China’s rare earth dominance to continue as US investment lags: analysts

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Beijing’s long-term strategy pays off as Washington scrambles to respond, a new report finds.

China is expected to maintain a strategic edge over the United States in the rare earth industry, thanks to Beijing’s long-term investments in advanced mining and processing technologies.

In contrast, the US is paying the price for decades of underinvestment, obsolete policies and the absence of a coherent strategy, according to a report by the New York-based think tank Strategy Risks.

The warning came as Beijing increasingly leverages its dominance in the global rare earth supply chain – particularly during recent trade negotiations with the Trump administration.

The critical minerals became a powerful bargaining chip for China to push back against Washington’s tech restrictions, culminating in a deal in London last month that laid the groundwork for both sides to ease curbs.

Despite growing US efforts to close the gap, analysts at Strategy Risks said the country was still not doing enough to reduce its reliance on Chinese rare earth exports in the near and medium term.

“Although the US is addressing its vulnerabilities in this sector through initiatives intended to strengthen production and materials processing, America remains dependent on imported minerals from China, due to a comparative lack of raw mineral deposits and government investments,” they wrote in the report on Monday.

China mines about 70 per cent of global rare earth elements and accounts for more than 90 per cent of global capacity for separating and processing heavy rare earths, the report’s authors noted.

Meanwhile, US initiatives to modernise equipment and infrastructure remain fragmented and underfunded. American companies have focused on “retrofits and modular upgrades” to existing systems, while China has been developing automation technologies since 2015 to reduce or replace its mining workforce.

Beijing has even deployed smart lithium extraction technologies overseas, including in countries such as Argentina, according to the report.

China has also aligned its rare earth industry with its climate ambitions. Earlier this year, Beijing approved new regulations to support a national rare earth recycling system – part of broader efforts to peak CO2 emissions by 2030 and achieve carbon neutrality by 2060.

Amid the country’s electric vehicle boom, China is projected to have 400 million tonnes of decommissioned power batteries by 2028, according to the China Electronics Energy Saving Technology Association. The state-sponsored industrial body estimates the recycling market could be worth more than 280 billion yuan (US$39 billion) by the same year.

To reduce its dependency on China, the US must adopt a more targeted approach to investments in the rare earth sector, the Strategy Risks report said.

“Future actions and strategic investments should be directed towards expanding extraction and refining capabilities, deploying artificial intelligence-powered mining systems, and strengthening domestic battery production and recycling.”