China and Rare Earth Elements (REEs)
Overview
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China is the world’s largest producer of rare earths, contributing >60% of global production.
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Dominates the value chain: ~92% of global refining capacity, largest exporter (~30% of global demand).
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Rare earths are vital for clean energy, defense, and high-tech industries (EVs, wind turbines, smartphones, hard drives).
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China holds ~50% of global REE reserves.
Rare Earth Elements (17 metals)
| Type | Examples |
|---|---|
| Light REEs (LREEs) | Lanthanum, Cerium, Praseodymium, Neodymium, Samarium, Europium |
| Heavy REEs (HREEs) | Gadolinium, Terbium, Dysprosium, Holmium, Erbium, Thulium, Ytterbium, Lutetium, Scandium, Yttrium |
| Not included | Promethium (radioactive, not mineable) |
China’s Measures and Controls
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April 2025: Export restrictions on 7 rare earth elements (including NdFeB magnets).
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Companies must operate under government-set quotas and obtain approval for trade.
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Previous measures:
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Ban on exporting extraction/separation tools and methods
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Ban on processing technology exports (Dec 2023)
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Global Dependence
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U.S.: Second-largest importer; heavily reliant on China.
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India: >75% of rare earth imports from China since 2021.
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Other REE-rich countries: Brazil, Australia, India (deposits exist but production/refining limited).
Reasons for China’s Dominance
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Resource availability: Holds half of global reserves.
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Refining & production capacity: 92% of global refining.
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Research strength: ~30% of global REE research publications.
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U.S. & Japan: ~10% each
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India: ~6%
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High investment in exploration: ~$14 billion/year since 2022 (highest in past decade).
Strategic Importance
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Rare earths critical for:
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Electric vehicles, wind turbines (clean energy)
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Defense applications (missiles, electronics)
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High-tech devices (smartphones, computers)
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China’s export controls highlight geopolitical leverage in global supply chains.