RAW MATERIALS RISING
China’s Path to Global Rare Earth Dominance
When you work in emerging tech, you get asked for lists.
People want to know what the top 5 or 10 or 50 emerging technologies will be this year and beyond. So popular are lists of emerging technologies that the Biden White House published a 2024 update to the critical and emerging technologies list originally published by…you guessed it…the Biden Administration in 2022. The differences are subtle, but they speak volumes to industry, academia, and to government policy makers.
Lists of top emerging technologies are an exercise in futility (shhhhh…don’t tell McKinsey or Forbes). The pace of emerging technology development inherently means that any list must be updated or revised before it can be useful to industry executives or government policy makers. Further, lists of emerging technologies include finished products, which only captures part of the entire value chain. If the focus is on the end product, it is pulled away from the upstream technologies and materials required to manufacture those products.
In short, emerging technology lists lie to us.
The US Geological Survey produced a list of critical minerals first in 2018 then revised in 2022 including the 17 rare earth elements (REE) plus an additional 33 for a nice round 50. This list is currently driving initiatives like the Ukraine minerals deal and is a centerpiece of the tariff struggles with China. So, why do people want to see lists that include AI and quantum computing when critical minerals are driving so much of the emerging technology landscape today?
US policy makers have been touting sanctions that prevent adversaries from importing semiconductors or other consumer technologies and showcase the fates of Huawei and ZTE as evidence of efficacy. However, there’s another game afoot as outlined in Revenge of Raw Materials: the counter move by China to restrict US access to raw materials. The US should be not only be building lists of raw materials rather than of finished technologies, but it should also undertake a rigorous effort to:
Educate Americans across sectors on what these materials are used for and why they matter.
Change the psychology of how Americans think about rare earth element supply chains.
Study new economic models for rare earth element extraction and distribution that give the US an advantage.
Recognize the impact of global economic actions on its access to raw materials.
Before the US can achieve dominance in emerging technologies across their value chains, it must build a long-term strategy that prioritizes changing the strategic approach to REE extraction and processing. China spent over 15 years consolidating its REE industry and protecting its REE refining technology to control over 80% of global REE processing to pair with its 40% of proved reserves. The US is unlikely to be able to close the gap on access to the raw materials, but even that book is not closed yet. Creating such world redefining policy should start with an understanding of how we got here and where we stand today.
What follows is a discussion on the real numbers of REE proved reserves, their processing, and the respective actions the US and China have taken since 2010 to put us where we are today. For more information on specific industry impacts, read my piece on neodymium and check back here for the next in our series on specific raw materials.
Reserves
Raw material reserves have dominated the geopolitical consciousness for centuries. The materials change with the evolution of technology, but oil is the easy one. Oil’s application as a raw material in a multitude of products touches American life and life around the world every hour of every day. Events like the 1973 oil embargo and two wars in the Persian Gulf caused fluctuations in the market that people felt in their wallets. Foreign aid, wars, diplomacy, and all manner of state power levers have been pulled in pursuit of oil to the extent that Americans understand how important oil is and how important relationships with countries with proved reserves are.
Proved reserves tell us how much of a given raw material is inside a given country with a certain level of confidence. The CIA World Factbook defines proved reserves this way:
Proved reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with a high degree of confidence to be commercially recoverable from a given date forward, from known reservoirs and under current economic conditions.
The CIA World Factbook maintains an estimate of the proved reserves of petroleum for 214 countries (numbers 99-214 are all zeros; that’s 115 countries with no proved oil reserves). The countries at the top of that list will surprise few:
Venezuela
Saudi Arabia
Canada
Iran
Iraq
Kuwait
UAE
Russia
Libya
Nigeria
The reason this list surprises few is because we’ve all been hearing about these countries relative to oil for decades on the news, and in some cases the US has fought wars in or in defense of some of these countries.
Here’s where lists matter.
A list of the countries with the top 10 proved reserves of petroleum carries a lot of information about the world. For decades, policy makers and strategists have been looking at this list and making globally consequential decisions that have impacted elections, toppled regimes, and made or broken fortunes.
The list they did not base those decisions on was one that included the finished products to which oil contributes.
A less familiar but equally consequential list is that of countries with proved rare earth elements (REE) reserves. This list looks a lot different than the oil list, a list that has driven significant geostrategic activity for decades. The look and character of this list is what matters more in 2025 than any list of top finished emerging technologies:
China (40% of proved reserves)
Vietnam (19%)
Brazil (18%)
Russia (10%)
India (6%)
Australia (3%)
US (1.3%)
Greenland (1.3%)
Tanzania (.8%)
Canada (.7%)
*Numbers 8-10 had zero mining production in 2020
This list turns out to be very informative and should make even casual news observers sit up in their chairs. There are significant geopolitical activities and posturing that can be explained by this list. Many might notice Greenland and recall the Trump Administration’s calls for Greenland to become a US territory. Importantly not on that list is Ukraine, a country with which the Trump Administration announced a deal for REEs and critical minerals. According to news reporting, the deal includes;
Copper
Lithium
Titanium
Graphite
Beryllium
Uranium
Lead
Zinc
Silver
Nickel
Cobalt
Manganese
These are valuable minerals that appear on the USGS critical minerals list but are decidedly not the 17 minerals that constitute REEs. So poor is our collective understanding of REEs that the term is often used interchangeably with other elements, but just from these two lists, we should observe two important points:
Even if the US were able to get access to Greenland’s 1.3% of proven reserves and add Ukraine’s ~0%, that would still only get the US access to 2.6% of global proved reserves.
The delta between China’s 40% of proved reserves and the US’s 1.3% is telling, but even that tells only part of the story.
Being able to access REE deposits through mining is part of the battle, and the US does have an operational REE mine in San Bernardino County, but it is the only such mine in the US and most of its REEs have historically been exported to China for processing. Even if the Mountain Pass mine can produce at full capacity in the coming months and years, it will still suffer from a lack of domestic processing capability. As of April 2025, the Mountain Pass mine has stopped exporting its raw REEs to China citing tariff concerns and the lack of economic viability in continued exports under a 125% tariff.
More on proved reserves later.
Processing
China not only sits on 40% of proved reserves of REEs, they also enjoy a staggering 80% share of global processing capabilities…and the value of those processing capabilities is not lost on them. China has been restricting the export of its refining and processing technology since at least 2010, but potentially back to 2008. China shut off export of technology to process neodymium two years ago, far before the tariffs and trade war began.
China produces about 210,000 metric tons of unprocessed REEs per year to American’s 43,000 metric tons. The devil is truly in the details because while there is a 167,000 metric ton delta, processing is where China has a nearly insurmountable lead. The US exports some of its unprocessed REEs to China where they are processed into usable form. This imbalance is part of what current US policy makers are trying to correct, but they are working against a 167,000 metric ton deficit with unworkable plans to make up the difference (see Greenland and Ukraine).
China has a significant technological and talent lead regarding REE extraction and processing. On April 23, 2025, China announced a major breakthrough in REE separation technology achieving 86% extraction rates and far surpassing western technologies. The ability to process heavy and light REEs is another place where China has a significant lead making the US task of replacing it more difficult.
While it is true that alternatives to China exist and that REEs are not rare in the sense of being difficult to find, we’ve seen this movie before. There have always been alternatives to the oil producing countries list, but at scale those alternatives become difficult to capitalize on. Further, the processing and refining capabilities in the alternative countries is likely to pale in comparison to China’s making this a more difficult problem. Another argument is that REEs are often used in small quantities in finished materials, which is true…currently. As materials sciences evolve, the requirements for REEs could rise making the scalability problem more difficult. The US currently has neither the ability to expand its access to raw REEs in a meaningful way nor the ability to process them domestically. While building these capabilities is a noble goal, near term access still matters and its current economic policies are moving away from access, not toward.
Consolidating
China identified and prioritized the REE value chain going back decades, placing its bet on its REE reserves as a strategic and economic lever to use when the time came. The time came in 2025.
Since at least 2008, China has been taking specific actions to consolidate its REE industry and restrict the export of technologies that would see other countries potentially threaten its lead. The timeline of this consolidation warrants examination because it tells the story of a strategic approach that resulted in a commanding economic and geopolitical lead in an era defined by emerging technology competition.
The first significant move China made came in 2008 when it revised its Catalogue of Technologies Prohibited and Restricted from Export (CTPRE). The CTPRE was established by China’s Foreign Trade Law and the Regulations on the Administration of Technology Import and Export and is administered by the Ministry of Commerce usually in conjunction with the Ministry of Science and Technology. The list, which is not public, was revised in 2008 to include REEs and most analysts believe it included the extraction, processing, separation, and utilization technology for REEs. This came at a time when China’s REE industry was still relatively fragmented but nascent efforts were underway to create a strong, globally dominant REE industry.
Just two years later, China found itself in a diplomatic incident with Japan after an at-sea collision near the Senkaku Islands. China’s response was to cut off exports of critical REEs to Japan igniting a multi-year fight at the World Trade Organization. The export quotas (~40%) were challenged at the WTO by Japan, the US, and the EU and after five years, the quotas were removed in 2015.
Also in 2015, the Chinese government published Made in China 2025. The plan lays out specific actions the government would take over the next ten years to achieve a set of priorities around making China a manufacturing powerhouse in high tech products. The document prioritizes “self-sufficiency” in manufacturing, which sounds prescient in a post-COVID and current tariff world. Made in China 2025 does not mention REEs specifically but clearly lays the groundwork for what would become the Chinese REE industry as we know it today.
In 2016, the year following the publication of Made in China 2025, the Chinese government completed a yearslong consolidation of its previously fractured REE industry into six major companies:
China Northern Rare Earth Group High-Tech Co. Ltd (based in Inner Mongolia)
China Minmetals Corporation
Aluminum Corporation of China (Chinalco)
Xiamen Tungsten
China Southern Rare Earth Group
Guangdong Rising Nonferrous Metals Group
These six companies now run under effective Chinese state control and are responsible for the extraction and refining of China’s approximately 210,000 metric tons of REE output per year. It is hardly an accident that this consolidation completed the year after Made in China 2025 was published and when read through the REE lens, the document has a very different character. China is nothing if not strategic and it knew it was possibly sitting on a winner as the US, EU, and Japan clearly felt the sting of its export quotas. While China ultimately removed the quotas, a major lesson was learned. China could flex its REE muscle just as oil producing countries had in decades before. It would now need to create an unassailable lead so it could impose its will. Fortunately for China, it has the advantage of being able to direct “private” sector activities and affect such consolidation and vertical integration in a way the US system is not set up to achieve.
In 2023, China again revised its CTPRE to explicitly ban:
REE magnet production technology
REE extraction/separation technology
REE calcium oxyborate prep technology
The revision also added more restrictions around the existing extraction/processing/utilization technologies plus added controls on graphite, gallium, and germanium (all on the USGS critical minerals list).
This timeline tells a compelling story about a country with a strategic vision whose moment arrived in 2010. Since that time, China has used its power to consolidate its REE industry into six major producers and paired that capability with significant export controls. All of this was done BEFORE the Trump Administration kicked off its trade war. No matter how the current trade war ends, China’s CTPRE restrictions and its considerable leads in processing, extraction, and talent are geopolitically daunting. Some analysts argue that the REE card is not as valuable as China thinks. That may or may not prove true, but on the numbers, the US does not have any good near- or medium-term options to cover the delta between its domestic production and China’s and the trade war has certainly not helped.
US Policy and Legal Moves
Meanwhile in the good ol’US of A, the significance of the 2010-2015 REE export quota response to the diplomatic incident with Japan also hit home. Around the same time, the US began to ramp up its policy and legal architecture in response, but there’s a big catch. China took specific actions like restricting export of processing technology and consolidating its REE industry. US policy and legal actions made no comparable move. The US’s response to the REE issue has mainly surrounded defining the criticality of the materials and scoping a strategy, which is largely where it remains.
In 2017, Executive Order 13817 A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Materials was a critical first step that called on federal agencies (and only federal agencies) to:
Identify a critical minerals list (developed by USGS)
Assess supply chain vulnerabilities
Streamline permitting for domestic mining and processing
Increase domestic exploration
Enhance recycling and reprocessing
Conduct R&D for alternatives
In 2021, Executive Order 14017 America’s Supply Chains mandated a 100-day review of critical supply chains including critical minerals and REEs. The same year, the Infrastructure Investment and Jobs Act allocated funding for the Department of Energy to run programs on developing domestic critical mineral supply chains to include processing, separation, and recycling (aligned with earlier Executive Order language. USGS also got $3.4 million to collect data and map critical mineral deposits.
One year later, the Inflation Reduction Act provided incentives in the form of tax credits for domestically produced critical minerals to include separated REEs. The US has also used the Defense Production Act to unlock funding for REE grants and contracts. 2022 also saw the passage of the CHIPS and Science Act, which only mentions raw materials in Section 10861 referencing NASA. Also in 2022, the US State Department announced the Minerals Security Partnership including 14 nations plus the European Union at the time of its announcement. This international partnership creates a forum for discussing security issues related to REEs and other critical minerals. What it does not do is consolidate US industry in a way that mirrors or counters Chinese moves in the same space.
Achieving Market Dominance
We can decry Chinese actions as unfair, or we can grow up.
China executed a long-term vision based on resources it had onshore and a proven use case of how these resources could be leveraged economically and geopolitically (2010 Japan diplomatic incident). It used its governmental power to consolidate its REE industry and had the foresight to strategically plan through documents like Made in China 2025 and to protect its budding advantage by using the CTPRE. In 2025, as tariff percentages soared above 100%, China’s time came. On the same timeline, the US spent its resources directing the federal government to assess the problem and providing incentives using grants and contracts. This is not intended to cast blame or to pass judgement on which approach was better, but to point out that the US and China are not playing the same game.
The US government does not have the same authority to force the consolidation of its domestic REE industry, so direct counter moves, or tit-for-tat responses will not work. Instead, the US must change its approach and change the game in its favor. Instead of reacting to the moves that China has already made, the US needs to make moves to force reactions from China. That will not come by going mine for mine with China or processing plant for processing plant. It will come through changing the economics of REEs to fit a capitalist model, not an authoritarian one, which China has already done.
Back to the proved reserves list. Proved reserves is a useful concept, but it by no means indicates the total availability of every deposit of REEs in the world. China has 40% of REE deposits but they have also invested heavily in surveying for REEs throughout the country. China’s lead over the past decade has prevented many other countries from entering the REE market given China’s lead in processing and the low costs it is able to charge. But if the US and its allies can get serious about REEs, there is an excellent chance that the game can change. The US is sitting on 1.3% of global proved reserves of REEs but it has also not surveyed as extensively for REEs as it has for coal in the past. In October 2024, USGS announced a previously unknown deposit of between 5 and 19 million tons of lithium beneath Arkansas. While not an REE, this shows that surveys for new mineral deposits are an ongoing process, and it is possible to change the number of proved reserves in your country by focusing and prioritizing.
In an era defined by the pursuit of emerging technologies, the US has been hyper-focused on finished technology products and semiconductors at the highest level. US policy makers are prioritizing domestic manufacture, and manufacturing demands raw materials. That’s a reality that we cannot escape but that does not mean the history is written and the books are closed. China’s focused strategy has paid off so far, but the US and other nations can also choose a strategy. It starts with recognition of the challenge to be solved, what advantages are present, and prioritization. A mistake on top of a mistake is to try to play the game China defined while carrying a message that it is unfair. But a strategy must have momentum and momentum begins with education. When we understand how we got where we are today and why these issues matter, we can build an effective strategy.
We started by talking about lists and lists are illustrative of the problem. We try to boil complex supply and value chains into a “top ten.” This can still be useful, but we need to look in the right direction. Emerging technology leadership means leadership across the value chain. 2025 was already a significant year on the REE timeline, but it has the potential to be significant as a turning point for the US and its allies that changed the nature of geopolitical competition.
