The real battlefield for global rare earths is not underground; China has unparalleled advantages
The control of the global rare earth supply chain lies in refining and processing capabilities, rather than underground resources. China almost monopolizes the rare earth refining segment, and the Ministry of Commerce and the General Administration of Customs have implemented export controls, causing rare earth prices to triple within a week. Global rare earth trade is highly concentrated, with 89% of trade relationships relying on a few suppliers. Although raw material extraction is dispersed, the refining segment is almost entirely concentrated in China, supplying 65% of refined lithium and nearly 80% of refined cobalt globally. The United States' dependence on Chinese rare earths has intensified, with over 90% of rare earth imports coming from China in 2023
The true control of the global mineral supply chain does not lie in who owns the underground resources, but in who possesses the refining and processing capabilities.
According to a report by CCTV News, the Ministry of Commerce and the General Administration of Customs announced on April 4th that export controls would be implemented on certain items related to medium and heavy rare earths.
According to information from the Chasing Wind Trading Platform, Barclays stated in a report on May 29th that China holds a near-monopoly position in the rare earth refining segment, and this advantage was vividly demonstrated in the export controls of April 2025—rare earth prices surged threefold within a week.
Barclays noted that global rare earth mineral trade is extremely concentrated. In terms of value, 89% of mineral trade relationships are concentrated. Specifically, 43% of trade relationships rely on five or fewer suppliers, while 46% depend on three or fewer suppliers.
A few emerging and developing economies dominate the extraction of key raw materials: the Democratic Republic of the Congo supplies 73% of the world's cobalt ore, Guinea supplies 70% of the bauxite, South Africa supplies 80% of the chromium ore, and Kazakhstan controls over 90% of the primary beryllium supply. This highly concentrated supply chain makes the global mineral supply extremely fragile and susceptible to disruption.
Although raw material extraction is dispersed across multiple countries, almost all processing and refining stages are concentrated in China. China supplies 65% of the world's refined lithium and nearly 80% of refined cobalt. In the rare earth sector, China controls over 90% of the global refined rare earth supply.
Barclays stated that this dominance is not accidental. Over the past two decades, China has systematically built the facilities, expertise, and industrial ecosystem necessary to convert raw materials into inputs for batteries, electronic products, and green technologies.
Geopolitical tensions have actually intensified the reliance on China's mineral supply chain. In 2023, over 90% of U.S. rare earth imports came from China, a significant increase from 70% in 2013.
This shift is driven by two main factors: first, U.S. restrictions on Russia (formerly the second-largest supplier) have reduced its market share; second, the surge in demand for rare earths, with only China currently capable of meeting such scale of demand.
The U.S. and Europe are heavily dependent on China's rare earth refining capabilities. The only rare earth mine in the U.S.—the Mountain Pass mine in California—extracts light rare earths, but 80% of its output is sold to China for processing. Japan's magnetic rare earth industry has a similar story: although Japan imports a large amount of rare earth oxides from non-Chinese suppliers, downstream reliance still exists—Japanese companies often send materials and components to China for final processing Barclays warns that the Ukraine-U.S. mineral agreement has strategic significance, but it is difficult to change the global mineral supply pattern in the short term, with the main bottleneck currently being refining capacity rather than mining.
Ukraine holds about 5% of the world's rare earth reserves and has one of the largest lithium and titanium reserves in Europe. However, a surge in the supply of critical minerals from Ukraine remains a distant prospect. The real constraint is not the mining of minerals, but the refining capacity, an area where China has an unparalleled advantage.
Analysts believe that even with new investments, establishing rare earth refining in Ukraine will not happen overnight. Many products from existing refining lines are specifically tailored for the U.S. industry and can seamlessly integrate into the U.S. supply chain. Reconfiguring this supply chain will take years and may mean a comprehensive reform of the global supply chain.
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