• Ionic Rare Earths (ASX:IXR) has positioned itself advantageously following China's export restrictions on seven medium and heavy rare earths implemented in April 2025, with the company experiencing increased inquiry for its dysprosium and terbium production capabilities from its Belfast recycling facilities.
• The company operates through three primary channels - magnet recycling and refining capacity, a large ionic absorption clay upstream deposit, and strategic joint ventures including the Viridion partnership in Brazil for developing refining and recycling capabilities in South America.
• Ionic has secured £11 million from the UK government's supply chain initiative and is progressing toward additional grant funding through the APC (Advanced Propulsion Centre), while also pursuing substantial capital packages through Brazil's BNDES and FINEP programs for the Viridion joint venture.
• The company's proprietary intellectual property for magnet recycling enables production of separated oxides with consistent quality, differentiating it from competitors, while the technology can be rapidly deployed across multiple facilities globally.
• Recent US Department of Defense & Apple investments in MP Materials and Apple's supply chain diversification efforts have created significant opportunities for complementary rare earth suppliers, with Ionic's heavy rare earth production capabilities filling critical gaps in non-Chinese supply chains for defense and advanced manufacturing applications.

The rare earth elements sector is experiencing a fundamental transformation driven by geopolitical tensions, supply chain security concerns, and rapidly expanding demand from advanced manufacturing sectors. Ionic Rare Earths represents a compelling investment opportunity within this strategic materials space, positioned to capitalize on the urgent need for Western supply chain diversification while offering multiple revenue streams across recycling, refining, and upstream production capabilities.

Ionic Rare Earth's Managing Director Tim Harrison recently outlined the company's strategic position following significant market developments, stating:

"Since the export restrictions were implemented in April of this year, it's just been a sequence of sort of crescendo events that have sort of led to stark, huge investment or huge paradigm shift in rare earths."

This paradigm shift has created immediate opportunities for companies with established technology and operational capabilities outside Chinese supply chains.

Market Dynamics

The rare earth elements market has undergone dramatic changes in 2025, beginning with China's implementation of export restrictions on seven medium and heavy rare earth elements in April. These restrictions, affecting elements crucial for magnet production including dysprosium and terbium, have created supply shortages and price premiums throughout Western supply chains.

The US Department of Defense's recent investment in MP Materials, featuring floor pricing for neodymium-praseodymium (NDPR) at $110 per kilogram, represents approximately a 100% premium when factoring in Chinese VAT. This commitment demonstrates the strategic priority placed on securing domestic rare earth capabilities and establishes pricing frameworks that significantly improve project economics for alternative suppliers.

Harrison noted, "The customer base now looking to support these new supply chains. Apple announcing the deal last week with MP Materials bodes well for the rest of us looking at ex-Chinese supply."

Apple's subsequent supply agreement with MP Materials further validates the customer demand for non-Chinese supply chains. This trend suggests major end-users are willing to pay premiums for supply chain security and are actively seeking diversified sourcing strategies.

The defense sector represents a particularly attractive market, with rare earth requirements for military applications commanding significant premiums and offering long-term contract stability. Ionic's UK operations provide NATO-aligned supply chain security, while the company's technology enables production of specialized rare earth compositions required for defense applications.

Electric vehicle adoption continues driving demand for permanent magnet motors, while offshore wind development requires large quantities of rare earth magnets for direct-drive generators. Both sectors prioritize supply chain security and are increasingly willing to pay premiums for Western-sourced materials.

Technology Platform & Competitive Advantages

Ionic Rare Earths has developed proprietary technology for magnet recycling that produces separated oxides, enabling precise control over rare earth compositions required for high-performance magnet applications. The company's technology platform addresses critical gaps in Western supply chains, particularly for heavy rare earths essential for defense applications, electric vehicles, and wind turbine systems.

The recycling process developed in Belfast serves as a scalable template that can be rapidly deployed globally. This scalability reduces development risks and capital requirements for expansion into new markets. Harrison explained:

"On recycling, we'll be able to rapidly deploy recycling in Brazil. So what we do in Brazil will be a natural beneficiary of all of the work in Belfast."

The company's technology differentiation becomes apparent in product quality and consistency. Unlike competitors producing mixed rare earth concentrates, Ionic's separated oxide production enables magnet manufacturers to achieve specific performance characteristics required for advanced applications. This capability has attracted significant customer interest, with the company reporting substantial inbound inquiry following the Chinese export restrictions.

Interview with Managing Director, Tim Harrison

Geographic Diversification

Ionic Rare Earths has established operations across multiple jurisdictions, reducing single-country risk while accessing different market opportunities and funding sources. The UK operation in Belfast provides the technology foundation and serves European markets, while the Viridion joint venture in Brazil positions the company in South America's growing rare earth sector.

The Brazil strategy centers on developing the Colossus ionic absorption clay project. This partnership combines Viridis's upstream resource with Ionic's downstream processing capabilities, creating an integrated supply chain within Brazil. The company has already demonstrated operational capability by recycling Brazilian-sourced magnets through Belfast and delivering separated oxides to Brazilian supply chain partners.

US market expansion represents the largest opportunity, driven by defense spending priorities and reshoring initiatives. The company has been actively engaging with stakeholders in Washington DC and potential partners throughout 2025, positioning for rapid deployment once funding arrangements are finalized.

Financial Framework and Funding

The rare earth sector's strategic importance has unlocked government funding mechanisms previously unavailable to mineral processing companies. Ionic has secured £11 million from the UK government's Circular Economy Initiative and is progressing toward additional grant funding for the Belfast commercial facility, estimated at £85 million total project cost.

In Brazil, the Viridion joint venture is pursuing substantial funding through BNDES and FINEP programs, with announcements expected in the near term. Harrison indicated:

"Hopefully we're in a position to announce the quantum of that funding, which will then help us develop a rare earth refining and recycling hub."

Customer prepayment structures are emerging as end-users seek to secure supply, while strategic investors including technology companies are directly funding capacity development to ensure access to critical materials. The Brazilian government's support for value-added processing aligns with Ionic's downstream strategy. The funding landscape for rare earth projects has fundamentally changed, with government backing reducing traditional project financing risks.

Operational Timeline

Ionic Rare Earths has established clear operational milestones across its geographic footprint. The Belfast facility is progressing toward commercial production, with grant funding decisions expected to enable construction commencement. The company's feasibility study provides the technical and economic framework for rapid scale-up once funding is secured.

In Brazil, the Viridion partnership targets recycling operations by late 2026, with separated oxide production capability. The permitting requirements for recycling facilities are significantly streamlined compared to mining operations, enabling faster deployment timelines.

US expansion discussions are advancing, with the company's technology platform enabling rapid deployment once partnership and funding arrangements are finalized. The urgency created by supply shortages has accelerated decision-making timelines among potential partners and customers.

The Investment Thesis for Ionic Rare Earths

• Supply chain security premium: Position in rare earth recycling and refining provides exposure to geopolitically-driven price premiums as Western economies prioritize supply chain independence from China
• Technology moat with scalability: Proprietary separated oxide production technology creates competitive differentiation while enabling rapid global deployment using proven Belfast template
• Government-backed project financing: Strategic importance of rare earths unlocks government funding mechanisms, reducing traditional project finance risks and dilution concerns
• Multiple market exposure: Diversified operations across UK, Brazil, and planned US expansion provide access to different customer bases, funding sources, and regulatory frameworks
• Heavy rare earth specialization: Focus on dysprosium and terbium production addresses the most constrained segment of rare earth markets with highest strategic value
• Customer prepayment potential: End-user urgency for supply security creates opportunities for advance payment structures and long-term contracts at premium pricing
• Defense sector access: NATO-aligned supply chain positioning enables access to defense contracts with stable, long-term pricing and strategic customer relationships
• Recycling feedstock advantages: Magnet recycling model reduces dependence on mining permits and environmental approvals while accessing urban waste streams
• Joint venture risk mitigation: Partnership structures with established players provide operational expertise and local market access while sharing development costs
• Timing advantage: Market entry during supply disruption period enables premium pricing and preferential customer access before new capacity normalizes markets

Rare Earth Supply Chain Transformation

The global rare earth supply chain is experiencing its most significant transformation since China consolidated market control in the 1990s. China's April 2025 export restrictions on seven strategic rare earth elements have exposed the vulnerability of Western technology supply chains and triggered emergency responses from governments and corporations alike. The US Department of Defense's commitment to 100% price premiums and Apple's direct supply chain investments signal a fundamental shift from cost-optimization to security-prioritization in strategic materials procurement.

This transformation extends beyond simple supply diversification. The emerging Western rare earth ecosystem requires different business models, with recycling and downstream processing commanding higher strategic value than traditional mining operations. Companies positioned in critical processing stages benefit from government support, customer prepayment opportunities, and premium pricing structures previously unavailable in commodity markets.

The defense applications driving much of this transformation demand NATO-aligned supply chains, creating geographic preferences that transcend pure economics. Harrison captured the essence of this shift:

"The reality is that this will happen again. Anybody who thinks that this won't happen again is kidding themselves. The supply chain is fractured. It isn't resilient and the only way to get resilience is to take a portion of that supply chain in-house."

Key Takeaways & Implications

Rare earth demand is expanding beyond traditional applications into emerging sectors including robotics, autonomous vehicles, and advanced defense systems. The company's heavy rare earth production capabilities address the most constrained segment of the market, with dysprosium and terbium essential for high-temperature magnet applications.

Ionic Rare Earths represents a unique opportunity to participate in this transformation through established technology, diversified operations, and strategic positioning during a critical supply shortage period. The company's separated oxide production capabilities address specific market needs that complement rather than compete with larger primary producers, while government funding support reduces traditional development risks. The convergence of customer urgency, government backing, and proven technology creates conditions for accelerated value creation as Western supply chains prioritize security and resilience over cost optimization.