Summary US-China trade détente continues with Beijing suspending critical mineral export controls through November 2026 while Washington reduces tariffs and delays affiliate rules. EV battery nickel value reaches second-highest on record as European markets surge 33% year-over-year, driving cobalt to 30-month highs despite oversupply fundamentals. USGS World Minerals Outlook projects doubling of lithium and cobalt production capacity by 2029, while gallium, palladium, and platinum remain stable. Asian critical minerals agreements with Japan, Malaysia, and Thailand advance supply chain diversification as Western governments prioritize security over market efficiency. Battery metals show divergent signals with lithium stabilizing near recent gains while nickel faces continued surplus pressures.
Key Points
US-China Trade Deal Suspends Critical Mineral Export Controls
China suspended global implementation of October 2025 export controls on rare earth elements and critical minerals through November 2026, issuing general licenses for gallium, germanium, antimony, and graphite exports. The agreement effectively removes controls China imposed since 2023, while Washington reduced fentanyl-related tariffs by 10% and suspended the 50% Affiliates Rule. The deal provides tactical breathing room but does not resolve structural supply chain dependencies, with both sides maintaining ability to reimpose restrictions after November 2026.
EV Battery Nickel and Cobalt Values Surge to Multi-Year Highs
EV battery nickel spending reached $1.71 billion on a rolling three-month basis through October, the second-highest on record, while cobalt hit 30-month highs driven by European market growth of 33% year-over-year. US buyers pulled forward purchases before retail incentive expiry in September, contributing to the surge. Despite strong value performance, nickel sulfate prices averaged only $18,000/tonne in October, well below the $30,000 levels seen in 2022, highlighting volume rather than price-driven gains.
USGS Projects Doubling of Critical Battery Metal Capacity by 2029
The first World Minerals Outlook forecasts global lithium and cobalt production capacity will double from 2025-2029, driven by expected battery demand growth. Gallium, palladium, platinum, and helium capacity expected to remain stable. North American cobalt production has stalled due to Chinese price reductions, while US titanium sponge capacity was idled, increasing reliance on Japanese imports. The analysis identifies where US domestic capacity may not meet projected demand.
Trump Secures Asian Critical Minerals Partnerships
President Trump's Asia trip yielded critical minerals cooperation agreements with Japan, Malaysia, and Thailand, alongside the China trade deal. The US-Japan Framework targets supply chain diversification for rare earths and critical minerals, while Malaysia and Thailand MOUs provide quarterly information sharing and investment prioritization. These agreements advance US strategy to reduce dependence on Chinese-dominated supply chains through allied partnerships.
Why It Matters
Tactical Pause, Strategic Competition Continues
The US-China agreement provides essential inventory-building time but maintains underlying structural competition. China retains 89% of rare earth refining capacity and near-monopoly in permanent magnet production. Western governments now recognize supply chain decoupling as inevitable, using this window to accelerate domestic capacity development and allied partnerships rather than seeking permanent accommodation.
European Market Momentum Shifts Battery Metal Dynamics
Europe's emergence as fastest-growing EV market in 2025 (+33% vs +30% in Asia Pacific) alters global battery metal demand patterns. The continent's regulatory environment and infrastructure investments drive premium battery chemistry adoption, supporting higher cobalt and nickel content despite Chinese LFP market share gains elsewhere.
Capacity Buildout Timeline Crystallizes Western Options
USGS projections confirm 2025-2029 as critical window for establishing non-Chinese production alternatives. Doubling of lithium and cobalt capacity provides diversification opportunities, but requires sustained government support given current price volatility that has stalled multiple projects across Australia and North America.
Watchlist Companies
Company/Entity | Context | Homepage/Link |
|---|---|---|
MP Materials (MP) | Only US rare earth producer with $400M DOD investment, benefits from trade deal certainty but remains exposed to Chinese processing dominance | |
Tesla (TSLA) | Leading EV manufacturer driving battery nickel demand growth; European expansion particularly strong in current market surge | |
Vale (VALE) | Major nickel producer benefits from EV battery demand but faces Indonesian supply competition; stock sensitive to nickel price volatility | |
Glencore (GLEN.L) | Cobalt market leader with DRC operations; reduced production 26.7% year-over-year but benefits from current price recovery | |
Albemarle (ALB) | Lithium leader positioned for capacity doubling cycle; benefits from USGS outlook supporting long-term demand fundamentals | |
Lynas Rare Earths (ASX:LYC) | Major ex-China REE processor positioned for government partnerships under new supply chain agreements |
Critical Minerals Spotlight
Geopolitics — Managed Competition: US-China agreement demonstrates both sides prefer controlled tension over economic warfare, but fundamental strategic rivalry continues.
Markets — Value Recovery: European EV surge drives battery metal values despite oversupply fundamentals, highlighting regional demand variation importance.
Supply — Capacity Race: 2025-2029 window critical for establishing alternative supply chains before Chinese control becomes permanently entrenched.
Action Points
Leverage Inventory Window: Manufacturers should maximize critical mineral stockpiling through November 2026 while general licenses remain active, as restrictions likely return with enhanced scope post-agreement.
Track European Momentum: Monitor European EV market growth and battery chemistry preferences as region becomes key demand driver for premium battery materials, potentially offsetting Chinese LFP adoption.
Engage Government Programs: Companies should accelerate applications for USGS-identified capacity gaps and DOD partnerships, as government support becomes essential for project viability amid volatile commodity pricing.
This briefing is for informational purposes only and is not legal, investment or policy advice. Information is believed accurate at the time of publication; sources are publicly available.
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