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Geopolitical Mining

Rare Earths: The US Treasury, Baotou and Crucible

The US Treasury’s G7+ finance meeting, Korea Zinc’s Crucible smelter in Tennessee, and China’s new Baotou rare earth price index are three pieces of the same story: Washington is starting…

Geopolitical Mining

Geopolitical Mining · Article

Rare Earths: The US Treasury, Baotou and Crucible

Authors: Marta Rivera | Eduardo Zamanillo

How Washington coordinates supply, demand and prices while China consolidates its own rare earths framework.

1. Three moves, one shared play

In the space of a few weeks, three signals emerged that, taken together, show where the rare earths and critical minerals board is moving:

  • On 12 January 2026, the US Treasury convened in Washington the finance ministers of the G7, the European Union and invited countries such as Japan, South Korea, India and Mexico to address dependence on Chinese rare earths and explore tools such as a minimum price and new support schemes.
  • In Clarksville, Tennessee, Korea Zinc’s Crucible project, backed by the US government and private capital (with JP Morgan as lead financial partner), advanced with a clear design for a supply corridor and a specific list of critical metals to process.
  • In Baotou, the centre of China’s rare earths industry, a rare earth price index was activated, backed by the Chinese state and distributed through Xinhua’s financial information infrastructure, providing an organised price reference for key products.

Taken together, these moves suggest that:

  • The United States is using the Treasury to coordinate an architecture in which supply, demand and prices are aligned to support new midstream capacity outside China, while China reinforces its own rare earths reference framework to preserve its leadership.
  • The underlying issue goes much further than the energy transition. What is at stake is the ability to sustain defence systems, data infrastructure, advanced manufacturing and entire technological chains under volatile price cycles and geopolitical pressure.

2. Washington: the Treasury as architect of a demand club

The Washington meeting was convened by the US Treasury, not by a sectoral ministry. Around the table sat: the finance ministers of the G7 (United States, Canada, Japan, United Kingdom, France, Germany, Italy); the European Union as a bloc; and key invited countries: Australia, Japan, South Korea, India and Mexico, together with the US Trade Representative, the president of EXIM Bank and investment banking executives, including JP Morgan, which is also a financial partner in the Tennessee refinery.

Taken together, these countries and the EU account for around 60% of global demand for critical minerals, according to estimates cited by the Treasury and the IEA.

The formal purpose of the meeting was to discuss how to secure and diversify critical mineral supply chains, with an emphasis on rare earths, and to move toward a prudent de-risking approach vis-à-vis China.

Beyond the diplomatic language, the composition of the room reveals the underlying logic:

  • The G7, EU, Japan, Korea and India represent a massive structural demand for rare earths and critical minerals for defence, electronics, industry and data.
  • Mexico brings a different combination: mining, industrial base and geopolitical proximity within the North American perimeter.

The Treasury is doing more than sharing diagnostics. It is building an anchor demand club – countries that can sign long term contracts, that can create strategic reserves, and that can support, with their demand, the viability of new processing projects outside China.

In that context, the idea of a minimum price for rare earths is part of an architecture in the making: a price floor defines a threshold below which investment in midstream and mining projects starts to come apart; above that threshold, banks and investors can continue financing new capacity without every downturn turning into an existential crisis for non Chinese supply.

From a Geopolitical Mining perspective, the Washington meeting can be read as follows:

The US Treasury is using its convening power to align those who can become reference buyers of non Chinese supply and, at the same time, to design the financial and pricing instruments that allow that supply to survive the cycle.

This move is consistent with what we analyse in “America’s 2025 National Security Strategy: when economic power and critical minerals move to the center” , where we show how the new NSS places critical mineral chains at the heart of US national security.

3. Crucible: when midstream becomes a plant, a corridor and a metals list

In parallel, US strategy is taking physical shape in Clarksville, Tennessee. Crucible, Korea Zinc’s project backed by JP Morgan and supported by the US government, concentrates several dimensions of this new phase in a single plant. As Fastmarkets reported from direct contact with the company, Crucible is planning:

  • a defined timeline: site preparation in 2026, construction starting in 2027 and commercial start up around 2029;
  • treatment of large volumes of zinc and lead as base metals;
  • recovery of critical byproducts such as indium, gallium, germanium, bismuth, antimony and other minerals listed as critical by the United States.

The way Crucible secures its feedstock is as strategic as the metals list. According to data reported by Fastmarkets, the sourcing design is structured as follows: zinc concentrates are expected from the United States and Mexico; lead concentrates from Mexico, Peru and the United States; copper scrap and other secondary materials from across the Americas and from the European Union.

With that design, Crucible becomes an expanded North American midstream node: it integrates Mexico and Peru as structural feedstock origins; it incorporates the EU as a supplier of scrap and secondary materials; and it processes, within the United States, a combination of base and critical metals that largely depend today on chains controlled by China.

The role of the US state here goes beyond permitting. It acts as partner and coordinator, it helps make the CAPEX bankable, backs the focus on critical minerals and connects the project to the price and risk discussion taking place at Treasury level.

Crucible expresses, in industrial terms, the logic we have been describing in “Critical minerals are now geopolitics: why the U.S. is no longer playing the old mining game” .

In practice, Crucible marks the shift from a narrative about critical minerals to a reality in which:

  • there is a specific plant;
  • there is a concrete calendar;
  • the supply corridors are known;
  • and there is an explicit decision on which critical minerals will be recovered and under what security framework.

4. Baotou: China reinforces its own pricing framework

While Washington articulates its demand club and midstream projects, China is strengthening the price reference layer that shapes the rare earths market.

The hub of Baotou, in Inner Mongolia, already concentrated a significant share of the country’s rare earths processing. The new step consists of:

  • consolidating a rare earth price index based on transaction data from the Baotou Rare Earth Products Exchange and verified commercial operations;
  • ensuring that this index covers the most relevant products for magnets and advanced technologies (lanthanum, cerium, praseodymium, neodymium and others);
  • and integrating it into China’s official financial information infrastructure: China Financial Information Network, Xinhua Finance professional terminals and app, as well as the exchange’s own channels.

With this move, China achieves several goals at once: it provides its companies with a coherent internal reference for contracts, hedging and financial planning; it gives the state a numerical basis for decisions on quotas, licences and market stabilisation; it reinforces the message that the centre from which the rare earths market is read is located in its own industrial hub, not in an external reference.

China is thus deepening its own rare earths governance framework: it dominates extraction and processing; it retains the ability to adjust flows through exports; and it steers price interpretation through an index anchored in Baotou.

This approach fits with what we develop in “For China, minerals were, are and will always be strategic” , where we show how the country integrates resources, processing, pricing and industrial policy into a single structure of power.

5. The state as coordinator: prices, risk and demand

The challenge facing investors and governments is strikingly similar, even if it is expressed in different languages. Midstream and critical by product recovery projects:

  • require very high investment;
  • have long construction and ramp-up cycles; and
  • are particularly sensitive to price cycles when there is a dominant actor with significant market power.

When prices remain below a certain level for years the internal rate of return deteriorates, banks reduce their exposure, new projects are postponed or cancelled, and dependence on the dominant supplier is prolonged.

Faced with this risk, the approach the US Treasury is adopting can be summarised in three coordinating functions:

1) Coordinating the physical supply side

  • supporting projects such as Crucible and other midstream facilities;
  • integrating neighbours and partners into supply corridors (United States, Mexico, Peru, EU), aligned with the new critical minerals list and the 2025 NSS.

2) Coordinating an anchor demand club

  • working with the G7, EU, Japan, Korea, India and others so that part of their future demand is structured through long term contracts;
  • designing instruments that distribute price risk (floors, reserves, special contracts, public bank support).

3) Coordinating price and risk instruments

  • exploring price floors and related support schemes;
  • studying purchase mechanisms for strategic reserves;
  • linking public and private banks so that financing responds to a security project logic, not only to the spot cycle.

In this configuration, the state is no longer only a producer, regulator or shareholder. It becomes a facilitator and coordinator of an architecture in which: extraction is embedded in coherent value chains; midstream finds sustainable financing; buyers understand what they are underwriting; and the risk that a downcycle dismantles the entire chain is reduced.

It is the type of state role we describe in the book Mining Is Dead. Long Live Geopolitical Mining , where we argue that, in the new geopolitical mining landscape, the most effective state is the one that coordinates institutions, incentives and material flows, rather than trying to control each link in isolation.

6. Latin America: between corridor and architecture

In Latin America, these moves raise both questions and opportunities.

Mexico stands out with a particular profile. It participates in the finance meeting where mechanisms and resilient chains are discussed; it is explicitly named as an origin of zinc and lead concentrates for the Tennessee plant, according to Korea Zinc; and it exports large volumes of silver and other refined metals to the United States, which in 2025 added silver to its critical minerals list. Mining, industrial base and geopolitical proximity place Mexico squarely inside the architecture the United States is trying to coordinate.

Chile and Peru are fundamental in copper and, in Chile’s case, in lithium. A large share of their exports leaves as concentrate or intermediate products, with heavy dependence on Asia, and particularly China, for subsequent processing. Midstream potential exists, but it requires institutional frameworks, demand agreements and investment decisions that relocate part of the chain within the region or link it into coordinated architectures with other poles.

Cases such as Panama, with the Cobre Panamá project on hold, show how decisions on individual projects can no longer be read purely as national debates. They affect and are affected by a context in which global critical mineral chains are treated as part of economic and political security, not just sectoral policy.

In this setting, the question for Latin American states goes beyond “state control, yes or no?”:

What role does each country want to play in an architecture where extraction, processing, demand and pricing mechanisms are increasingly decided through coordination?

Countries that remain solely exporters of concentrate will continue to be essential, but will stay outside the rooms where strategic corridors are defined, price references are consolidated, and investment risk instruments are negotiated.

Those that manage to combine mining, some industrial capacity and credible demand agreements will move closer to the position Mexico is beginning to occupy in the North American strategy: an actor that contributes mineral, manufacturing and a direct connection into the market that is rewriting its critical minerals security policy.

7. What comes next: follow the play

For those observing this process from the vantage point of policy, investment or the region, several developments merit close attention:

  • the evolution of price and risk instruments emerging from the Treasury’s conversations with its partners;
  • the pipeline of midstream and recycling projects that move from announcement to built, operating capacity;
  • the degree to which the Baotou index is adopted in commercial contracts and regulatory frameworks, and how Western indices respond;
  • whether Latin American countries choose to remain only as feedstock suppliers or seek a place in the coordination of chains, prices and demand.

Ultimately, the question running through these three stories is simple and demanding:

Who is building a system capable of sustaining its industrial, technological and defence base when prices move, logistics tighten and strategic competition uses every available tool?

The Treasury in Washington, the index in Baotou and the plant in Tennessee are the first visible pieces of that answer.

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