The rare-earth chokepoint

The finding

Western decoupling from Chinese rare earths is a structural project measured in years, because the binding constraint is refining and magnet-making capacity that takes the better part of a decade to build, and China retains the pricing and licensing leverage to slow every new entrant in the meantime.

The concentration sits downstream, in processing. Per the International Energy Agency's 2026 analysis, China accounts for about 60% of mined magnet rare earths and 91% of refining. For the heavy rare earths, the elements that are chemically hardest to separate, the Center for Strategic and International Studies puts Chinese processing above 99%. China also manufactures 94% of the world's sintered permanent magnets, up from roughly 50% in 2005, and the United States operates no heavy-rare-earth separation capacity at present.

The dependence is near-total at the consumption end. The Council of the European Union states that China provides 100% of the EU's heavy rare earths, and the European Commission puts EU reliance on China for rare-earth magnets at 98%. A European Central Bank network analysis found that more than 80% of large European firms sit within three supplier links of a Chinese rare-earth producer, so apparent diversification often masks unchanged underlying reliance.

Beijing moved from controlling the material to controlling access. On April 4, 2025 China added seven medium and heavy rare-earth elements plus the finished magnets to its export-licensing list, processed under a one batch, one licence rule that can take up to 45 working days. By May, magnet exports had fallen 74% year over year to 1,239 metric tons, the lowest monthly figure on record. The October 9, 2025 escalation asserted extraterritorial jurisdiction over any product made anywhere on earth containing at least 0.1% Chinese-origin rare earth by value; that package was suspended in November 2025 for one year, to roughly November 2026, while the April heavy-rare-earth controls remained fully active through every round of talks.

Western capacity is real and sub-scale. MP Materials produced its first commercial magnets at Independence in late 2025, at roughly 1,000 tons per year, against the 138,000 tons of neodymium-iron-boron magnets China produced in 2018. The IEA puts average rare-earth mine lead times near eight years and projects that the top-three refiners' share of supply falls only from 86% in 2024 to about 82% by 2035. At the G7 summit on June 17, 2026 the seven economies committed to push China below 60% of rare-earth and magnet supply by 2030, and the report's simulation finds no run that reaches it.

The numbers that carry it

• Roughly 91%China's share of rare-earth refining per the International Energy Agency's 2026 analysis, alongside about 60% of mined magnet rare earths and 94% of the world's sintered permanent magnets. As of publication, June 2026.
• Above 99%China's share of heavy rare-earth processing, per the Center for Strategic and International Studies. As of publication, June 2026.
• 74% year over yearThe fall in China's magnet exports by May 2025, to 1,239 metric tons, the lowest monthly figure on record.
• Roughly 84% in 2030China's modeled share of magnet-rare-earth refining across a 20,000-run simulation of every announced project, with no run below the G7's 60% target. As of publication, June 2026.
• 90% to 58% over about seven yearsJapan's reduction in Chinese rare-earth dependence after the 2010 cutoff, under full state backing, before it plateaued.

What would change our mind

A durable US-China settlement that permanently reopens heavy rare-earth flows, or ex-China heavy-separation capacity scaling several times faster than the eight-year lead times historically allow.

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Published June 2026. Figures are as of publication and are not updated on this page.