China's control over the global rare earth elements market is facing increased pressure as countries work to establish alternative supply chains and reduce their strategic dependence on a single supplier.
China currently holds 49% of the world's rare earth reserves and controls 69% of global mining production, while maintaining a 90% share of refining operations. This dominance has enabled Beijing to use export restrictions as a geopolitical tool, including temporary cuts to Japan in 2010 and recent bans on gallium, germanium, and antimony exports to the United States in December 2024.
The strategic importance of rare earth elements extends across multiple industries, including electric vehicle motors, wind turbines, military-grade magnets, and high-performance electronics. These 17 minerals are divided into light rare earth elements like neodymium and praseodymium, and heavy rare earth elements such as dysprosium and terbium.
The United States, which holds 2.1% of global reserves but produces 12% of world output, has invested more than $439 million since 2020 to establish domestic supply chains. The Mountain Pass mine in California remains the country's only active rare earth facility, though new projects in Alaska and Wyoming are under development. A significant challenge remains in refining, as much extracted ore is currently shipped to China for processing.
Australia has emerged as a key alternative supplier through companies like Lynas Rare Earth, the largest producer outside China. Lynas operates a major processing plant in Malaysia and plans to open a Texas facility in 2025 with U.S. Department of Defense support. The Australian government has provided substantial backing through its National Reconstruction Fund, supporting projects like Arafura Rare Earths in the Northern Territory.
Brazil represents another significant opportunity, holding 23% of global reserves according to the U.S. Geological Survey. The country's first rare earth mine, Serra Verde, began commercial production in 2024 with investments from both U.S. and UK sources. The project is recognized by the Minerals Security Partnership as part of efforts to create sustainable and diversified supply chains.
Canada has established the Canada-U.S. Joint Action Plan on Critical Minerals and operates the first commercial-scale rare earth metals facility in North America through the Saskatchewan Research Council. The country ordered Chinese state-owned enterprises to divest from Canadian rare earth and lithium projects in 2022.
The Arctic region has become a new area of competition, with Greenland holding approximately 1.6% of known reserves. The U.S. has proposed a Compact of Free Association with Greenland, while the territory has cancelled licenses linked to uranium-rich projects to limit Chinese involvement.
India holds 8% of global reserves but contributes less than 1% to mining production. The government launched the National Critical Mineral Mission in 2025 to build domestic capabilities, with Indian Rare Earths Limited considering reduced exports to expand domestic processing.
Despite these developments, the International Energy Agency projects China's market share will decrease from 69% to 51% in mining and from 90% to 76% in refining by 2030. However, global reliance on existing supply sources is expected to persist in the near term, as alternative supply chains have not yet reached the scale required to substantially displace current sourcing patterns.
The pace of alternative supply network development will depend on increased investment, simplified permitting procedures, and enhanced international cooperation to reduce concentration risks in this critical materials sector.