This week, FOB quotations in the ex-China rare earth market generally declined, with varieties such as terbium oxide and terbium metal seeing noticeable drops. However, affected by policies and weak demand, actual transaction volumes were thin, and heavy rare earth prices stayed high. Meanwhile, supply chain restructuring moves were frequent: resources at Namibia's Kameelburg increased by another 35%, Japanese capital officially entered the Lofdal project; Malaysia considered conditionally liberalizing raw ore exports; US-based Energy Fuels advanced the final investment decision for the Donald project in Australia, and Lockheed Martin signed a long-term scandium supply agreement. A survey in Japan showed that 80% of manufacturing executives considered rare earth procurement a major risk, highlighting anxiety in the industry chain.

[SMM Rare Earth Daily Review: Rare Earth Prices Remain in the Doldrums, Intense Tug-of-War Between Upstream and Downstream] Overall, hampered by weak downstream orders and low purchase willingness from magnetic material enterprises when inquiring and sourcing, rare earth market inquiries continue to be under pressure, with an intense tug-of-war between upstream and downstream. Additionally, as Pr-Nd oxide futures prices keep softening, rare earth market prices remain in the doldrums, and actual trading performance is poor. In the short term, affected by the stalemate in market trading, Pr-Nd product prices are expected to move sideways.

[SMM Rare Earth Daily Review: Rare Earth Prices in the Doldrums, Tug-of-War Between Buyers and Sellers Continues] Overall, inquiry activity in the rare earth market is currently low, and combined with the decline in futures prices for Pr-Nd oxide, rare earth prices are in the doldrums. However, upstream producers' quotes remain relatively firm, with limited actual declines, and the tug-of-war between upstream and downstream is intense. In the short term, affected by the stalemate in market trading, Pr-Nd product prices are likely to move sideways within a narrow range.

Background: Pangkalpinang Case Triggers Tighter Regulation of Rare Earth Elements in Indonesia’s Mineral Exports Recently, the detection issues surrounding Indonesia’s rare earth elements, or Logam Tanah Jarang (LTJ) , primarily stemmed from stricter government oversight of related mineral product exports following the Pangkalpinang case. The initial case involved an anomalous export of approximately 390 mt of materials containing rare earth elements and implicated PT Putraprima Mineral Mandiri, PT Sucofindo, and the Pangkalpinang Customs Office. It raised a broader regulatory question: when a mineral product contains rare earth or radioactive elements as associated elements, should the product continue to be treated under its primary export commodity classification or be subject to rare earth-related export restrictions. This issue quickly rippled through Indonesia’s broader mineral export chain. High-grade NPI, NPI, MHP, alumina, and tin-related products are not themselves exported as rare earth products, but they may contain trace amounts of associated rare earth elements or radioactive elements. Consequently, with regulatory parameters not yet fully clarified, surveyors and customs tended to be cautious, causing a slowdown in LS report issuance and customs clearance for some shipments. For the nickel industry, the incident quickly became a market focal point, as exports of high-grade NPI, NPI, and MHP were all affected by additional testing requirements. Market feedback indicated that some cargoes experienced short-term port detentions or shipment disruptions, and the impact was not confined to a single enterprise. Some traders also reported that related cargoes faced shipment difficulties during the period of disruption. Why Rare Earth Elements Matter: Indonesia Strengthens Value Controls Over Critical Minerals Before Export Rare earth elements have drawn attention due to their extensive application in high-value-added fields such as EVs, permanent magnet materials, electronic products, new energy, and national defense-related materials. For Indonesia, this issue is not only about export customs clearance but also about resource value control. The Indonesian government is placing increasing emphasis on identifying, regulating, and protecting the value of critical mineral resources before they leave the country. The problem is that rare earth elements often do not exist as standalone products but appear as associated or trace elements in other minerals. If all products containing small amounts of rare earth elements were treated as restricted rare earth exports, normal mineral exports could be disrupted; yet if rare earth content is not identified or regulated at all, Indonesia could lose control over the value of strategic minerals. The commonly recognized 17 rare earth elements include: lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, yttrium, and scandium . In recent market discussions, the testing scope mainly involved these 17 rare earth elements, while radioactive elements such as thorium and uranium also became items of inspection concern. Rare earth elements are often not produced as independent products but exist in other minerals in the form of associated elements . This also creates a regulatory gray area. If every export shipment containing trace rare earth elements were treated as rare earth exports, many normal mineral shipments could face delays. But if associated rare earth content is not tested at all, Indonesia risks the loss of strategic mineral value. Therefore, the market’s focus is not merely on whether nickel product exports are disrupted; the larger question is whether Indonesia is entering a new regulatory phase requiring more detailed chemical composition verification for mineral exports. What Happened in the Market: LS Report Delays and Additional Testing Disrupted Mineral Shipments According to SMM’s market understanding, the recent testing requirements temporarily affected the export of some processed mineral products from Indonesia. For nickel products, the impact was mainly reflected in three aspects. Delays in LS report issuance. LS reports are critical documents in the export process, and delays in their issuance directly affect customs clearance and cargo release. According to SMM’s understanding as of July 24, relevant authorities also noted that laboratory testing preparations remained relatively limited, and due to differing interpretations of how to handle rare earth elements during export verification, 102 LS survey reports were still pending. Short-term port detentions for some cargoes. Market feedback indicated that shipments of some NPI and MHP cargoes were affected, and some traders also mentioned that QMB-related cargoes faced shipment difficulties during the disruption. Export enterprises required to organize additional testing. The government required testing of 17 rare earth elements and radioactive elements in certain products, and some enterprises were still awaiting testing results or further clarity from surveyors and customs. Thus, this incident is not a direct export ban on nickel products but a short-term administrative and testing bottleneck arising from unclear regulatory parameters for associated rare earth and radioactive elements. Impact on the Nickel Market: NPI and Other Nickel Product Exports Mainly Affected by Shipment Pace Disruptions For the high-grade NPI and NPI market, the short-term impact was mainly on shipment pace rather than production. Some port cargoes experienced delays due to affected LS reports and customs clearance processes. According to SMM’s latest understanding, LS survey reports were being released in batches, and some high-grade NPI cargoes at ports had begun to be released progressively. As the current disruption primarily occurred in export documentation and customs clearance, the direct impact on NPI production was limited. If LS report issuance and customs clearance continue to normalize, the impact on the overall NPI market is expected to be limited. At this stage, the issue appears more as a short-term export process disruption rather than a confirmed structural restriction on NPI exports. For the MHP market, some cargoes were also affected by the rare earth-related testing requirements. According to market feedback, some MHP shipments faced short-term inability to ship smoothly during the disruption. Similar to NPI, the core issues centered on LS report issuance, testing requirements, and customs clearance, rather than direct restrictions on MHP production. The latest Indonesian government coordination outcome clarified that export procedures should refer to the primary mineral product and its derivative attributes, rather than automatically treating associated rare earth elements or radioactive elements in the product as grounds for export restrictions. Therefore, for MHP, the key lies in whether the product can continue to be classified and exported based on its primary product attributes. Market Feedback and Industry Concerns: Unclear Technical Standards Create Uncertainty for Export Enterprises Market feedback indicated that rare earth-related testing requirements had already caused real disruptions to Indonesia’s mineral product export chain. According to Arif Perdanakusumah, Chairman of FINI (Indonesian Nickel Smelting Association), at least 120 bulk commodity vessels were unable to sail or depart due to the need to test for rare earth content. He noted that this situation caused losses not only for enterprises but also for the government, primarily because there were still no clear regulations providing technical guidance on rare earth content thresholds. Industry associations generally understood that this policy was part of the government’s effort to improve mineral governance, but they also stressed that technical implementation still needed re-examination, particularly given that rare earth elements in many mineral products exist only as associated or trace elements rather than primary products. This distinction is especially important for commodities such as nickel, bauxite, tin, and copper, as enterprises' permits and processing designs are primarily centered on the main minerals, and rare earth elements may merely be naturally occurring by-products or associated elements. The bauxite industry also raised similar concerns. Ronald Sulistyanto, Chairman of ABI (Indonesian Bauxite Association), stated that the rare earth issue should be addressed based on its technical nature and handled by the Ministry of Energy and Mineral Resources, as the ministry possesses the relevant mining and mineral expertise. He emphasized that the key question is whether rare earth elements are primary products or merely associated elements. If they are primary products, relevant export restrictions could apply; but if they are only associated elements, more detailed technical clarification is needed rather than causing widespread export disruptions. Sari Esayanti, Executive Director of IMA (Indonesian Mining Association), also pointed out that most mining enterprises still center on the primary commodities covered by their permits and existing processing designs. In multiple commodities such as tin, bauxite, nickel, and copper, rare earth elements are typically just associated elements. She also stated that most mining enterprises currently lack adequate facilities or technology to identify, separate, or economically utilize rare earth elements. Thus, new interpretations regarding rare earth element declarations or export obligations have created uncertainty for enterprises. From an industry perspective, the most urgent need currently is technical certainty. Enterprises require clearer parameters, testing methods, and declaration mechanisms so that all exporters, surveyors, and customs authorities can adopt uniform standards. Without consistent technical guidance, even if the current bottleneck gradually eases, similar shipment delays could still recur. Latest Government Developments and Resolution Direction: Primary Product Attributes Become the Core Clarification Point The most important development came from the Indonesian government’s coordination letter dated July 31, 2026. According to the document, the Coordinating Ministry for Economic Affairs convened a coordination meeting on July 30 to discuss export obstacles related to the presence of rare earth elements and/or radioactive elements in mineral products and their derivatives. Key points from the government coordination included: Exports of mineral products and their derivatives should still be conducted in accordance with existing trade regulations, including Minister of Trade Regulation No. 23/2023 on Export Policies and Arrangements and Minister of Trade Regulation No. 22/2023 on Prohibited Export Goods, with reference to subsequent amendments. Relevant regulations should be understood as applying to primary mineral products and their derivatives, rather than automatically applying to associated elements within these products. This is the most critical clarification for high-grade NPI, NPI, MHP, alumina, and other processed mineral products. If radioactive elements are present in the product, as long as they fall under naturally occurring radioactive material, i.e., NORM (Naturally Occurring Radioactive Material), exports can still proceed. This helps mitigate the risk of trace radioactive elements automatically causing export obstructions. Export enterprises, surveyors, and customs authorities should refer to the export attributes of the primary mineral product and its derivatives when handling exports. This provides a basis for the gradual resumption of LS report issuance and customs clearance. The Indonesian Attorney General’s Office will concurrently issue a legal opinion, to support the clarification of relevant regulatory interpretations. The government plans to accelerate the revision of relevant regulations, including Minister of Trade Regulation No. 23/2023, Minister of Trade Regulation No. 22/2023, and Minister of Energy and Mineral Resources Regulation No. 25/2018. Relevant discussions are expected to commence on August 3, 2026, targeting completion of revisions within approximately one week. SMM View: Short-Term Export Disruption, but Medium and Long-Term Signal of Tighter Mineral Oversight Released SMM believes that this rare earth testing incident is a short-term disruption but also an important policy signal. In the short term, as LS reports are progressively issued and customs enforcement parameters become clearer, the impact on NPI and MHP exports is expected to gradually ease. If cargo clearance continues to normalize, the impact on the overall nickel market supply-demand pattern is expected to be limited. However, the incident also demonstrates that Indonesia is strengthening its oversight of critical mineral element content, export documentation, and resource value protection. Even if this round of disruption is resolved relatively quickly, export enterprises may still face stricter testing requirements, clearer declaration obligations, and tighter coordinated supervision among agencies such as surveyors, customs, ESDM, and the Ministry of Trade in the future. Subsequent market focus should include: whether all previously delayed LS reports can be fully released. whether future cargoes will need to undergo complete testing for rare earth elements and radioactive elements. whether the government will clarify specific thresholds for rare earth elements, thorium, uranium, and NORM classification. whether the revised regulations can clearly distinguish between primary export products and associated trace elements. whether high-grade NPI, NPI, MHP, alumina, and tin-related products will face different enforcement standards. Overall, this incident should not be interpreted as Indonesia directly banning NPI or MHP exports, but rather as a process of regulatory clarification under the backdrop of strengthened oversight of rare earth and radioactive elements. If the subsequent implementation details are clarified quickly, the market impact will largely remain at the short-term level; if rules remain unclear, similar shipment delays and administrative friction could still recur.

Background: Pangkalpinang Case Triggered Wider REE Scrutiny Indonesia’s recent rare earth element (REE), or Logam Tanah Jarang (LTJ) , inspection issue appears to have been triggered by stricter government scrutiny following the Pangkalpinang case. The initial case was linked to alleged irregularities involving around 390 tonnes of REE-containing material and involved PT Putraprima Mineral Mandiri, PT Sucofindo, and the Pangkalpinang Customs office. This raised a broader regulatory question: when a mining product contains rare earth elements or radioactive elements as associated content, should it still be treated as its main export product, or should it fall under rare-earth-related export restrictions? This issue quickly affected Indonesia’s wider mineral export chain. Products such as NPI, ferronickel, MHP, alumina, and tin-related products are not exported as rare earth products. However, they may contain trace amounts of associated REE or radioactive elements. As a result, surveyors and customs became more cautious, causing delays in LS issuance and customs clearance for some cargoes. For the nickel industry, the issue became an immediate concern because both NPI/ferronickel and MHP exports were affected by additional testing requirements. Market feedback indicated that some cargoes were temporarily stuck, and the disruption was not limited to one company. Some traders also reported that QMB-related cargoes could not be shipped smoothly during the disruption period. Why REE Matters: Indonesia Moves to Protect Critical Mineral Value Before Export REE matters because rare earth elements are strategic materials used in high-value industries such as electric vehicles, permanent magnets, electronics, renewable energy, and defense-related materials. For Indonesia, the issue is not only about export clearance, but also about resource-value control. The government is increasingly focused on identifying and protecting critical mineral value before it leaves the country. The challenge is that REE often appears not as a standalone product, but as an associated or trace element in other mineral products. If every product containing small REE content is treated as a restricted rare earth export, normal mineral shipments could be delayed. However, if REE content is not monitored at all, Indonesia may lose control over strategic mineral value. The 17 rare earth elements generally include lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, yttrium, and scandium . In the recent market discussion, testing was understood to cover these 17 REE elements, while radioactive elements such as thorium and uranium also became part of the inspection concern. The problem is that rare earth elements are often not produced as standalone products. They can appear as associated elements in other mining products. This creates a regulatory grey area. If every exported product containing trace REE must be treated as a rare earth export, then many normal mineral shipments could be delayed. But if associated REE content is not checked at all, Indonesia risks losing control over strategic mineral value. Therefore, the market concern is not only whether nickel exports are blocked. The larger concern is whether Indonesia is entering a new phase where exports of mineral products require more detailed chemical-content verification. What Happened in the Market: LS Delays and Additional Testing Disrupted Mineral Shipments According to SMM’s market understanding, the recent inspection requirement temporarily affected exports of several Indonesian processed mineral products. For nickel products, the impact was mainly reflected in three areas. LS issuance slowed down. The LS report is a key export document, so delays directly affected customs clearance and shipment release. According to SMM’s understanding on July 24, it is reported that around 102 surveyor reports were delayed due to differences in interpretation regarding REE checks during export verification. Some cargoes were temporarily stuck at ports. Market participants reported delays in NPI and MHP shipments, while some traders also mentioned that QMB-related cargoes faced similar obstacles. Exporters had to organize additional testing. The government required checks on 17 REE elements and radioactive elements in certain products. Some companies were still waiting for test results or clarification from surveyors and customs. Therefore, this was not a direct export ban on nickel products. It was mainly a temporary administrative and testing bottleneck caused by unclear implementation standards for associated REE and radioactive elements. Impact on the Nickel Market: NPI and other Nickel Product Exports Affected Mainly Through Shipment Delays For the NPI and ferronickel market, the short-term impact was mainly reflected in shipment timing rather than production. Some port-side cargoes were delayed because LS reports and customs clearance were affected. According to SMM’s latest market understanding, LS reports are currently being issued in batches, and some high-grade NPI cargoes at ports have started to be released. As the current disruption mainly occurred during the export documentation and clearance process, the direct impact on NPI production was limited. If LS issuance and customs clearance continue to normalize, the impact on the overall NPI market is expected to remain limited. At this stage, the issue is more related to temporary export procedure disruption rather than a confirmed structural restriction on NPI exports. For the MHP market, some shipments were also affected by the REE-related inspection requirement. According to market feedback, certain MHP cargoes, were temporarily unable to be shipped smoothly during the disruption period. Similar to NPI, the key issue was mainly related to LS issuance, testing requirements, and customs clearance rather than a direct restriction on MHP production. The government’s latest coordination result clarified that export procedures should refer to the main mining product and its derivatives, rather than automatically treating associated REE or radioactive elements as the basis for export restriction. Market Feedback and Industry Concerns: Lack of Technical Standards Created Uncertainty for Exporters Market feedback shows that the REE-related inspection requirement has created practical disruption for Indonesia’s mineral export chain. According to FINI Chairman Arif Perdanakusumah, at least 120 commodity vessels were unable to sail or leave ports due to the requirement to test rare earth element content. He noted that the situation caused losses not only for companies, but also for the government, mainly because there was still no clear regulation providing technical guidance on REE content limits. Industry associations generally understand that the policy is part of the government’s effort to improve mineral governance. However, they also emphasized that the technical implementation needs to be reviewed, especially because many mining products contain REE only as associated or trace elements rather than as the main product. This distinction is important for commodities such as nickel, bauxite, tin, and copper, where companies are licensed and designed to produce the main commodity, while REE content may naturally appear as a by-product or associated element. The bauxite industry also raised similar concerns. ABI Chairman Ronald Sulistyanto stated that the REE issue should be returned to its core technical framework and handled by the Ministry of Energy and Mineral Resources, as the ministry has the relevant mining and mineral expertise. He stressed that the key question is whether REE is the main product or only an associated element. If it is the main product, then specific export restrictions may apply. However, if it is only an associated element, the issue requires more detailed technical clarification rather than broad export disruption. IMA Executive Director Sari Esayanti also highlighted that most mining companies are currently oriented toward their main licensed commodity and existing processing design. In many commodities such as tin, bauxite, nickel, and copper, REE generally appears as an associated element. She also noted that most mining companies do not yet have sufficient facilities or technology to identify, separate, or economically utilize REE elements. As a result, new interpretations around REE reporting or export obligations have created uncertainty for business players. From the industry’s perspective, the most urgent requirement is technical certainty. Companies need clearer parameters, testing methodology, and reporting mechanisms so that all exporters, surveyors, and customs authorities apply the same standard. Without consistent technical guidance, similar shipment delays could occur again even if the current bottleneck is gradually resolved. Government Update and Resolution The most important update came from the Indonesian government coordination letter dated July 31, 2026. According to the letter, Indonesia’s Coordinating Ministry for Economic Affairs held a coordination meeting on July 30 to discuss export obstacles related to REE and/or radioactive content in mining products and derivatives. Key points from the government coordination result: Exports should continue to follow existing trade regulations , including Minister of Trade Regulation No. 23/2023 on export policies and arrangements, and Minister of Trade Regulation No. 22/2023 on prohibited export goods, as amended by later regulations. The regulation should apply to the main mining product and its derivatives, not automatically to associated elements contained in those products. This is the most important clarification for NPI, ferronickel, MHP, alumina, and other processed mineral products. Products containing radioactive elements may still be exported if the content is classified as Naturally Occurring Radioactive Material, or NORM. This helps reduce the risk that trace radioactive content automatically blocks exports. Exporters, surveyors, and customs should refer to the main product classification when processing exports. This provides a basis for LS issuance and customs clearance to gradually resume. A Legal Opinion from the Attorney General’s Office will be prepared in parallel to support the regulatory clarification. The government plans to accelerate revisions to Minister of Trade Regulation No. 23/2023, Minister of Trade Regulation No. 22/2023, and Minister of ESDM Regulation No. 25/2018. Discussions are expected to start on August 3, 2026, with completion targeted within around one week. SMM View: Short-Term Export Disruption, but a Longer-Term Signal of Stricter Mineral Supervision SMM believes the REE inspection issue is a short-term disruption, but also an important policy signal. In the short term, the impact on NPI and MHP exports should gradually ease as LS reports are issued and customs interpretation becomes clearer. If cargo clearance continues to normalize, the impact on overall nickel supply-demand balance should remain limited. However, the event shows that Indonesia is strengthening supervision over critical mineral content, export documentation, and resource-value protection. Even after the current disruption is resolved, exporters may face stricter testing, clearer reporting requirements, and closer coordination among surveyors, customs, ESDM, the Ministry of Trade, and other agencies. Going forward, the market should monitor: Whether all delayed LS reports can be fully cleared. Whether future shipments will require full REE and radioactive-content testing. Whether the government will set clear thresholds for REE, thorium, uranium, and NORM classification. Whether the revised regulations clearly distinguish main export products from associated trace elements. Whether NPI, ferronickel, MHP, alumina, and tin-related products will face different implementation standards. Overall, this event should not be interpreted as a direct ban on NPI or MHP exports. It is more accurately a regulatory clarification process triggered by Indonesia’s stronger focus on rare earth and radioactive element content in mineral products. If implementation becomes clear quickly, the impact will remain temporary. If rules remain vague, shipment delays and administrative friction could reappear.

[SMM Rare Earth Flash] The US government has decided to support the Ampasindava rare earth project in Madagascar to promote the diversification of the critical minerals supply chain and reduce dependence on China’s rare earth supplies. Project developer Harena Rare Earths stated that the U.S. International Development Finance Corporation (DFC) has committed up to $4.48 million for a pilot plant, laboratory testing, and environmental protection projects, paving the way for subsequent financing. The ion-adsorption rare earth mine is planned to start production in mid-2028, with an expected annual output of approximately 4,000 mt of rare earth oxides, of which about 1,700 mt are magnetic material rare earths such as neodymium-praseodymium, dysprosium, and terbium. The total investment of the project is approximately $150 million.

[SMM Rare Earth Express] Australian heavy mineral producer Iluka Resources released its April-June quarterly report, showing that due to the slower-than-expected capacity ramp-up at the Balranald mine, the company's zircon production dropped 30% YoY to 26,000 mt. However, as zircon prices rebounded from lows, the company drew on inventory to support sales, with zircon sales up 43% YoY. In rare earths business, the construction progress of Iluka's Eneabba rare earth refinery in Western Australia was approaching 60%. The project has a designed annual capacity of 23,000 mt and a total investment budget of A$1.8 billion, of which A$1.1 billion (approximately $770 million) has been invested. It is expected to commence production in mid-2027. Once completed, the refinery will be able to process both light and heavy rare earths, producing key elements for permanent magnetic materials such as neodymium, praseodymium, dysprosium, and terbium, and is expected to enhance Australia's processing capacity in the global rare earth supply chain.

[SMM Rare Earth Daily: Rare Earth Prices Continue in the Doldrums, Inquiries Recover but Gains Limited] Overall, inquiry activity in the Pr-Nd market has improved somewhat, but downstream magnetic material enterprises are still mainly restocking for rigid demand and have low acceptance of high-priced metals, which has led to a modest recovery in Pr-Nd product prices that nonetheless remain in the doldrums compared with yesterday morning. In the short term, affected by the stalemate between trading parties, Pr-Nd product prices may consolidate within a narrow range.

This week, the ex-China rare earth market saw mediocre trading, with prices generally stable. Trading volume pulled back due to the summer break and export approvals. Geopolitically, the Malaysian parliament was reviewing the supply agreement between Lynas and the US Department of Defense, stirring domestic controversy. On the supply side, Lynas’ Q2 production rose 8%, but Pr-Nd output was cut and heavy rare earth production commenced for the first time; exploration projects in Namibia and California made progress. On the demand side, an institutional report noted that AI is becoming the third major growth driver for rare earths, after defense and electrification, and is expected to account for 3% of magnet consumption by 2030.

[SMM Rare Earth Daily Review: Rare Earth Prices Stable, Actual Transactions Insufficient] In summary, at this stage, downstream new orders are poor, and purchasing enthusiasm is low. Meanwhile, upstream suppliers have weak willingness to sell at low prices, with quotations remaining relatively firm. The tug-of-war between upstream and downstream persists, and overall prices remain stable. In the short term, affected by weak supply-demand fundamentals, Pr-Nd product prices may move sideways in a narrow range.