Public stockpiling, offtake, and the value of domestic rare earth midstream capacity: A calibrated policy valuation for South Korea

For import-dependent manufacturing economies, the policy value of domestic rare earth midstream readiness depends on whether it can provide useable supply that reduces shortages remaining after external supply and public stockpiles have been used. This study evaluates that condition for South Korea by comparing a BASELINE of external supply and a common public stockpile with an ENHANCED state that adds a pre-established joint neodymium–praseodymium (NdPr)–Dy 2 O 3 separation/refining pathway, domestic operating inventory, and public offtake. A 20-year monthly material-flow and inventory model is evaluated under a deterministic disruption and 10,000 stress-test paths, using 0.5 t/year of joint oxide output as a functional scale anchor. Under the deterministic full-usability benchmark, ENHANCED reduces the 2466.18 t BASELINE residual priority-demand shortage by 1.375 t (0.056%), with USD 9.584 million in incremental real-resource cost and a required USD 8974.7/kg break-even value, not an estimated economic benefit. Public offtake improves facility finance, but facility net present value remains negative under all three contracts, including OT-3 at −USD 1.478 million, while government fiscal burden reaches USD 8.913 million. At the same break-even unit value, economic net value is non-negative in 81.58% of full-usability paths, 59.27% of partial-usability paths, and 0% under pathway failure. These are conditional stress-test outcomes, not probabilities of policy success. Taken together, these diagnostics identify a bounded role for public offtake in improving the financial conditions for maintaining readiness, while downstream usability remains necessary for shortage reduction; they do not establish facility viability or economic justification.