Michael Kern argues that for the last twenty years, every time a Western rare earth mining operation looked like it was about to build its own processing plant, Chinese producers would flood the market and crash the price of the metal. The investment case would evaporate and the company would go out of business.

This kind of predatory capitalism is all very well until the nice guys realize what's going on and ban your products from their defense contracts, back their own start ups, and those companies develop their own processing techniques, which is what is starting to occur in the US now.

China was treating rare earths as a strategic weapon, while the West assumed the free market was free, and was hooked on the cheaper stuff.

All's fair in love and war, but dirty tricks have their own price.

How China Killed Every Rare Earth Competitor Before It Could Get Started
By Michael Kern, Oilprice

The West handed its rare earth processing capability to China roughly 40 years ago. The last major U.S. rare earth mine, Mountain Pass in California, closed in 2002, unable to compete with Chinese production costs. By 2010, China controlled approximately 90-95% of global rare earth production and an even larger share of the processing and refining that turns raw material into usable metals and magnets.

China was able to control the price because it not only controlled 90% of global rare earth production, but it also controls the Asian Metal Index (AMI).

Even if the western company survived the price crash, they were often dependent on Chinese technology that only Chinese operators could maintain, and the CCP sometimes withdrew support leaving the western company with something they couldn't use.

The Crisis That Should Have Changed Everything

The most dramatic chapter of this story came in 2010, when a territorial dispute between China and Japan over the Senkaku Islands triggered what many consider the first open weaponization of rare earth supply.

In September 2010, China unofficially halted rare earth shipments to Japan. Within months, rare earth prices spiked dramatically, with the prices of some oxides increasing more than tenfold. The price of dysprosium oxide alone surged from roughly $90 per kilogram in early 2009 to over $2,300 per kilogram by mid-2011.

What followed was a gold rush.

Then China did what it usually does. After the initial panic subsided and prices peaked, China eased its restrictions and flooded the market with supply. Prices collapsed just as quickly as they had risen. Dysprosium oxide, which had peaked above $2,300, fell back below $200 per kilogram by 2016. One by one, the Western projects that had launched during the boom ran out of money, ran out of investors, or simply couldn't compete. Molycorp, the company behind the Mountain Pass revival, filed for bankruptcy in 2015.