China has cemented its position as the world leader in rare earth minerals, presenting a formidable challenge to Western efforts to diversify supply chains. According to the Financial Times, the head of one of China’s largest rare earth companies recently declared that international attempts to curb Beijing’s dominance are unlikely to succeed.
“Our tech advances will consolidate China’s rare earth price-setting power,” Xigang Zhang, chief of Rising Nonferrous Metals Share Co, a subsidiary of one of China’s state-owned rare earth giants, told investors. “International markets will remain dependent on China’s rare earth supply chain for the foreseeable future.”
The U.S., Europe, and Japan have been racing to establish non-China sources for minerals and magnets crucial to smartphones, electric vehicles, and fighter jets. Yet analysts agree that breaking Beijing’s grip is a daunting task. China controls roughly 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing globally. Its dominance has been reinforced by decades of strategic planning, acquisitions, and state support.
China has also used its rare earth supply as a lever in global trade negotiations. Export controls have been employed to extract concessions from Washington, while European Commission President Ursula von der Leyen has criticized Beijing for a “pattern of dominance, dependency and blackmail” in the sector.
Despite this dominance, China has generally kept rare earth prices low, discouraging new competitors. Experts warn that replicating this model will be difficult. “They don’t turn around and curb production to raise prices — instead they use this market dominance to retain leverage and then weaponize these resources,” said Gracelin Baskaran, a critical minerals expert at the Center for Strategic and International Studies.
China’s rise in rare earths dates back decades. Mining expanded rapidly in the 1990s amid lax environmental oversight, while strategic acquisitions allowed Chinese firms to acquire foreign magnet technology. By the early 2000s, U.S. production lines had largely closed, and machinery was relocated to Chinese cities. State-backed consolidation has further strengthened Beijing’s position, enabling China to maintain low prices while investing in technological advances and large-scale production.
In response, the West has begun exploring alternative strategies. The G7 announced plans in June to investigate a standards-setting mechanism, potentially limiting China’s low-cost magnet dominance. The U.S. also pledged in July to guarantee a price floor for Las Vegas-based MP Materials, offering to purchase neodymium-praseodymium at double the market price and securing future magnet output.
However, industry insiders remain skeptical about demand for higher-cost non-China magnets outside of defense applications. “The mantra of most western companies has always been ‘lowest cost at any cost,’” said Gareth Hatch, founder of Technology Materials Research. “Why would you buy from a higher-cost producer if lower-cost alternatives are available?”
