Why China controls rare earths | DW News

Key Concepts:

• Rare earth elements (REEs): A group of 17 elements crucial for various industries.
• Supply chain dominance: China's control over mining, separation, refining, and magnet production of REEs.
• Export restrictions: China's limitations on REE exports, impacting global industries.
• Permanent magnets: Magnets made from REEs, essential for motors and electricity movement.
• Geopolitical leverage: China's use of REE control as an economic and political tool.
• Diversification: Efforts by Western economies to secure alternative REE sources.

Rare Earth Metals as an Economic Weapon

• A German warehouse holds approximately $35 million worth of rare earth metals, highlighting their economic value.
• The company trading these resources faces supply disruptions due to Chinese export restrictions imposed in April 2025.
• These restrictions, following US tariff announcements, require buyers to disclose the intended use of the materials to Chinese authorities.
• The restrictions give China leverage over industries, including weapons manufacturing, due to the widespread use of REEs.

China's Dominance in the Rare Earth Supply Chain

• China dominates not only the mining of REEs but also the separation, refining, and production of permanent magnets.
• Permanent magnets, made from REEs, are essential components in motors, enabling electricity to move things.
• The global economy heavily relies on these magnets from China, making export restrictions a significant disruption.

Impact of Export Restrictions

• The new Chinese export restrictions require buyers to disclose the end-use of the REEs, which some customers are unwilling or unable to do.
• Major car manufacturers in the US, Europe, and India have reported production issues due to these restrictions.

Rare Earth Elements: Availability and Extraction

• Rare earths consist of 17 different elements found in various locations globally.
• However, they are rarely found in concentrations that make extraction economically viable.
• Turbium, a rare REE resembling cocoa powder, is used in electric car engines to enhance heat resistance.

Sourcing and Processing Challenges

• Myanmar is a significant source of turbium, with Chinese companies sourcing REEs from mines operated by Chinese-backed militias.
• The process of isolating individual REEs is complex and environmentally challenging, requiring various chemicals.
• China has a significant lead in the innovation and production of industry-critical magnets.

Western Response and Future Strategies

• The United States is actively seeking to secure its own REE supplies.
• A long-term solution requires substantial investment in mining and refining capabilities in Western economies.
• The cheap prices offered by China have created a dependency on its REE products, making diversification a complex undertaking.

Conclusion

China's dominance in the rare earth element supply chain presents a significant geopolitical and economic challenge. The country's control over mining, refining, and magnet production, coupled with export restrictions, gives it considerable leverage over global industries. Western economies are now racing to diversify their REE sources and invest in domestic mining and refining capabilities to reduce their dependence on China.