CANBERRA, March 25 (Reuters) - The United States and

Japan are quickly locking up rare earths supply, leaving

industrial powerhouses Germany and South Korea exposed, said the

CEO of Australia's Arafura Rare Earths ( ARAFF ), which is

negotiating final supply agreements.

Since the world's top rare earths producer China placed

export restrictions on some of the minerals last year, roiling

the automotive and defence industries, the U.S. has led a push

to diversify global supply chains and secure new supply sources.

Of that non-Chinese supply, there are only two Western

companies producing at scale, Australia's Lynas Rare Earths ( LYSCF )

and MP Materials ( MP ) of the U.S., with its Mountain

Pass deposit.

The U.S. government secured Mountain Pass supply as part of

a deal with MP Materials ( MP ) last year.

"(That) doesn't meet all their needs, but meets a fair chunk

of it," Arafura CEO Darryl Cuzzubbo said.

Meanwhile, Lynas Rare Earths ( LYSCF ) this month agreed a

long-term supply deal with Japan Australia Rare Earths through

2038 and a smaller, shorter-term deal with the Pentagon.

"So the EU and in particular, Germany, and Korea are quite

exposed, right? Where are they going to get their supply from?"

Cuzzubbo said.

Since Lynas' supply was locked up, Arafura has noticed more

urgency from potential buyers, he added.

NOLANS PROJECT SUPPLY

Arafura plans to supply from its Nolans Project in the

Northern Territory 4,440 metric tons a year of

neodymium-praseodymium (NdPr) oxide, a key rare-earth magnet

material from the second half of 2029, representing around 4% of

global supply.

It already has supply agreements with automakers Hyundai

Motor and Kia as well as Siemens Gamesa

Renewable Energy and commodity trader Traxys.

Arafura is seeking to place another 1,200 tons of NdPr oxide

to bring secured supply to 80% of planned output as a condition

required by its lenders, he said. Once that is achieved, Arafura

will be able to make a final investment decision and begin

constructing the project.

"We haven't put all of our eggs into one basket, so we're

negotiating with multiple parties, and the one that gets there

first on the right sort of pricing regime is the one we're going

to go with," he said.

Arafura was looking for terms closer to those achieved by

Lynas, he said.

In both deals, Lynas locked in a price of $110 per kilogram

for NdPr, with additional terms around payments for higher

prices. China-based prices are currently around

$103 a kg.