Between reading a Pentagon press release and witnessing a German neodymium vault guarded by armed guards, there is a point at which the rare earth story ceases to feel like a niche industrial dispute and begins to feel like something more significant. Really, it was a slow-motion realization. The kind of situation that Western capitals appear to be going through at the moment, blinking in conference rooms under fluorescent lights, wondering how they got here.
Beijing tightened its hold once more in the latter part of last year. Not only on the minerals themselves, but also on the technology used to refine them, which is what most people overlook. Within hours, Trump imposed 100% tariffs on Chinese goods, calling it economic aggression. Since then, both sides have somewhat reversed their positions, but no one truly thinks the truce is more than a pause. Trade analysts believe that the underlying conflict will not go away.
| Topic Snapshot | Details |
|---|---|
| Subject | China’s dominance over global rare earth processing and refining |
| Share of global refining capacity | Roughly 87% controlled by China |
| Number of rare earth elements | 17, including neodymium, dysprosium, europium, and terbium |
| Key policy shift | October 2025 export controls on rare earths and refining technology |
| Largest historical Western mine | Mountain Pass, California (once supplied 100% of world’s europium) |
| Major Western response projects | MP Materials (Texas, California), Lynas (Texas refinery), US–Japan–South Korea magnet venture |
| Industries most exposed | Defense (F-35, Tomahawk), EVs, wind turbines, data centers, semiconductors |
| Main analyst quoted | Miquel Vila, geopolitical risk consultant |
| Estimated illegal export share (mid-2000s) | Up to one-third of Chinese rare earth output |
| Strategic risk for the West | Long lead times to rebuild refining and magnet manufacturing capacity |
The peculiar thing about rare earths is that they aren’t truly rare. The geology can be found in many places, including the United States, Australia, Brazil, Vietnam, and even a frozen area of northern Sweden close to Kiruna. The laborious, chemically harsh process of converting ore into something usable is what China controls. It’s a position built over decades, protected by a 1990s state policy that essentially ignored environmental harm and undercut all rivals on price until they vanished into thin air.
Speaking with those who recall the former Mountain Pass mine in California can teach you a little bit about the demise of industries. All of the world’s europium was produced at that one location during its peak. After taking tours, taking pictures, and asking courteous questions, Chinese executives left to construct something more ambitious back home. When rivers began to turn orange due to sulfuric acid runoff in the late 1990s, Beijing began enforcing quotas, not to completely clean things up but to control prices, consolidate, and drive out foreign competitors.
The chokehold that everyone is currently discussing is the outcome. China is home to about 87% of the world’s refining capacity. These minerals are used in wind turbines, satellites, EV motors, MRI machines, F-35 fighter jets, and Tomahawk missiles. Investors actually store rare earth stockpiles behind 3.5-meter walls at a company in Germany that is guarded by armed guards. You can tell how the mood has changed just from that particular detail.
For many years, Beijing wagered that Western governments were too sluggish and preoccupied to launch a significant industrial response. It was a reasonable presumption. Maybe it wasn’t until then. Through the Defense Production Act, the Pentagon is now supporting MP Materials to resume magnet production in Texas and heavy rare earth refining in California. Lynas, an Australian company, is constructing a refinery in Texas with US funding. In an effort to lessen Chinese influence, Japan and South Korea are discreetly partnering to manufacture magnets.
It remains to be seen if any of this is timely. Refineries require years. Permits are more time-consuming. It is nearly impossible to locate competent chemists with experience in rare earths outside of China. Many Western manufacturers are already taking independent action, such as financing refining capacity, signing offtake agreements, and discreetly hedging, because they believe that governments cannot wait to resolve this.
The historical rhyme in this passage is difficult to ignore. China pursued semiconductor self-sufficiency as a result of US chip controls. China’s mineral restrictions may now be having the opposite effect. Beijing may have given Washington the political cover it required by aiming for a chokehold. It’s still unclear if the West is moving quickly enough. However, the strategy no longer appears to be biased for the first time in years.
