China dominates rare earth supply chain

China dominates the global supply of rare‑earth minerals, which are essential for modern technology. It accounts for more than 90 % of worldwide rare‑earth refining and 98 % of magnet production, while the majority of rare‑earth ore is mined within its borders. The International Energy Agency and industry analysts note that, although China extracts about two‑thirds of the world’s rare‑earth ore, it also controls the processing and manufacturing stages that turn the raw material into usable components.

Goldman Sachs warns that the West could need up to ten years to challenge China’s supremacy in this sector. Daan Struyven, co‑head of global commodities research at Goldman, estimates that building a new mine would take roughly a decade, and constructing a refinery would require about five years. Recent Chinese export controls on several rare‑earth elements used in military applications—cited as national‑security measures—are viewed as a response to Washington’s restrictions on advanced semiconductors and chip‑making equipment introduced since late 2022.

The United States has been working to prevent China from developing high‑end chips that could boost its military and artificial‑intelligence capabilities. Trade tensions have intensified, with former President Donald Trump describing the relationship as “effectively in a trade war” and threatening an additional 100 % tariff on Chinese goods starting in November. China, in turn, has vowed to “fight to the end.” Despite the rhetoric, officials from both sides are negotiating a potential trade framework that could avert the U.S. tariff increase and lead to reciprocal steps by China on export controls.

A meeting between Trump and Chinese leader Xi Jinping is scheduled for Thursday in South Korea, where they are expected to discuss the trade dispute. The outcome could have significant implications for the global supply of rare‑earth minerals and the broader trade tensions between the United States and China. As worldwide reliance on these minerals continues to grow, establishing a stable and diversified supply chain becomes increasingly important.