The West’s Bold Move to Crack China’s Rare Earth Monopoly

By Tsvetana Paraskova – Nov 20, 2025, 5:00 PM CST

Western nations are racing to build independent rare earth and magnet supply chains after China restricted exports of key heavy rare earth elements like dysprosium and terbium.
China controls about 90% of global refining and 94% of magnet manufacturing.
The U.S., Canada, and Europe are investing in projects such as MP Materials’ Mountain Pass expansion and Aclara’s Louisiana separation facility to create mine-to-magnet capacity by 2028.

Since China restricted exports of rare earth elements early this year, Western countries have raced to create mine-to-magnet supply chains to reduce dependence on Chinese supply in the key military and automotive industries.

The Trump Administration is ensuring funding through buying minority stakes in North American rare earth and lithium companies and projects, while companies in the U.S. and Europe are setting up alliances with miners and refiners to have magnet supply chains outside and independent of China.

The West has realized it’s late to the party, considering that over the past two decades, China has built so much mining and refining capabilities that it now holds more than 90% of the global refined production of rare earths.

North America and Europe are looking to break the near-monopoly of China in rare earth elements, especially the so-called heavy rare earth elements (HREE), which are rarer in rare earth oxides and more difficult to source.

Two of these HREEs, or heavies as industry executives refer to them, are so crucial to the manufacturing of high-performance permanent magnets that the magnets used in defense and military applications and the automotive industry cannot perform at high temperatures without them.

These are dysprosium and terbium—elements that the magnets in vehicles, defense, and missile systems need to withstand rising temperatures.

Chinese Control

Dysprosium and terbium were at the top of the list of the Chinese export curbs announced in early April. China restricted exports of dysprosium, terbium, gadolinium, scandium, samarium, yttrium, and lutetium. These so-called “heavy” and “medium” rare earth elements are mostly used in automotive applications, including rotors, motors and transmission in electric vehicles and hybrids, as well as in the defense industry in parts of jets, missiles, and drones.

“Heavies are definitely the next piece of the puzzle that needs to be dealt with to unlock widespread Western magnet production at scale,” Ryan Castilloux, managing director of Adamas Intelligence, told Reuters.

The rare earth supply chain is among the most highly concentrated across all stages of the value chain, analysts at the International Energy Agency (IEA) wrote in a commentary last month.

Last year, China held a 59% share of the mining of rare earths, 91% in refining, and a whopping 94% in magnet manufacturing, the agency estimates.

China has significantly strengthened its position in the manufacturing of rare-earth-containing permanent magnets. Two decades ago, China accounted for around 50% of the production of sintered permanent magnets commonly used in cars, wind turbines, industrial motors, data centers, and defense systems.

“This share has risen significantly to 94% today, making China the world’s single largest supplier of the component critical to the manufacturing of the most powerful motors that are used for many cutting-edge applications,” the IEA’s analysts said.

“Such high market concentration leaves global supply chains in strategic sectors – such as energy, automotive, defence and AI data centres – vulnerable to potential disruptions.”

Western Alliances Scramble for Heavies

Faced with China’s dominance and the export controls that have disrupted automotive and defense supply chains, North American and European companies are looking to source dysprosium and terbium elsewhere.

The West needs partnerships with holders of rare earth oxide rich in dysprosium and terbium, separation and milling facilities to produce the refined product, and magnet manufacturing capacities, which are just beginning to start up in the U.S.

The West faces years of catching up with Chinese sourcing and refining capabilities and much higher costs than in China.

For example, in the rare earth oxides of MP Materials, which is now backed by a U.S. Department of Defense (DoD) funding and public-private partnership, dysprosium and terbium account for just 4% of the total rare earth oxide at Mountain Pass.

Michael Rosenthal, founder and COO of MP Materials, said on an earnings call earlier this month that “regarding supply sources, we are actively engaged with a number of different types of potential feedstock providers to supplement our own contained HRE content.”

MP Materials plans to commission a terbium and dysprosium production circuit in mid-2026, Rosenthal added.

The company is also working on a magnet partnership recycling with Apple.

Yet, panelists at the E-Scrap Conference in Grapevine, Texas, last month said that recycling, while potentially a major source of rare earths, faces challenges in recovery and separation, Fastmarkets reports.

Molly Mackenzie, manager of strategic partnerships at rare earth recovery company Cyclic Materials, pointed out that tech and automotive designs aren’t currently done with easy recycling in mind. Moreover, the recovery and processing need to happen before end-of-life electronics or motors are exported out of the U.S.

“We can recover material,” Mackenzie said, as carried by Fastmarkets, “but we need to ensure it stays in the US and feeds back into domestic manufacturing rather than being exported for processing.”

Other companies are forming partnerships to create a rare earths supply chain for permanent magnets. Canada-based Aclara Resources will build the first heavy rare earths separation facility in the United States, located in Louisiana, with an expected secured sustainable feed from two ionic clay deposits in Brazil and Chile.

“Our Project is unique in the Western world: with direct access to our ionic clay deposits, this will be the only fully integrated heavy rare earth separation operation currently capable of producing material volumes of heavy rare earths at scale,” Aclara’s CEO, Ramon Barua, said.

“We are moving at an accelerated pace to bring supply online as quickly as possible, and we are working to have our projects converge and enter production by mid-2028.”

Rare Earths Americas, for its part, is advancing a portfolio of high-grade, heavy rare earth assets in the United States and Brazil.

“The rare earths market is undergoing a generational shift as the West races to secure its rare earths future,” Rare Earths Americas CEO Donald Swartz said.

“With grade and strategic geography on our side, we intend to advance our rare earths projects to support the long-term supply of critical materials essential to domestic innovation.”

By Tsvetana Paraskova for Oilprice.com

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