China to continue as top rare earths supplier for the next ten years

Attempts by Western democracies to secure their rare earth supply chains are falling short in reducing China’s stronghold over the market. According to the International Energy Agency’s analysis, efforts by the G7 nations to find alternatives have not been successful in loosening China’s grip on rare earths, with the nation projected to maintain its dominance for at least another decade.

While the G7 leaders committed to coordinating responses against deliberate market manipulation and increasing investments to diversify critical mineral supply chains, the IEA remains skeptical about the impact these efforts will have on China’s control. The agency’s critical mineral outlook, published on May 21, indicates that China’s share of rare earth mining is expected to decrease only slightly from 60% to 52% by 2035, with its refining share dropping from 91% to 77%.

Rare earth elements, a group of 17 elements found abundantly worldwide, are challenging to extract and process due to their complexity and environmental hazards. Since the 1970s, China has emerged as the leading producer of mined and refined magnet rare earth elements like neodymium, praseodymium, terbium, and dysprosium. Despite efforts by Western countries to diversify their sources, China’s current position in global rare earth production, along with its expertise in processing and separation, is expected to keep it at the forefront of the industry in the coming years.

While some progress has been made towards diversifying supply chains, with Australia’s Lynas Rare Earths emerging as the world’s only producer of separated heavy rare earth products outside China, the magnitude of China’s current dominance presents a significant challenge. Even with market forces at play, analyst Amrita Dasgupta from the IEA believes that additional policies and cross-border partnerships will be crucial in achieving the desired level of diversification.

Data from the US Geological Survey underscores China’s significant role in global rare earth production, with a current hold of approximately 69.23% as of 2024. The country’s control over critical minerals, essential for green and digital technologies, is particularly noteworthy. The upcoming establishment of new separation facilities in the US and Australia, coupled with new production sites in Brazil, South Africa, and Malawi, reflects ongoing efforts to reduce reliance on Chinese rare earth elements.

Despite recent trade tensions and export restrictions imposed by China, the challenges in securing rare earth supplies continue to persist. While recent developments suggest a slight easing of export constraints, particularly concerning rare-earth magnets used in defense technology, China’s commitment to further restrictions remains uncertain. Analysts suggest that closing the investment gap between Western allies and Chinese manufacturers in the rare earth sector will be vital in ensuring sustainable competition in the future.

In conclusion, China’s dominant position in the rare earth market is likely to endure for the foreseeable future, casting a shadow over efforts by Western nations to establish alternative supply chains. While strides have been made to diversify sources, overcoming China’s stronghold on rare earth elements will require comprehensive policies, strategic partnerships, and significant investments to level the playing field.