China’s Grip on Rare Earths Undercuts Projects from US to Japan

Just a couple of hours outside Houston, near a Dow Chemical Co. plant, America’s efforts to loosen China’s hold on the global supply of rare earth minerals, vital for high technology, have yet to gain significant traction. Despite numerous projects, China’s dominance remains overwhelming—it controls around 70% of the world’s output and more than 90% of refining.

The Texas plant, led by Australia’s Lynas Rare Earths, represents only a fraction of the billions of dollars in subsidies and loans dedicated to producing and refining these critical minerals in the US and allied countries. Lynas secured over $300 million in Pentagon contracts for the 149-acre site, which is expected to begin processing rare earths within two years if all goes according to plan.

National security drives these projects, but a slump in prices since 2022 has weakened the business case. Market conditions, worsened by Chinese competition, raise doubts about whether such initiatives can establish a supply chain that rivals China’s. According to MP Materials CEO James Litinsky, Chinese control over the rare earth supply chain remains strong, despite global efforts.

Rare earths aren’t truly “rare,” but finding them in concentrations sufficient for environmentally responsible mining is difficult. The 17 chemically related elements are crucial for making electronics—from phones to fighter jets—more efficient.

Earlier this year, Laura Taylor-Kale, the US assistant secretary of defense for industrial base policy, assured that by 2027, the US would have a “sustainable mine-to-magnet supply chain” for defense needs. Lynas aims to produce 25% of the world’s rare earth oxides from the Texas facility.

Meanwhile, a price slump driven by China’s increased supply and a weakening domestic economy has made it difficult for most rare earth projects to break even. Countries like Australia, which have invested heavily in rare earth production, are also seeing setbacks.

Arafura Rare Earths, which received an A$840-million government loan for a project in Australia, is facing delays, and Iluka Resources Ltd., another Australian firm, has seen costs for its rare earth refinery soar to A$1.8 billion—far above initial estimates.

China’s control over rare earth markets remains formidable. The Japanese government began its effort to reduce reliance on Chinese rare earths more than a decade ago, learning that such projects take longer and are costlier than anticipated.

Lynas CEO Amanda Lacaze stressed that patience and long-term investments are essential, noting delays in its Texas project due to wastewater permits. Lacaze underscored the need for patient capital, saying, “If we truly want an industry, we’re playing a 30-year catch-up game.”