Two Countries Supply 80% of the World's Rare Earth Elements

A deep look into how China and the United States control the critical materials powering the green transition and modern defense.

Rare earth elements have quietly become the foundational infrastructure of the twenty-first-century global economy. These critical minerals are essential components in everything from everyday consumer electronics like smartphones to the hardware driving the green energy transition, including electric vehicle batteries and offshore wind turbines. They are equally vital to national security, serving as indispensable materials in modern military hardware, including advanced missile guidance systems. Because the transition to a low-carbon economy relies heavily on these technologies, global supply chains are entirely dependent on the steady flow of these minerals. Without them, the global shift toward renewable energy and advanced technology would effectively grind to a halt.

Currently, this critical resource is concentrated in the hands of just two nations. China and the United States together control roughly 80% of global rare earth production. This extraordinary concentration of supply gives both countries outsized leverage over virtually every high-tech supply chain on the planet. However, the balance of power between these two producers is far from equal, and the structural dynamics of the market reveal a deep, systemic vulnerability for Western industries.

The Extraction Divide

When looking at raw extraction, the global landscape is heavily skewed. China alone accounts for roughly 60% of global mine output. This dominant position is not a sudden development or a geological accident; rather, it is the result of a decades-long strategic bet. While Western nations largely ignored the long-term importance of these minerals, focusing instead on cheaper, outsourced production, China invested heavily in the infrastructure, technology, and expertise required to dominate the sector.

The United States has emerged as the second-largest producer of rare earths, primarily driven by the revival of the Mountain Pass mine in California. After years of closure due to economic and environmental challenges, the Mountain Pass facility was brought back online to secure a domestic source of these critical minerals. Yet, despite this successful restart, American mining output remains a mere fraction of China's massive extraction capacity. While the U.S. has reclaimed its position as a major miner, it remains heavily reliant on foreign partners to turn its raw materials into usable components.

The Processing Bottleneck

To understand the true extent of global dependence, one must look beyond raw mining output. Mining is only half the story; the raw ore extracted from the earth is useless without highly complex chemical refining. In this arena, China’s dominance is even more pronounced. China processes about 85% of the world's rare earths.

This processing monopoly creates a remarkable geographical bottleneck. Because the infrastructure required to refine rare earths is highly specialized and concentrated in China, raw ore dug up in other parts of the world—including Australia and even the United States—is frequently shipped across the ocean to Chinese facilities to be refined. Consequently, even if a country succeeds in mining its own domestic deposits, it remains tethered to Chinese industrial infrastructure to transform those minerals into the high-purity chemicals and magnets required for advanced manufacturing.

Geopolitical Leverage and Market Shockwaves

This extreme concentration of processing power has transformed rare earths into a potent geopolitical tool. China has demonstrated that it is willing to use this leverage to protect its strategic interests. In 2023, Beijing tightened export controls on key rare earth processing chemicals. This policy shift sent immediate shockwaves through Western defense and automotive industries, which rely on a predictable supply of these chemicals to manufacture electric vehicle motors and military guidance systems.

For Western policymakers and industrial leaders, the 2023 export controls served as a stark reminder of the vulnerabilities inherent in a highly centralized supply chain. A disruption at any point in the Chinese refining pipeline has immediate, cascading effects on global manufacturing, forcing companies and governments to urgently reassess their sourcing strategies.

The Long Road to Diversification

As governments attempt to de-risk their supply chains, they face a rapidly ticking clock. Demand for rare earth elements is heading in only one direction. Driven by the global push for electric vehicles, the installation of massive offshore wind turbines, and the modernization of defense systems, analysts expect global demand for these critical minerals to roughly double by 2035.

In response to this looming supply squeeze, new mining and processing projects are being planned in several resource-rich regions, including Canada, Greenland, and South Africa. These projects aim to establish independent supply chains that bypass the existing bottlenecks. However, building a rare earth supply chain is not a quick or simple task. From initial exploration and environmental permitting to constructing the specialized chemical infrastructure required for refining, building a new mine and a refinery typically takes a decade.

Because of these long development timelines, the current concentration of market power is highly durable. While the international community is actively working to diversify its sources, the dual dominance of China and the United States—and China's overwhelming control of the refining process—will remain the defining feature of the high-tech geopolitical landscape for years to come.

Frequently asked

Which countries control the majority of global rare earth production?

China and the United States together control roughly 80% of global rare earth production, giving them massive leverage over high-tech and green energy supply chains.

Why is mining only part of the rare earth supply chain challenge?

While mining extracts the raw ore, the material must be refined to be useful. China processes about 85% of the world's rare earths, meaning even raw ore mined in the United States or Australia is often shipped to China for refining.

What is the significance of the Mountain Pass mine?

Located in California, the Mountain Pass mine is the primary reason the United States is the world's second-largest producer of rare earths. It was brought back online after years of closure, though American output still remains a fraction of China's.

How is global demand for rare earths expected to change?

Driven by the rapid growth of electric vehicle motors, offshore wind turbines, and advanced defense systems, global demand for rare earth elements is projected to roughly double by 2035.

Can other countries quickly establish independent rare earth supply chains?

No. Although new mining and refining projects are being planned in countries like Canada, Greenland, and South Africa, building a fully operational mine and refinery takes about a decade, meaning current supply concentrations will persist for years.

This explainer is AI-assisted and fact-checked against the cited primary sources above.