP Materials — Mountain Pass, CA (operating)
    • USA Rare Earth (USARE) — Round Top, TX (project; not producing yet)
    • Non-U.S., non-China feed (imports to U.S. plants): Lynas — Mt Weld (AU) → LAMP (MY)

  2. Separate to Oxides (US + non-China imports)

    • Energy Fuels (UUUU) — White Mesa, UT: NdPr operating; Dy/Tb piloting
    • MP Materials — Mountain Pass, CA: NdPr oxide operating
    • Ucore — Louisiana SMC: RapidSX separation (DoD-funded; under build)
    • Lynas — LAMP (Malaysia): operating NdPr/HRE oxides → import feed for U.S. metals/alloy/magnets
    • (Conditional/forward) Lynas USA — Seadrift, TX: separation planned/under review

  3. Reduce to Metals (US)

    • MP Materials — Fort Worth, TX (“Independence”): NdPr metal online
    • USA Rare Earth (USARE) — Stillwater, OK: metals planned (integrated line)

  4. Alloy (US)

    • MP Materials — Fort Worth, TX (integrated alloy line)
    • USA Rare Earth — Stillwater, OK (planned, integrated)

  5. Magnet Manufacturing (US)

    • MP Materials — Fort Worth, TX: trial sintered magnets; ramp from late-2025
    • Noveon Magnetics — San Marcos, TX: operating sintered NdFeB (multi-year deals)
    • e-VAC Magnetics (VAC Group) — Sumter, SC: commissioning 2025 (defense-backed)
    • USA Rare Earth — Stillwater, OK: first sintered magnets produced; commercial start H1’26