China's Rare Earths Supply Remains a Strategic Risk: Greer

A report from investing.com on May 15, 2026, highlighted comments from commodities analyst Jack Greer, who stated that China continues to demonstrate unpredictability in its supply of rare earth elements (REEs). This assessment injects fresh uncertainty into a market critical for defense, technology, and green energy sectors. China currently dominates over 90% of the world's rare earth processing, giving it significant use over global high-tech manufacturing and creating a persistent vulnerability for import-dependent nations.

Why China's Rare Earths Strategy Causes Concern

China's dominance in the rare earths market is a decades-long strategic achievement, built on state subsidies, low-cost labor, and lax environmental regulations. This has allowed the nation to control not just the mining but, more critically, the complex processing and separation stages. Greer's comments underscore that Beijing views this dominance as a tool of statecraft, not just a commercial enterprise. The risk is not necessarily a full-scale embargo but the strategic use of export quotas and licensing delays to achieve political goals.

This control creates a significant bottleneck. While other countries have reserves, they lack the processing infrastructure to convert raw ores into the high-purity metals and alloys needed by manufacturers. Building this capacity is a capital-intensive process that can take over a decade, a timeline that does not align with the urgent needs of modern supply chain management. The global market for rare earth elements is projected to reach $9.8 billion by 2028, and any disruption has cascading financial effects.

How Dependent Are Global Industries on Chinese Supply?

The dependency on China's REEs is acute across several key industries. The most critical application is in high-performance permanent magnets, essential for electric vehicle (EV) motors, wind turbines, and precision-guided munitions. Neodymium and praseodymium are key ingredients for these magnets, and China accounts for over 92% of their global supply. A modern F-35 fighter jet, for example, requires approximately 427 kilograms of rare earth materials.

Beyond defense and green energy, the consumer electronics sector is also highly exposed. Everything from smartphone speakers and hard drives to medical imaging devices relies on components made with rare earths like terbium and dysprosium. This broad-based reliance means that any export friction from China could translate directly into production halts, higher costs, and inflationary pressure for a wide range of goods. The EV sector alone is expected to see demand for rare earth magnets grow by over 300% by 2035.

What Progress Has Been Made on Alternative Supply Chains?

In response to this strategic vulnerability, Western nations have accelerated efforts to build ex-China supply chains. The United States, Australia, and Canada are leading initiatives to revive domestic mining and establish new processing facilities. For example, the U.S. Department of Defense has awarded over $100 million in grants since 2020 to support projects aimed at onshore REE processing. Companies like MP Materials in California and Lynas Rare Earths in Australia are central to this strategy.

However, these efforts face significant headwinds. The primary challenge is economic viability. Chinese producers operate with cost advantages that are difficult for Western firms to match without government support or higher market prices. the environmental standards for mining and processing in the West are far stricter, adding to costs and project timelines. This reality serves as a counter-argument to a quick decoupling; for at least the next 5-7 years, a significant level of dependency on China is unavoidable.

Q: Which specific rare earth elements are most critical for green technology?

A: For green technology, the most critical REEs are neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb). Neodymium and praseodymium form the basis of the world's strongest permanent magnets, essential for the efficiency of EV motors and large-scale wind turbine generators. Dysprosium and terbium are added in smaller quantities to help these magnets retain their properties at high operating temperatures, a crucial requirement for high-performance applications.

Q: Are rare earths geologically rare?

A: Contrary to their name, most rare earth elements are not geologically scarce. Cerium, for example, is more abundant in the Earth's crust than copper. The challenge lies in finding them in economically viable concentrations and then performing the difficult, costly, and environmentally hazardous process of separating them from the surrounding ore and from each other. China's dominance is in this processing expertise, not a monopoly on global reserves, which are more widely distributed.

Bottom Line

Expert analysis confirms that China's strategic grip on the rare earths supply chain remains a significant and unresolved risk for global high-tech industries.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.