Since the Ministry of Commerce of China, in conjunction with the General Administration of Customs, issued the "Decision on Export Control of Certain Items of Medium and Heavy Rare Earths", the global supply chain has been shaken. China and the US have been continuously engaged in a rare earths game. The US has even attempted to use the "trade lifting of bans" on ethylene, EDA, and aircraft jet engine parts, etc., to get China to be lenient on rare earths. At the same time, to reduce its reliance on the Chinese rare earths market, the US government has begun to promote the domestic development of the rare earths industry chain, supplemented by joint development with multiple countries and regions to increase the diversity of rare earths resources supply.
How do these changes affect the rare earth competition between China and the United States? How will other countries and regions respond to China's rare earth control measures? This article selects analyses from multiple authoritative think tanks to explore the current situation and development trends of the global rare earth industry.
Beyond the agreement, uncertainties remain
On June 11, 2025, the Center for Strategic and International Studies in the United States released "Trump Reached Agreement to Restore Rare Earth Supply Channels". The article stated that the China-US economic and trade negotiation agreement includes China's resumption of rare earth and magnet exports to the United States. This event highlights the importance of rare earth raw materials to the US economy and China's dominant position in the global key mineral supply chain.
In April 2025, China imposed export restrictions on seven rare earth elements, directly impacting the global supply chain. This crisis exposed the high degree of dependence of Western countries on China in key mineral sectors. Although a 90-day tariff truce agreement was reached between China and the United States in May, the delay in administrative approval led to a slow recovery in actual supply. American car manufacturers were particularly affected - the Ford Chicago plant was shut down for a week, and many European automotive suppliers were forced to halt production. Japanese Suzuki even suspended the production of the Swift model.
In the new framework reached in the London negotiations in June, although China committed to resuming some rare earth supplies, this was merely a temporary measure. In the long run, the US should accelerate efforts to reduce its reliance on China's heavy rare earths. Data shows that the production capacity of MP Materials in the US for neodymium iron boron magnets in 2025 is only 1,000 tons, which is less than 1% of China's production in 2018. This highlights that the process of achieving supply chain autonomy is arduous.
The US strategy for breaking through focuses on two directions: One is to achieve diversification of the rare earth supply chain through Australia. The country's production of rare earth oxides is planned to triple within three years. After the Arafura Rare Earths Limited starts production next year, it is expected to account for 4% of the global demand for neodymium and praseodymium by 2032. The other is that in its "Defense Industry Strategy", the US states that it aims to establish a "mine-magnet" full industrial chain by 2027.
The supply and demand dynamics in the rare earth market are intertwined with geopolitics.
On May 31, 2025, the International Energy Agency released the latest "2025 Global Critical Minerals Outlook". The report indicates that in 2024, the global demand for major energy minerals saw a strong growth. The continuous expansion of battery power and new energy infrastructure led to a nearly 30% increase in lithium demand, while nickel, cobalt, graphite and rare earths maintained a high growth rate of 6% to 8%.
The report indicates that the potential shortage of copper and lithium is the most decisive. Although the overall supply of energy minerals seems abundant in the short term, both copper and lithium will face severe shortages in the medium and long term: by 2035, the primary copper shortage may reach 30%, and the lithium shortage may also approach 40%. Once the shortages materialize, it will increase the cost of downstream products, forcing new energy and industrial projects to postpone or reduce their scale, thereby slowing down the global process of achieving net zero goals.
The report states that strategic mineral resources that underpin the new energy and high-tech industries are facing multiple market risks. Firstly, due to the small scale of the market and limited transparency, the key mineral markets are prone to price fluctuations. According to statistics, among the 20 strategic minerals, 75% have a higher price volatility rate than crude oil, and half exceed that of natural gas. Secondly, trade restrictions affect the key mineral markets. A series of recent export control policies have increased market uncertainty. Moreover, the highly concentrated supply (especially in the refining and processing stages) amplifies the risks: China dominates the refining capacity of 19 out of the 20 strategic minerals, accounting for an average market share of approximately 70%. Additionally, minerals such as tantalum, titanium, and vanadium either lack feasible alternatives or require a compromise between cost and performance.
The report also mentions that although technological innovation (such as AI exploration, DLE, and tailings reutilization) can enhance efficiency, it is difficult to mitigate geopolitical risks; likewise, policy support (tax incentives, price differentials, long-term purchase and sale agreements) will not form a sustained driving force without the availability of practical technologies. Therefore, "technology and policy" collaboration is necessary to break the reliance on a single approach. By providing loan guarantees, strategic reserves, and simplified approval processes from the government and international organizations, and by providing targeted support for efficient technology projects, it is possible to both introduce new production entities and ensure that these entities operate stably under both policy and market safeguards.
The United States currently lacks a suitable alternative supply chain.
The Center for Strategic and International Studies of the United States released "The Consequences of China's New Restrictions on Rare Earth Exports" on April 14th, stating that China's practice of restricting the export of seven types of rare earth elements has caused a huge stir in the international market, especially in the relevant industries of the United States.
The US defense technology sector was the first to be impacted. From the perspective of procurement, the restrictions have brought about threefold effects. Firstly, during the establishment of the licensing system, export activities were temporarily suspended, disrupting the stable procurement rhythm of US enterprises. Secondly, 16 US defense and aerospace enterprises were included in the export control list, significantly increasing the risk of supply chain disruption. Thirdly, the dynamic licensing system has prompted countries to seek cooperation with China. If US enterprises fail to adapt in time, they may lose their advantages in international competition.
The United States is also extremely vulnerable in the supply chain of rare earths. China has long held 99% of the global market share for processing rare earths. The only Vietnamese refinery that can provide a small amount of output has been out of production for a year due to tax disputes. This makes the United States highly dependent on China for rare earth supply. This restriction on heavy rare earths directly targets the core of the US supply chain. Currently, the United States does not have the ability to separate rare earths. By the end of 2025, MP Materials, funded by the Pentagon, can only produce 1,000 tons of NdFeB magnets annually, while China was already able to produce 138,000 tons of NdFeB magnets annually in 2018; in 2024, MP Materials announced an output of 1300 tons of oxide NdPr, and China produced approximately 300,000 tons of NdFeB magnets in 2018. Although the United States has relevant development plans, they are far from the target. Although the Department of Defense has invested over 439 million US dollars (approximately 3.18 billion yuan) to build the domestic supply chain, the related facilities will not be able to meet the defense needs until 2027.
Rare earth elements are of great significance to the national security of the United States. In defense technologies, numerous key equipment such as the F-35 fighter jet, Virginia-class and Columbia-class submarines, and "Tomahawk" missiles all extensively utilize rare earth elements. An F-35 fighter jet contains over 900 pounds of rare earth, and a Virginia-class submarine requires approximately 9,200 pounds. The United States already has a disadvantage in the manufacturing of defense technologies, and if China restricts the import of key minerals, it will rapidly widen the military capability gap between China and the United States.
When it comes to seeking alternative suppliers for international cooperation, although many countries have plans and investments for developing rare earth resources, currently China still holds a dominant position in the heavy rare earth refining process. Although Australia has been striving to develop the Browns Range mine to make it a production base for dysprosium, it still needs a lot of work in terms of processing and refining capacity construction, and will still rely on China's oxide refining technology at least until 2026. The article points out that the United States needs to strengthen cooperation with other countries and accelerate the overcoming of the technical knowledge gap in rare earth separation and processing.
Africa may become the next main battlefield for competition between China and the US
The report "How China and the US Invest in Key Minerals" released by the Stimson Center points out that in the current situation where global demand for key minerals is surging and geopolitical situations are complex and volatile, the competition between China and the US in the field of key minerals in Africa has become increasingly prominent.
From the perspective of investment scale, in 2023, through the "Belt and Road Initiative", China's total economic participation in Africa reached 21.7 billion US dollars (approximately 155.689 billion yuan), among which the investment in key mineral projects was approximately 8 to 10 billion US dollars; while the United States invested 7.4 billion US dollars (approximately 53.025 billion yuan) in Africa that year, with key mineral investment being only about 300 million US dollars. China's investment in key minerals in Africa was far greater than that of the United States.
The goal of the green energy transition has driven China's demand for key minerals. As a signatory to the 2030 Sustainable Development Goals, China has vigorously developed clean technologies, resulting in a significant increase in demand for key minerals. Policies such as the "New Energy Vehicle Industry Development Plan (2021-2035)" and the "New Three Goods" economic growth drivers have prompted enterprises to strengthen the supply chain of key minerals. Africa has become an important supply source. For instance, nearly 90% of China's cobalt is imported from the Democratic Republic of the Congo. The United States, aiming to reduce its reliance on key minerals from China and ensure national security, urgently needs to diversify the supply chain of key minerals. Africa has become an important partner for it.
In terms of investment projects, China has made extensive deployments in key mineral industries in Africa. In 2023, copper-related projects in the Democratic Republic of the Congo were valued at over 2 billion US dollars (approximately 143.31 billion yuan), in Botswana it was nearly 2 billion US dollars, and there were also large-scale projects such as lithium mining in Mali and Zimbabwe. At the same time, China is a global center for the import, refining, and processing of key minerals. It accounts for 85-90% of global rare earth element refining and processing. In terms of key mineral exports in Africa, China is the largest importer of many minerals, such as 72% of cobalt and 28% of graphite. The two sides have formed a mutually dependent relationship.
The United States, through institutions such as the International Development Finance Corporation (DFC), has invested in multiple projects in Africa to strengthen key mineral supply chains. For instance, it invested in the "Lobito Railway Corridor Project". It also signed memorandums of understanding with countries like Angola and Zambia. When providing funds, DFC emphasizes cooperation with the private sector and highlights environmental, social, and governance (ESG) standards. This contrasts with the model used by China, where state-owned enterprises play a leading role, investment is driven by the state, and it often faces criticism due to ESG compliance issues.
Looking ahead, the new Trump administration's stance on the critical mineral supply chain in Africa remains unclear. Although they have the intention to obtain critical minerals, such as proposing cooperation with Greenland and discussing the acquisition of minerals with Ukraine, there is still uncertainty regarding whether they will continue the measures of the Biden administration in their diplomatic and economic engagement with Africa. China is expected to continue to expand its participation in the critical mineral sector in Africa. The role of Africa in the US's critical mineral supply chain is full of uncertainties, and the competitive situation between China and the US in the critical mineral sector in Africa will continue and may evolve.
Europe: An Important Variable in the Competition for Rare Earths between China and the US?
On April 17, 2025, the China-Europe Policy Analysis Center released the report "Rare Earth Minerals: China + Tariffs = Crisis". The article states that recently, China suspended the export of six types of rare earth minerals, posing a severe challenge to Western industries. Between relying on Chinese supply and seeking solutions independently, the West is at a crucial crossroads.
In response to the scarcity situation caused by China's restrictions on rare earth exports, Europe has focused on developing new technologies and production capacity for recycling. The "Critical Raw Materials Act" was thus born, setting targets for domestic mining, processing and recycling, and reducing reliance on a single supplier. The European Commission has launched 47 strategic projects in 13 member states to promote the all-round development of key minerals.
In practice, a number of enterprises and projects dedicated to rare earth recycling have emerged across Europe. Heraeus Remloy in Germany has built the largest rare earth magnet recycling plant in Europe, aiming to significantly increase production capacity to meet over 30% of the new magnet demand in Europe; Carmag in France has constructed a large-scale recycling facility, with the goal of recycling a large amount of rare earths and producing considerable amounts of heavy rare earth oxides annually; Ionic Technologies in the UK has developed a patented process to recover key elements from decommissioned equipment; Hydrometal in Belgium utilizes its expertise to recycle rare earth elements subject to export restrictions from China; NeoPerformanceMaterials in Estonia and RarEarth in Italy focus on the recycling of electric motors. These efforts aim to build a comprehensive circular economy strategy, reduce reliance on imports, and enhance the resilience of Europe in the field of rare earths.
In summary, China will continue to dominate global rare earth supply in the short term. However, in the medium and long term, it will also face multiple challenges: On one hand, as other countries accelerate production and technological breakthroughs, and as the international community's ability to replace and recycle strategic minerals continuously improves, China's market share may be squeezed; on the other hand, export control countermeasures and geopolitical frictions may also increase industry uncertainty. China not only needs to accelerate the improvement of its long-term resource development and technological innovation layout, but also should strengthen the supervision and crackdown on rare earth smuggling, improve the transparency of the industrial chain, in order to ensure supply chain security and consolidate its industry leadership position.
Your message must be between 20-3,000 characters!
