A US-China trade negotiated at the end of October saw markets across the world breathe a sigh of relief as China agreed to suspend additional export controls on rare earths.

Rare earths – a group of 17 minerals that are found throughout the earth’s crust but rarely in deposits large enough to mine – are crucial resources used in the manufacture of everything from the magnets used in electric cars and wind turbines, to LED lights, the displays of smartphones and hi-tech military satellites, missile guidance systems, and advanced jet engines.

China accounts for more than 60% of global rare earth production and 92% of global processing capacity, and prior to the trade agreement with the US in October, was preparing to implement tight controls on rare earth exports. If implemented, the export controls would have had a significant impact on the electric vehicles, renewable energy, consumer electronics, and defence industries, among others, that rely on rare earth supplies.

Strategic importance of rare earths spurs M&A

The agreement between the US and China has come as a great relief for investors and operators in these industries, but industry players are nevertheless continuing to explore options to diversify rare earths supplies.

M&A and joint ventures are already established as a crucial strategic tool to strengthen rare earths production capacity and solidify supply chains. 

As the world’s largest producer, China has led the way in rare earths deals, with China’s rare earths companies turning to M&A to build scale and strengthen their market positions.

At the end of December 2021, for example, three state-owned Chinese rare earths companies – China Minmetals, Aluminum Corp. of China, and Ganzhou Rare Earth Group – announced a merger to form a new entity, China Rare-Earths Group. The deal enabled the companies to increase efficiencies, boost investment in extraction and processing technologies, and gain greater market control.

Other Asian countries, meanwhile, are also upping investment in rare earth infrastructure. Malaysia is supporting the development of a $142 million rare earth magnet manufacturing facility in the state of Pahang, while Australian group Lynas Rare Earths and South Korea’s JS Link have inked a deal to develop another magnet manufacturing facility.

In addition to striking cross-border joint venture deals and partnerships, Australian rare earth players are also anticipating significant sums of government investment in the domestic Australian rare earths market, with the likes of Arafura Rare Earths and Iluka Resources among the local Australian rare earths companies to secure government loans and financing support.

Rare earths companies outside of the Asia Pacific are also actively turning to M&A to increase access to rare earth minerals and build up domestic supply and processing capacity.

In the summer of 2024, for example, US-listed rare earth company Critical Metals Corp. announced a deal to acquire 92.5% of the equity in Tanbreez, a rare earths deposit in Greenland, in a $211 million deal. In the US domestic market, meanwhile, MP Materials, the US’s only full-capability rare earths magnet producer, received a $400 million equity investment from the US Department of Defence as well as a $1 billion financing facility from JPMorgan Chase and Goldman Sachs.

Strengthening supply chains: APAC M&A trends shaping the rare earths sector

The Deal Drivers: APAC Q3 2025 report highlights how M&A activity across Asia Pacific stabilized following tariff disruptions, with technology, media, & telecoms (TMT) leading by deal volume and financial services showing notable value growth. China’s fiscal support and India’s robust GDP growth contributed to a resilient deal environment, while Southeast Asia benefited from supply-chain reconfiguration. Notably, industrials & chemicals (I&C), including rare earths, remained a focal point for strategic transactions, underscoring the region’s commitment to supply chain resilience and specialty materials.

Looking ahead

More deal activity in the rare earths is expected in 2026, with national security and supply chain risk spurring governments and rare earths companies to invest in supply chains and production capacity.

Governments will be key players in transactions, supporting strategic public-private partnerships and joint ventures with industry players, with specialized rare earths investors in the private sector also active in a space that is set to generate sustained transaction activity.