Recently, the Chinese government officially announced a new restrictive regulation on rare earth exports. Although Chinese authorities were quick to clarify that this policy shift does not intend to “weaponize” rare earth resources, the U.S. government responded with swift, trade war-style countermeasures, i.e., raising tariffs on certain Chinese rare earth products to as high as 100%, and expanding export restrictions on semiconductor design software and aircraft engines. This new round of the “rare earth conflict” has already transcended the realm of trade alone. However, most opinions and commentaries remain focused narrowly on rare earths themselves. Analysts view this policy maneuvering as reigniting a strategic contest over resource security on the global stage, while also sparking intense debate over whether China still holds a “rare earth trump card”.
That said, some of the discourse appears to lag behind the evolving reality of the rare earth industry in the West. Analysts note that in the past five years, developed countries have undergone significant changes in rare earth industry development, government support, and technological capability. These nations have already begun, and in some areas, completed key preparations to “de-Sinicize” their rare earth supply chains.
First, the long-standing barriers that hindered the U.S. from achieving rare earth independence are gradually being overcome.
For years, Chinese observers have commonly believed that while the U.S. possesses rare earth reserves, it lacks refining capacity. Yet, the U.S. was once a dominant player in the rare earth industry. The Mountain Pass mine in California was the world’s largest supplier of rare earth metals in the 1990s. However, with China reshaping the global market through centralized industrial policy and cost advantages, the U.S. rare earth supply chain gradually disintegrated. In contrast, China’s rare earth industry steadily rose, and in recent years, the country has come to control over 95% of the world’s rare earth refining capacity.
The 2010 diplomatic dispute between China and Japan, which led to a disruption in rare earth exports, once again alerted the United States to the fact that the “refining stage” is the true strategic chokepoint. Since then, the U.S. Congress has introduced a series of bills, including the Rare Earths and Critical Materials Revitalization Act. However, due to a lack of executive push and financial support, most of these initiatives remained on paper.
A turning point came in 2020. The Trump administration, for the first time, invoked the Defense Production Act to allocate USD 250 million toward the rare earth supply chain. This funding supported companies such as MP Materials, Lynas USA, and E-VAC Magnetics, helping to accelerate the construction of domestic refining facilities. By 2024, the U.S. had significantly reduced its reliance on Chinese rare earth imports, as well as its rare earth exports to China, with both figures seeing double-digit declines. The notable increase in American refining capacity appears to be the primary driver behind this shift.
A direct reflection of this shift is MP Materials’ decision to stop exporting rare earth concentrate to China. In April 2025, MP announced it would halt sales of rare earth concentrate to China, effectively ending more than two decades of trade ties. Previously, over 70% of the company’s revenue came from contracts to export concentrate for refining in China. This move marks a transition in the U.S. rare earth industry from policy declarations to concrete industrial action. The U.S. Department of Defense had already signed long-term procurement agreements with MP, and Apple and Ford subsequently entered into investment and prepayment agreements with the company.
Secondly, the use of state power to reshape the rare earth supply chain represents the true challenge to China's price advantage. Over the past decade, China’s rare earth industry has dominated through price leverage. State-owned enterprises, supported by policy loans and economies of scale, have effectively kept competitors out of the market. After experiencing multiple "rare earth shocks," Western countries have begun to abandon traditional free-market principles, shifting instead to state-led industrial support policies characterized by long-term contracts and price floors.
In 2022, the U.S. Department of Defense awarded MP Materials a USD 35 million contract to establish a heavy rare earth refining facility at its mine. In July 2025, the U.S. further signed a ten-year offtake agreement with MP, setting a price floor of USD 110 per kilogram for neodymium-praseodymium oxide (NdPr) to ensure stable revenue for the company. This price support mechanism may become a key element in building a "de-Sinicized" supply chain.
The U.S. government's actions have significantly boosted confidence in the private sector. Apple and Ford have each signed long-term procurement agreements with MP, making advance payments of hundreds of millions of dollars to secure supplies of permanent magnets for electric vehicles and electronic devices. At the same time, countries such as Japan and Australia have also adopted a dual strategy of state investment and long-term orders to support Western companies like Lynas.
Because of its continuous improvements in resource and technological reserves, the U.S. has even begun exporting its rare earth technologies. In October 2025, Turkey announced a partnership with the U.S. to jointly develop the Beylikova rare earth mine in Anatolia, which contains key elements such as praseodymium and neodymium. Previously, Turkey had held talks with China and Russia, but negotiations fell through due to significant differences in their stances on technical cooperation. After inspecting MP Materials’ facilities, Turkish officials confirmed that the U.S. had acquired heavy rare earth refining capabilities, prompting them to shift toward signing a cooperation agreement with the U.S. The two countries agreed to build a joint venture refinery in Turkey, using American technology to enable full-process refining.
Around the same time, Pakistan also completed a critical rare earth deal with the U.S., launching a strategy of exchanging rare earths for resource support. In early October, U.S. Strategic Metals (USSM) received the first shipment of concentrated rare earth materials from Pakistan, marking the beginning of a USD 500 million cooperation project. A multi-metal rare earth refinery will be established in Pakistan in the future. This represents the first time the U.S. rare earth industry has exported its technological system to South Asia, signaling that Washington is expanding its global control over rare earth resources through supply chain diplomacy.
This “re-globalization of the supply chain” strategy can be seen as a reflection of the U.S.’ renewed confidence in its own rare earth technology. Without a maturing refining system as a foundation, the U.S. would neither be able to commit to technology transfers abroad nor build joint venture refineries in multiple countries.
Furthermore, the technical bottlenecks in refining capabilities are gradually being overcome by the U.S. For a long time, it was widely believed that the U.S. could only separate light rare earth elements (such as lanthanum, cerium, neodymium, and praseodymium), but lacked the ability to refine heavy rare earths (such as terbium, dysprosium, and samarium). However, since 2023, this situation has been steadily changing.
An MP Materials senior vice president previously stated in an interview that the company is building refining facilities to process heavy rare earth elements, with plans to begin production within 2–3 years. In June 2025, MP announced that its Mountain Pass facility had successfully produced “SEG+”, a high-value mixture containing medium and heavy rare earths such as samarium, europium, gadolinium, terbium, and dysprosium. This marks the U.S.'s tangible return to heavy rare earth separation capabilities after a 30-year gap.
It is also important to note that the U.S. is not acting alone. France’s Solvay and Australia’s Lynas already possess commercial-scale heavy rare earth separation capabilities, and Norway’s REEtec is advancing its own heavy rare earth project. In April 2025, Solvay publicly declared for the first time that it is capable of separating all rare earth elements, significantly elevating its global standing in the field of integrated refining capabilities.
Looking at the recent technological and industrial developments, the claim that the U.S., and indeed the West in general, is "incapable of refining heavy rare earths" is increasingly untenable. The U.S. and its allies are forming a collaborative network that spans the entire supply chain, from mining to refining to magnet manufacturing. This trend suggests that China’s monopoly advantage is gradually being eroded. While China still holds certain cost advantages in specific areas, it no longer possesses an impenetrable technological barrier. Moreover, as researchers at ANBOUND have previously noted, the U.S. and Western countries have made sustained progress over the past five years in bio-extraction technologies, achieving several breakthroughs. These developments offer a potential alternative path that could bypass China's technological dominance. Should these technologies be fully commercialized and scaled into production, China’s lead in rare earth technology may be further undermined.
China's recently introduced new regulations on rare earth export controls, designed as a response to the latest wave of U.S. non-tariff barriers and tech export restrictions, may, from a global perspective, further reinforce the West’s determination to restructure supply chains. The U.S. is integrating rare earths and critical minerals into a "secure supply chain alliance" through frameworks such as the G7 and the Quad (U.S., Japan, India, and Australia). The fact that Turkey and Pakistan have pivoted toward cooperation with the U.S. in this context illustrates how rare earth supply chain competition is shifting from a bilateral U.S.-China contest to a broader multilateral effort focused on resource security and technological standards. The U.S. is not only gradually restoring its domestic refining capacity but is also exporting rare earth technologies, establishing price floor mechanisms, and building long-term procurement networks. This suggests that the deterrent effect of China's rare earth export controls may gradually diminish.
Logically, if the U.S. was able to dominate 50% of the global rare earth market thirty years ago, then under the combined forces of policy, capital, and technology, it is not impossible for the U.S. to once again achieve a “supply chain reconstruction”. It will simply require a longer time frame. Conversely, as the Western industrial and supply chain systems become more complete, China’s rare earth industry may face dual pressures: idle production capacity and a declining share in the international market.
In October of this year, MP Materials’ latest financial report revealed that as production capacity continues to expand, the company’s losses are also steadily increasing. As seen in other sectors undergoing "decoupling" from China, the process is inevitably disrupted by factors such as cost, due to the deep integration of Chinese industrial chains within the global system. The path to disentanglement is bound to be full of setbacks. Therefore, the ongoing reconstruction of the U.S. and Western rare earth supply chains does not mean that China’s rare earth industry has completely lost its strategic value. Rather, it means that it can no longer function as a one-dimensional “lever of leverage”. From a technological perspective, it would be unreasonable to assume that once an industry’s production capacity has shifted to China, the West will forever lose the ability to produce such products. True competition is shifting, from resource monopolies to a systemic contest involving technology, cost efficiency, and supply network resilience.
Final analysis conclusion:
Over the past decade, China’s overwhelming advantage in the rare earth industry has indeed provided the country with significant strategic buffer space. However, as the outside world has, through more than ten years of sustained effort, gradually built a diversified system covering mining, refining, separation, and magnet manufacturing. From the policy evolution of the United States, Australia, Japan, and Europe, it is clear that the nature of the rare earth supply chain is shifting, from "cost competition" to "security-oriented planning", and from a "market logic" to a "state logic". In this context, China’s control over rare earths still holds influence over industrial development and pricing, but it is unlikely to remain dominant. Rare earths are still an important bargaining chip for China, but their role is increasingly that of a negotiation lever or strategic signal, rather than being capable of unilaterally altering the course of a trade war. The true determinant of the future direction of the U.S.-China rare earth competition may not lie in the ores themselves, but in the rebalancing of technology, industrial organization, and international collaboration.
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Zhou Chao is a Research Fellow for Geopolitical Strategy programme at ANBOUND, an independent think tank.
