UBS meeting minutes: China's dominance in the global rare earth supply chain is hard to shake.

On September 11, 2025, UBS Securities released "China's Sustainable Development - Summary of the China Rare Earth Experts' Conference". The conference invited senior experts with over a decade of experience in the rare earth permanent magnet industry to deeply analyze the market pattern of China's rare earths and its impact on the global supply chain. The final conclusion of the conference summary: China's dominant position in global rare earth reserves and the refining process is unlikely to be shaken in the short term.

Ⅰ. In the long term, the price of rare earths will remain stable with a slight upward trend.

The meeting minutes hold that, from the perspective of the entire supply chain, China's dominant position in rare earths is not only reflected in upstream mining but also in the core refining and separation stage, which has formed a "moat". Coupled with structural demand drivers, in the long term, rare earth prices are expected to remain stable with a slight upward trend.

1.On the supply side: mining accounts for 60-70%, and refining for 90%.

UBS experts point out that China currently contributes 60-70% of the global rare earth ore production, but more crucially, it holds about 90% of the global capacity in the refining and separation process, with a technological lead over overseas counterparts by at least 20 years. The cost advantage is also significant: China's refining and separation costs are only one-third of those of overseas peers. This "technology + cost" dual barrier makes the global rare earth supply highly dependent on China.

2. Demand side: Electric vehicles, wind power, and robots form the "three driving forces"

· Electric vehicles: Each electric vehicle requires 3.5 kilograms of neodymium-praseodymium (NdPr) for its traction motor.

· Wind power: Each wind turbine needs 600 kilograms of neodymium-iron-boron (NdFeB) permanent magnets.

· Humanoid robots and low-altitude aviation: As emerging fields, the demand for rare earth permanent magnets is rapidly increasing.

Ⅱ. Overseas rare earth projects are unlikely to shake China's dominance.

Although overseas enterprises are attempting to undermine China's dominance in the rare earth sector, experts from UBS believe that overseas rare earth projects are confronted with multiple challenges such as high costs, limited scale, and significant environmental pressures. Therefore, it will be difficult for them to challenge China's position in the short term.

1. Typical Cases: MP Materials (USA), Lynas (Australia)

· MP Materials: Although it is a strategic project in the USA, its commercial feasibility is questionable - the refining and separation cost is at least 40% higher than that in China. The current actual scale is only 1,000 tons, far below the target of 10,000 tons, and it is highly dependent on government subsidies. Experts predict that it will be difficult to achieve profitability in the next 5 years;

· Lynas (Australia): The analyst of UBS Rare Earths believes that it can maintain profitability without subsidies and is a relatively competitive project overseas. However, it still faces environmental compliance pressure, and the supply of heavy rare earths still relies on China.

2. Core Conclusion: The reliance on heavy rare earths is unlikely to change in the short term.

Experts stress that overseas projects are more of a "strategic backup". In the field of heavy rare earths, China's dominant position in supply will remain for the time being - overseas heavy rare earth mining and refining technologies are not mature and the costs are too high, making it difficult to form an effective alternative.

Ⅲ.The rare earth recycling alternative technology is still just a theoretical concept.

In the context of limited rare earth supply, the recycling industry is becoming an important supplement. Meanwhile, the so-called alternative technologies that the market is concerned about will not have a substantive impact for at least the next decade.

1. China accounts for 60% of global rare earth recycling.

UBS experts have pointed out that China is rapidly establishing a "closed-loop recycling system" for rare earths. Currently, it accounts for 60% of the global rare earth recycling volume, with a recovery rate of 90-95%. The main sources include electric vehicle motors, wind turbine blades, and electronic waste. Experts predict that by 2028, the recycling of rare earths is expected to meet approximately 35% of the global supply demand, effectively alleviating the pressure on primary mines.

In contrast, in the United States and Europe, due to backward recycling technologies and high environmental costs, the progress of the recycling industry has lagged significantly.

2. Risk of substitution: Still in the research and development stage, unlikely to take off within the next ten years

The alternative materials that the market is focusing on (such as ferrite, alnico, and nitrides) are all currently at the stage of laboratory research. Their performance and cost cannot compete with those of rare earth permanent magnets. Experts predict that within the next ten years, alternative technologies will be difficult to have a substantial impact on the demand for rare earths.