Rare earth elements: China's refining monopoly and the magnet chokepoint
Rare earth elements are 17 metals, from lanthanum to lutetium plus scandium and yttrium, whose main use is in the permanent magnets inside electric vehicle motors, wind turbines, electronics and weapons systems. They are not rare in the Earth's crust. What is rare is the capacity to separate them: world mine production was about 390,000 tonnes of rare earth oxide in 2024, per the USGS, and China mined about 270,000 tonnes of it, but it refined about 91% of all rare earths and made about 94% of sintered magnets, according to the IEA.
That processing monopoly became a chokepoint in April 2025, when China put seven medium and heavy rare earths under export licence, including dysprosium and terbium, the two elements that keep magnets working at high temperature. The licensing is still in force. A broader October 2025 package covering five more elements and products made abroad with Chinese rare earths is suspended until 10 November 2026. See China's critical mineral export controls.
Key numbers
| Metric | Value | Source | As of |
|---|---|---|---|
| World rare earth mine production | ~390,000 t REO | USGS | 2024 |
| China mine production | 270,000 t REO | USGS | 2024 |
| China share of refining | ~91% | IEA | 2024 |
| China share of sintered magnets | ~94% | IEA | 2024 |
| US mine production | 51,000 t REO | USGS | 2025 |
| US imports of rare earth compounds and metals | +169% | USGS | 2025 |
| Lanthanum oxide price | ~$1/kg | USGS | 2025 |
| NdPr price floor under the US defense deal | $110/kg | US Department of Defense | 2025-07 |
Supply: who mines and refines rare earths
China mines light rare earths at Bayan Obo in Inner Mongolia and in Sichuan, and heavy rare earths from ionic clays in southern provinces such as Jiangxi, and it imports heavy rare earth feedstock from Myanmar. It also separates most of the concentrate mined elsewhere. Outside China, MP Materials mines bastnaesite at Mountain Pass in California, where the United States produced about 51,000 tonnes of rare earth oxide in concentrates in 2025, per the USGS. Lynas mines at Mount Weld in Australia and separates in Malaysia, and began producing separated heavy rare earths there in 2025. Output is also rising in Nigeria and Thailand.
Demand: who uses them
Magnets are the leading global use, per the USGS, followed by catalysts, batteries, ceramics, glass, metallurgy and polishing. Neodymium-iron-boron magnets, with praseodymium and small additions of dysprosium or terbium, drive electric vehicle motors and wind generators; samarium-cobalt magnets serve high-temperature defense applications. Cerium and lanthanum, the most abundant rare earths, are cheap: lanthanum oxide averaged about $1 a kilogram in 2025.
Supply chain chokepoints
Separation and refining. Separating rare earths from each other is chemically complex and polluting, and China holds most of the capacity and the know-how.
Magnet making. Even rare earths separated outside China are mostly turned into magnets in China.
Heavy rare earths. Dysprosium and terbium come mainly from Chinese and Myanmar ionic clays, and Lynas's Malaysian plant is the only commercial source outside China.
Chinese licensing. Export licences for seven elements since April 2025, a ban on supply to foreign military users, and controls on processing technology.
Price dynamics
China's domestic market sets most prices, and export controls open gaps between Chinese and international prices for controlled elements. The US Defense Department's July 2025 partnership with MP Materials set a floor of $110 a kilogram for neodymium-praseodymium oxide, a signal of how far governments are willing to go to sustain production outside China. Light rare earths such as cerium and lanthanum stay cheap because they are produced in surplus.
Historical disruptions
| Date | Event | Observed impact | Source |
|---|---|---|---|
| 2025-11-07 | China suspends the October 2025 rare earth measures until 10 November 2026 | April licensing stays in force; general licences issued to selected exporters | USGS; MOFCOM |
| 2025-10-09 | China adds europium, holmium, erbium, thulium and ytterbium and extraterritorial rules | Suspended a month later | USGS |
| 2025-07 | US Defense Department partners with MP Materials | NdPr price floor of $110/kg and funding for magnet production | US Department of Defense |
| 2025-04-04 | Licences for samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium | Magnet shortages reported outside China | USGS; Reuters |
| 2014 | WTO rules against China's rare earth export quotas | Quotas removed | WTO |
| 2010-09 | China halts shipments to Japan during a territorial dispute | Prices spike in 2011 | Reuters |
Companies and assets along the chain
China. China Northern Rare Earth and China Rare Earth Group, plus magnet makers such as JL Mag.
Outside China. MP Materials (United States), Lynas (Australia and Malaysia), Iluka (Australia), Neo Performance Materials, Solvay, and magnet makers Shin-Etsu, Proterial and VAC.
Users. Automakers, wind turbine manufacturers, electronics firms and defense contractors. This entry is descriptive: the encyclopedia does not publish recommendations.
What to watch
- 10 November 2026, when the suspension of the October 2025 controls expires.
- Chinese export data for magnets and heavy rare earths by destination.
- Start-up of separation and magnet plants outside China.
- US and EU stockpiling of NdPr oxide and magnets.
FAQ
Which country produces the most rare earths? China, with about 270,000 tonnes of rare earth oxide mined in 2024 out of a world total of about 390,000, per the USGS. It also refines about 91% and makes about 94% of sintered magnets, according to the IEA.
Are rare earths actually rare? No. They are relatively abundant in the Earth's crust, but concentrations worth mining are less common, and separating the 17 elements from each other is difficult and expensive. The bottleneck is processing, not geology.
What are rare earths used for? Mainly permanent magnets for electric vehicle motors, wind turbines, electronics and defense systems. They are also used in catalysts, batteries, glass, ceramics and polishing.
Is China restricting rare earth exports? Yes. Since April 2025, exports of seven medium and heavy rare earths, including dysprosium and terbium, require licences. A wider set of controls announced in October 2025 is suspended until 10 November 2026.
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