Rare earths are a group of 17 elements with unique magnetic, luminescent and electrical properties. Refined into powdered oxides and sintered into magnets, they can be found in mobile phones, vacuum cleaners, stereo speakers, data centres, wind turbines, electric-car motors, robots, jet engines, guided missiles, night-vision goggles, lasers and scanners. America's Department of Energy estimated in 2022 that China produced 92% of the roughly 100,000 tonnes of rare-earth magnets made each year. As of 2025, Chinese firms account for 69% of the ore dug up, over 90% of the refined minerals produced and nearly all rare-earth magnet manufacture. Adamas Intelligence, a research firm, expects rare-earth consumption to more than double by 2035.
China began mining rare earths in the 1950s but initially trailed America, which had discovered deposits in the 1940s while searching for uranium for atomic bombs. In the 1980s China granted licensing authority to local governments and encouraged exports. Landlocked provinces saw a chance to industrialise; hundreds of mining firms sprang up. By the 2000s a rare-earth glut had driven America's main mine, Mountain Pass, to shut. Between 2000 and 2016 the Chinese Academy of Sciences produced 2,018 papers on rare earths. The authorities encouraged consolidation, culminating in 2024 in two giant firms: Northern Rare Earth in Inner Mongolia (light rare earths, extracted by digging) and China Rare Earth (CRE) in Ganzhou (heavy rare earths, extracted through leaching). The pair account for nearly all of China's rare-earth mining. Chinese refiners also have access to cheap ore from neighbouring Myanmar, where civil war has allowed an unregulated mining industry to flourish. Refining is complicated, requiring lots of electricity, solvents and reagents; processing some ores involves more than 100 separate steps, the details of which are fiercely guarded. Bayan Obo, in northern China, is the world's largest rare-earth mine; a patent filed in July 2025 aims to push oxide-extraction concentrations past 60% (40-50% is typical). In 2023 China restricted the export of equipment used to process rare earths and barred people with special expertise from travelling abroad.
China has repeatedly exploited its control of rare earths as a diplomatic weapon. In 2010, amid a Sino-Japanese maritime dispute, it throttled exports to Japan. Japanese manufacturers, with their lean "just in time" supply chains, were caught off guard; the Japanese government was forced to release the captain of a Chinese vessel it had detained. The supply scare encouraged Japan to use fewer rare earths, produce more itself and build stockpiles. In February 2025 China imposed further restrictions on the metals themselves. Then on April 4th 2025, as part of its retaliation against American tariffs, China announced export restrictions on seven rare earths and on rare-earth magnets. Applications for export licences piled up and exports plunged. Ford and Suzuki, among other carmakers, had to suspend production at some factories. Some Western companies agreed to disclose commercially sensitive information, including technical drawings, to secure licences. Approvals began to accelerate in June but remained inconsistent: German firms received more magnet licences than American ones, while carmakers in India appeared to be at the back of the queue. Licences issued are typically valid for only six months. By mid-2025 China had established a system of export controls that tries to track the end customer of commodities and spans hundreds of products, from sensors to manufacturing equipment. Building an alternative rare-earth supply chain would take at least three years and still probably fall short.
On October 9th 2025 China unveiled a further escalation, giving itself new legal powers to strangle supply chains of Chinese-produced rare-earth minerals and products containing even a trace of them, including permanent magnets used in everything from cars to fighter jets. Separately, Chinese authorities announced rules that would let them restrict exports of high-performance batteries as well as overseas sales of technologies needed to process rare earths or make batteries outside China—a blatant attempt to thwart countries trying to "de-risk" their supply chains. China's commerce ministry insisted the controls were not blanket bans but an attempt to safeguard "the security and stability of global supply chains" and to "better defend world peace", given the military uses of rare earths. Western diplomats in Beijing called the ministry's talk of world peace "preposterous", given that Ukraine was being battered by Russian drones and missiles packed with Chinese-made components. In October China added five more rare earths to its export-licensing regime. Those controls were suspended for a year after America and China struck a trade deal on October 30th 2025, but the original licensing regime for seven other rare earths remains in place, allowing China to slow deliveries at will. China is also seeking to prevent stockpiling, taking companies' past purchases as a baseline and making it clear that much bigger consignments will not be allowed. Westerners meeting Chinese officials found them "emboldened" after the April controls panicked American carmakers and prompted Donald Trump to slash tariffs on China. By using green technology for coercion, China risked weaponising its most benign exports: many controlled minerals are embedded in low-carbon technologies, from wind turbines to batteries. Rare-earth production will begin or resume in many countries, and quite soon, for the process is dirty but not especially hard.
Rare-earth magnets are prized because they pack a lot of magnetic strength into a small space. The standard measure is "maximum energy product", or (BH)max. A high-quality neodymium-iron-boron magnet can exceed 400 kilojoules per cubic metre, more than ten times the strength of cheap ferrite fridge magnets. Adding other rare-earth elements such as dysprosium allows them to function above 200°C. They also retain their magnetism in strong external fields, which is essential for motors and generators.
Masato Sagawa, a Japanese scientist, helped commercialise rare-earth magnets in the 1980s.
Tetrataenite is a mineral found in some meteorites, composed of atomically thin layers of iron and nickel. Its theoretical (BH)max of around 335kJ/m³ would make it nearly as strong as the best neodymium magnets, while being more heat-resistant and made from common ingredients. Natural tetrataenite forms as meteorites cool over millions of years. Scientists have been able to make it in the laboratory since the 1960s, but the process—bombarding iron and nickel with neutron beams—is too slow for mass production. Laura Lewis, an engineer at Northeastern University in Massachusetts, and her colleagues published a method in 2024 that produces small batches in about six weeks by heating iron and nickel in a vacuum under a magnetic field and mechanical strain.
Niron Magnetics, a firm based in Minnesota founded on research by Jian-Ping Wang, a physicist at the University of Minnesota, is working on magnets made from iron and nitrogen. In theory iron nitride could reach a (BH)max above 1,000kJ/m³, far exceeding rare-earth magnets, though it is more susceptible to demagnetisation by external fields. Nitrogen can be distilled from the air with relatively simple equipment. A 2023 Niron document reported a (BH)max of around 286kJ/m³. The firm has attracted roughly $140m in funding—about a third from the American government and two-thirds from private investors including General Motors and Stellantis. It plans to build a 1,500-tonne pilot plant, with aspirations for a 10,000-tonne commercial factory in 2027.
MP Materials is America's sole producer of rare-earth metals, with a mine at Mountain Pass in California and a factory in Texas. Mountain Pass resumed operations in 2018 after shutting in the 2000s. It produced 47,000 tonnes of light rare-earth oxides in 2024 and aims to reach 60,000 tonnes by 2030. America's Department of Defence has agreed to guarantee a minimum price for its output. On July 10th 2025 the DoD acquired a 15% stake for $400m, becoming its largest shareholder. Five days later Apple joined with a $500m deal to buy rare-earth magnets and help build a recycling facility. America relies on China for around four-fifths of its rare-earth products. On October 20th 2025 America signed a $3bn partnership with Australia aimed at building alternative rare-earth mining and processing facilities, though these could take half a decade to come online.
In May 2025 Lynas, a firm backed by the American and Japanese governments, began producing heavy rare earths in Malaysia, making it the first commercial producer outside China. Two Japanese firms bought a big stake in Lynas after the 2010 Senkaku crisis, but the first heavy rare earths from its mines did not reach Japan until October 2025. Rare earths imported from Malaysia to Japan between 2020 and 2024 cost 50% more on average than Chinese analogues, according to Mizuho, a Japanese bank. In June the European Union said it would back rare-earth projects in Malawi and South Africa. Project Blue, a consultancy, lists just 22 projects that hope to be operational by 2030. David Merriman of Project Blue argues the West could "significantly derisk" by cutting its reliance on China to 60-70% of consumption.
Japan depended on China for around 90% of its rare earths at the time of the 2010 Senkaku crisis. After the crisis Japan passed a ¥100bn ($1.2bn) supplemental budget and developed a national strategy involving alternative sources, reducing overall use and stockpiling. A decade later Japan had managed to bring the share sourced from China down by one-third—but that still meant around 60% dependence. Demand has since outpaced new supply, and Japan's dependence on China has ticked back up to around 70%, according to the Institute of Energy Economics, a Japanese think-tank. The experience shows that China's economic weapon can be blunted, but replicating China's command of the entire production process, let alone its scale, is extremely difficult.
Europe is more exposed to rare-earth supply disruption than America. It has fewer exploitable deposits and imports more of the key materials than anyone bar Japan. Industry-heavy Germany is the single biggest importer of permanent magnets. The EU deems 34 types of mined commodities critical; only two of those 34 comprise rare earths (light and heavy). Benchmark Minerals, a data firm, suggests the bloc's demand for key rare-earth oxides could be double or triple America's by 2030; one in five magnets will also go to Europe.
Of ten government-backed rare-earth projects in 2025-26 listed by Project Blue, a consultancy, four are sponsored by America and only one by Europe: Carester, a refining and recycling plant in south-western France. Neo Performance Materials, a Canadian firm, separates rare earths and makes magnets in Estonia.
On December 3rd 2025 the EU unveiled its ResourceEU strategy to co-ordinate member states' efforts and push for joint procurement and stockpiling. A European critical raw materials centre, modelled on Japan's equivalent, is to be set up as a strategic headquarters. The EU is scraping together €3bn ($3.6bn) to invest in supply chains and in recycling. The first project to receive funding is in Greenland. Germany's own resource investment fund will back just three projects, one a rare-earth mine and refinery in Australia owned by a company based in Perth. Stéphane Séjourné, the EU's industry commissioner, visited the Japanese government agency that deals with economic security in September 2025; Japan has stockpiled critical minerals for a long time, especially since China halted rare-earth exports to Japan in 2010.
Recycling of rare earths is currently negligible but gaining momentum. The EU adopted a law in 2024 aiming to satisfy a quarter of the bloc's demand for critical minerals, including rare earths, through recycling by 2030.
Caremag, a French startup that has raised €216m ($253m) from private investors and the French government, hopes to begin producing recycled rare earths at a plant in Lacq, in southern France. It plans to recycle around 2,000 tonnes of magnets a year—from electric motors, hard drives and manufacturing swarf. In 2024 it signed a ten-year supply contract with Stellantis, a carmaker that owns the Chrysler and Fiat brands.
Cyclic Materials, a Canadian startup backed by Amazon, Hitachi and Microsoft with $84m in funding, is building two plants (one in America, one in Canada) to produce 500 tonnes of recycled rare earths a year, including heavy ones. In May 2025 it signed a deal with Lime, an American e-bike rental firm, to recycle vehicles at the end of their lives, recovering aluminium, steel and copper alongside rare earths.
Most electric cars rely on permanent-magnet motors (PMMs), in which powerful rare-earth magnets are mounted on the rotor. But alternatives exist. Induction motors eschew magnets on the rotor and rely on electromagnetic induction; Tesla's early cars used them. Audi's Q6 e-tron uses induction motors alongside PMMs.
"Externally excited" motors (EEMs) replace the permanent magnets on the rotor with a second set of electromagnets. They are more complicated but can be built without any rare earths. BMW and Renault sell cars powered by EEMs. ZF Friedrichshafen, a big German car-industry supplier, has developed an EEM that matches the size of an equivalent PMM while being cheaper; it hopes to start manufacturing at scale in 2028.
Magnets made from aluminium, nickel and cobalt use cheap materials and tolerate high temperatures, but offer only a fraction of the strength of rare-earth magnets. Platinum-based magnets are another possibility, but platinum is rare and expensive.
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