Breaking China’s Hold on Rare Earth Refining

China controls roughly 80–90% of global rare-earth separation and refining capacity, creating a midstream bottleneck that underpins magnets for EVs, turbines, and defense systems.

Refining is industrial chemistry, not simple metallurgy: closely similar elements require many sequential solvent-extraction stages, tight process control, purpose-built equipment, and rigorous hazardous- and residue-management. Small errors can ruin batches and scaling is technically demanding.

Beijing built capacity and institutional expertise over decades, tolerating environmental and regulatory trade-offs while training large cohorts of operators and engineers. Controls on export of processing know-how since 2023 further hardened that advantage.

The West now faces a severe workforce shortfall — only a few dozen professionals in the U.S., Europe, and Japan have deep, hands-on separation experience — so new plants are costly and slow to staff. Training specialists takes years.

Government-backed projects are emerging: MP Materials halted China-bound shipments in 2025, accelerated domestic refining and secured $150 million in U.S. support; Lynas, Energy Fuels, and planned Gulf Coast complexes signal strategic intent but remain long, expensive undertakings.

Policy conclusions are clear: boosting midstream capacity will require sustained subsidies, industrial-scale training pipelines, strict environmental management, and treating refineries as strategic infrastructure, mirroring lessons from lithium and cobalt supply chains.

The midstream has become a strategic battlefield for supply-chain sovereignty.