Last month, China’s Ministry of Industry and Information Technology introduced interim measures to tighten controls on ‘rare earth’ mining and processing. The rules are the latest in Beijing’s efforts to centralise oversight of extraction, exports, and refining.
While China’s trading partners such as India and the U.S. are seeking alternative sources to reduce dependency, data shows that China’s dominance in rare earths stems not only from resource availability but more so from its longstanding strength in mining and research capacity.
Rare earth elements (REEs), despite the name, are not particularly scarce. According to the International Energy Agency (IEA), they comprise 17 metals, typically grouped into light rare earths (LREEs) — including lanthanum, cerium, praseodymium, neodymium, samarium and europium — and heavy rare earths (HREEs) such as gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium. Promethium is not included in the list as it is radioactive and does not occur in mineable quantities.
They are critical components in clean energy technologies such as electric vehicles and wind turbines, as well as in defence applications. Rare earths are also essential for high-tech devices including smartphones and hard drives.
Although rare earth deposits exist in countries such as Brazil, Australia, and India, China holds nearly half of the global reserves. Chart 1 shows country-wise share (in %) of global reserves of rare earths (as per U.S. Geological Survey 2025)
It is also the world’s largest producer, contributing over 60% of global production in the last five years. Chart 2 shows the country-wise share of the estimated global mine production of rare earths in the last five years
Beyond extraction, China dominates the value chain with around 92% of global refining capacity, according to the IEA. Moreover, in the last five years, China has been the largest exporter, supplying close to 30% of global demand. Chart 3 shows the country-wise share of the estimated global mine production of rare earths in the last five years
Charts 1, 2 and 3 establish China’s dominance across reserves, production, and exports.
In April, amid escalating U.S.-China trade tensions, Beijing imposed export restrictions on seven rare earth elements. The move targeted elements used in neodymium–iron–boron (NdFeB) magnets — essential for clean energy technologies — as well as those critical to ceramics, phosphors, steel, optical glass, fibres, and aerospace applications.
Chart 4 shows the sector-wise demand for rare earth elements under export controls announced by China in April
China’s decision to curb rare earth exports, amid tit-for-tat tariffs, dealt a significant blow to the U.S., which remains heavily dependent on Chinese supply.
Chart 5 shows the major importers of China’s rare earth. Figures in % show their share in China’s exports
The U.S. is the second-largest importer of Chinese rare earths, after Japan. India, too, is heavily dependent on China for its rare earth imports. Since 2021, more than 75% have come from China.
Under China’s interim measures announced last month, Chinese companies must now operate within government-set quotas for various minerals and obtain approval to trade in rare earths. This is not the first time China has tightened its rare earth trade. It has already prohibited export of tools and methods used to extract and separate rare earths, and in December 2023, it banned the export of processing technology.
China’s monopoly over rare earths is also reinforced by its strong research base. A study found that China leads the field of rare-earth research, contributing nearly 30% of all published papers. The U.S. and Japan followed with shares of 10% or less, while India accounted for about 6%.
In parallel, China has increased funding for mineral exploration, allocating about $14 billion annually since 2022, according to the IEA. The agency notes that this marks the highest three-year stretch of investment in the past decade.
The data for the charts were sourced from the U.S. Geological Survey, UN COMTRADE, the International Energy Agency, AP and Reuters
Published – September 12, 2025 07:00 am IST
