The 60% Rule: How to Play the G7's New Rare-Earth Doctrine
The G7 just put a hard cap on Chinese rare-earth dependence. We rank seven ways to own the build-out, and one we'd sell into the hype.
60% G7 Cap on Single-Country Supply by 2030
~90% China's Share of Separation & Magnet-Making
US$74bn 195 Critical-Minerals Projects Announced in 2026
38.8x MP Materials EV/Revenue — the One We'd Trim
The Doctrine at a Glance
On 17 June the G7 did something the sector has wanted for a decade: it put a number on de-risking. Meeting at Évian, leaders agreed that no single country should supply more than 60% of their rare-earth and permanent-magnet imports by 2030, with an ambition to push that toward 50% "as soon as possible." Translation: China, which still controls roughly 90% of separation and magnet-making, has to be designed out of the supply chain on a legislated timetable. An IEA-led coordination platform, pilot stockpiles for lithium and nickel, and 195 critical-minerals projects worth ~US$74bn already announced in 2026 turn what used to be a talking point into procurement policy.
New to rare earths? Start here.
The money in rare earths is in the magnet metals. NdPr (neodymium-praseodymium) is the main revenue driver — the light rare-earth pair at the heart of every high-strength magnet. The "heavies" — dysprosium (Dy) and terbium (Tb) — are scarcer additives that let magnets survive high temperatures in EV motors and wind turbines. Deposits are measured in TREO (total rare earth oxides), and output in tpa (tonnes per annum). Dotted-underlined terms in this article have hover-over definitions. A full glossary sits at the bottom.
Our Thesis: Mispriced by Stage
Our theme this week is simple: the 60% Rule is a multi-year demand signal for ex-China rare-earth supply, and the market is mispricing it by stage. We screened the magnet-metals complex (NdPr-led, with the heavies dysprosium and terbium as the kicker) across producers, funded developers and earlier-stage plays on the ASX and US, holding jurisdiction and stage roughly constant so the names are actually comparable.
Key Takeaway
We're structurally constructive on the build-out. We're not constructive on paying 39x sales for it. Here's the ladder, from cash-flowing producers down to optionality, and the one name we'd be trimming.
Tier 1: The Producers You Can Actually Own Today
Lynas Rare Earths (ASX: LYC): the only ex-China benchmark that matters Accumulate
Lynas is the largest rare-earth producer outside China and the cleanest way to own the theme. Mt Weld now underpins a ~20-year mine life targeting 12,000 tpa of NdPr, with the ramp toward ~10,500 tpa underway, and H1 FY26 NPAT came in at A$80.2m as NdPr prices ran. At a market cap of roughly A$17.9bn (shares ~A$17.77 in mid-June), it isn't cheap, but it's the one name with separation capacity, real volumes and a balance sheet that the 60% Rule directly advantages. Every Western OEM that needs a non-Chinese magnet-metal contract has Lynas at the top of a very short list.
Our take: core holding, accumulate on weakness. The scarcity premium for actual ex-China oxide is structural, not a fad.
MP Materials (NYSE: MP): great asset, dangerous price Avoid / Trim
MP owns Mountain Pass, the only scaled rare-earth mine in the US, and is building out NdFeB magnet capacity backed by a 2025 Pentagon deal (a 15% DoD equity stake plus a 10-year magnet offtake with price-floor protection). The asset is genuinely strategic. The valuation is not investable. At a ~US$11.7bn market cap, MP trades on roughly 38.8x EV/revenue and a ~770x P/E against 2025 revenue of just US$275m and a net loss. This is a project developer priced like a monopoly that already exists.
And the froth is showing: MP fell more than 10% recently as talk of a US-China rare-earth understanding bled the geopolitical premium out of the stock, with insider selling adding to the unease. That's the tell. When a name needs the politics to keep escalating just to hold its multiple, the risk/reward is upside-down.
Our Take — Avoid / Trim
We love the mine, we'd sell the stock here. If you must own a US magnet champion, demand a far better entry, a détente headline or a capital raise. Priced for perfection into a policy timeline that is, by the G7's own admission, "ambitious."
Tier 2: Funded Developers — The FID-to-First-Production Window
This is where we think the risk-adjusted value sits. These names have cleared the financing valley of death, the single biggest killer of rare-earth juniors, and now offer construction-to-production re-rates against a backdrop of guaranteed policy demand.
Arafura Rare Earths (ASX: ARU): Australia's first ore-to-oxide, fully sanctioned Own
Arafura took FID on Nolans on 21 May, with construction tentatively slated to begin September 2026 on a vertically integrated A$1.23bn complex targeting ~4,440 tpa NdPr oxide over a 38-year life. Crucially, the financing is done, equity reached US$887m and the project hit its 80% contracted offtake target, and Nolans now carries priority status under the Australia-US critical-minerals framework, reinforced by a 5 June MoU with the NT government. At a ~A$1.25bn market cap, you're buying a sanctioned, government-backed builder, not a slide deck.
What we'd watch: the September construction start and drawdown of the debt facilities. Execution risk is real, but the policy tailwind and offtake book de-risk the thesis materially.
Iluka Resources (ASX: ILU): the refinery is the moat Own
Iluka is building Eneabba, Australia's first fully integrated rare-earth refinery, on the back of a A$1.65bn non-recourse government loan. As of June the project is past 50% construction, heading to ~75% by year-end, with commissioning now targeted for 2027 (slipped from 2026, note that). It has also locked a binding take-or-pay deal with a global automaker for ~1,200 tpa of magnet oxides including the heavies. Refining/separation, not digging, is the genuine chokepoint the 60% Rule is trying to fix, and Iluka is one of the few in the West actually building it, with a diversified mineral-sands business funding the wait.
Our take: the most underappreciated way to own processing capacity. Watch the 2027 commissioning timeline like a hawk, slippage is the risk.
Tier 3: Earlier-Stage Optionality — The Ionic-Clay Stories
For investors who want leverage and can stomach licensing and study risk, ionic and clay-hosted deposits are where the next districts are being drawn, Brazil for scale, and Western Australia for the heavies. All three names below screen well on grade or composition; all three still need permits, studies and capital.
Brazilian Rare Earths (ASX: BRE): grade that stops you in your tracks Speculative
BRE keeps hitting numbers that don't look real, a fresh 9km corridor at Bahia with a surface sample grading 39.6% TREO, the kind of grade that turns into a district rather than a deposit. The market has noticed: ~A$1.47bn market cap, up ~198% over the year. This is exploration-stage and will need to prove it can permit and process at scale, but the geological endowment is in a class of its own.
Our take: high-beta, high-conviction speculative exposure. Size it accordingly.
Meteoric Resources (ASX: MEI): Caldeira nears the decision point Speculative
Meteoric's Caldeira ionic-clay project carries a 1.5Bt global resource at 2,359 ppm TREO and a probable reserve of 103Mt at 4,091 ppm, with a US$50m EFA letter of support already in hand. The catalyst is dated and near: the SEMAD Installation Licence is on track for the December-quarter 2026, which would tee up an FID shortly after. Ionic clays are the low-capex, heavies-rich part of the complex the West badly needs.
What we'd watch: the LI ruling. A green light flips Meteoric from explorer to builder and should re-rate it toward the funded-developer tier above.
Victory Metals (ASX: VTM): the purest heavies play on the list Speculative
If the heavies, dysprosium and terbium, are the kicker in this theme, Victory is the most direct way to own them. North Stanmore, near Cue in WA, is Australia's largest clay-hosted heavy rare-earth project: a 321Mt JORC resource supporting a 60+ year mine life, with heavy-to-total rare-earth ratios averaging ~39% and running as high as 83%, among the most HREE-enriched clay deposits anywhere, with scandium, hafnium and gallium credits on top. Recent metallurgy has been the standout: leach testwork delivered a 48x concentrate upgrade to 5.9% TREO with extraction rates above 70% for the high-value heavies, and roughly 80% of rare earths leached within 30 minutes. The strategic money has noticed too, a non-binding US EXIM letter of interest for up to US$190m of project financing on an indicative 15-year term, plus an offtake letter of intent with Sumitomo covering up to 30% of production (1,000 tpa of mixed rare-earth carbonate, including up to 50 tpa of DyTb product), with pilot-plant sales targeted from 2027. At a ~A$223m market cap it is by far the smallest name here, and the pre-feasibility study, due out of the June quarter, is the near-term catalyst that either validates the flowsheet economics or doesn't.
What we'd watch: the PFS release and the conversion of the EXIM and Sumitomo letters from non-binding to binding. Micro-cap risk applies: this is the highest-torque, lowest-liquidity name in the basket.
Disclosure: Cashu Group and/or its associates hold shares in Victory Metals (ASX: VTM) and stand to benefit from any increase in its share price.
The One Risk That Matters
The whole basket shares a single macro fault line: US-China détente. Any credible rare-earth supply agreement between Washington and Beijing drains the geopolitical premium fast, MP's recent drop is the live preview. But here's our read: the 60% Rule is now legislated procurement policy with a 2030 deadline and US$74bn of committed projects behind it. A trade thaw dents the froth (which is precisely why we'd avoid the frothiest name, MP); it does not unwind a Western industrial-policy commitment to build the supply chain. We'd use détente sell-offs to add to the producers and funded developers, not to abandon the theme.
Bottom Line & What to Watch
Bottom Line
Own the cash-flowing producer (Lynas), the funded builders (Arafura, Iluka) for the re-rate, and a measured slice of clay-hosted optionality (BRE, MEI, VTM) for torque, with VTM as the pure heavies expression. Avoid paying monopoly multiples for a developer (MP). The 60% Rule is the demand curve. Buy the supply.
1. Arafura — September 2026
Construction start at Nolans and drawdown of the debt facilities. Execution begins.
2. Victory Metals — PFS
Due out of the June quarter. Validates the flowsheet economics — or doesn't. Watch EXIM and Sumitomo letters converting to binding.
3. Meteoric — Q4 2026
The SEMAD Installation Licence ruling. A green light flips MEI from explorer to builder.
4. Iluka — 2027 Commissioning
Eneabba is past 50% construction, heading to ~75% by year-end. Slippage is the risk.
📖 Glossary — Plain-English Reference
Every dotted-underlined term in this article also has a hover tooltip. This glossary groups them for quick reference.
The Metals
Rare earths17 metallic elements essential to magnets, EVs, wind turbines, and defence. Not rare in the crust — rare in economic concentrations.
NdPrNeodymium-praseodymium — the light rare-earth pair at the heart of permanent magnets. The main revenue driver.
The heavies (Dy, Tb)Dysprosium and terbium — scarce additives that let magnets survive high temperatures. The West's most acute supply gap.
HREEHeavy Rare Earth Elements — the scarcer, higher-value half of the rare-earth family.
NdFeBNeodymium-iron-boron — the chemistry of the world's strongest commercial permanent magnets.
SeparationThe chemical step that splits mixed rare-earth concentrate into individual elements. The chokepoint China dominates.
Units & Measures
TREOTotal Rare Earth Oxides — the standard measure of rare-earth content in a deposit or sample.
tpaTonnes per annum — annual production capacity.
ppmParts per million. 10,000 ppm = 1%.
Bt / MtBillion tonnes / million tonnes — resource size units.
Project Stages & Deals
FIDFinal Investment Decision — the formal board go-ahead moving a project from studies to construction.
PFSPre-feasibility study — tests whether a project's flowsheet and economics stack up.
JORC resourceA mineral resource reported under Australia's JORC Code — the disclosure standard for what's in the ground.
OfftakeA contract where a customer agrees in advance to buy future production. Banks lend against offtakes.
Take-or-payThe strongest offtake: the customer pays for contracted volumes even without taking delivery.
Valley of deathThe funding gap between a positive study and construction — where most juniors die.
Non-recourse loanLender's claim is limited to the project's assets — the wider business isn't on the hook.
MoU / LOIMemorandum of understanding / letter of intent — formal but typically non-binding agreements.
Ionic-clay depositRare earths weakly bound to clay, extractable with mild salt solutions. Low capex, often heavies-rich.
SEMAD LIMinas Gerais (Brazil) state environmental Installation Licence — the regulatory gate before construction.
Valuation & Market Terms
Market capShare price × shares on issue — what the whole company is valued at.
EV/revenueEnterprise value ÷ annual revenue. 38.8x means ~39 dollars paid per dollar of yearly sales.
P/EPrice-to-earnings ratio. Long-run market average is roughly 15-20x.
NPATNet profit after tax — bottom-line earnings.
High-betaMoves more than the market — amplified in both directions.
Micro-capA very small listed company — typically higher risk and lower liquidity.
Institutions
G7The Group of Seven — US, UK, Canada, France, Germany, Italy, Japan (plus the EU).
IEAInternational Energy Agency — Paris-based inter-governmental body coordinating the critical-minerals platform.
EXIMExport-Import Bank of the United States — the US export credit agency.
EFAExport Finance Australia — Australia's export credit agency.
DoDUS Department of Defense (the Pentagon).
OEMOriginal equipment manufacturer — e.g. carmakers who buy magnet metals.
Sources: G7 Évian Summit communiqué — June 2026 | Company ASX/NYSE announcements and financial reports | Public market data as at late June 2026 | Cashu Research analysis
General advice warning: This article is prepared by Cashu Research (AFSL 485946) and contains general information and commentary only. It does not constitute personal financial product advice and does not take into account your objectives, financial situation or needs. It is not an offer or recommendation to buy or sell any security. Consider the appropriateness of the information and seek professional advice before acting. Past performance and forward-looking statements are not reliable indicators of future performance. Prices, market caps and project details cited are drawn from public sources as at late June 2026 and may have since changed.
Disclosure: Cashu Research and/or its associates hold shares in Victory Metals (ASX: VTM) and stand to benefit from any increase in its share price. To Cashu Research's knowledge, none of the other companies featured is a current Cashu Research client or under formal Cashu coverage. Cashu and its associates may hold positions in other securities mentioned.
Notice to US persons: MP Materials (NYSE: MP) is a US-listed security; the ASX-listed names discussed may not be registered for sale in all jurisdictions. This commentary is not directed at, and the securities discussed may not be available to, US persons except in accordance with applicable law. US persons should not rely on this material and should consult a locally licensed adviser.