Highlights

• China controls 70-85% of rare earth metal production and refining, creating significant global supply chain risks.
• Western policymakers face challenges in developing domestic rare earth metal processing capabilities beyond mining.
• Future rare earth metal market stability depends on solving refining bottlenecks and exploring recycling technologies.

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A new bachelor’s thesis by Arttu Hyyryläinen (opens in a new tab) at the Lappeenranta–Lahti University of Technology (LUT) (opens in a new tab) delivers a timely literature review and macro-risk analysis of global rare earth element (REE) supply chains. Titled Rare Earth Metals as Part of a Global Supply Chain (LUT School of Engineering Sciences, Industrial Engineering and Management, 2025), the study offers a sweeping overview of the fragile architecture behind the world’s critical materials for the green transition.

Findings: China’s Hegemony and Global Dependence

The thesis underscores a stark reality: while rare earth metals are not geologically scarce, they are extraordinarily difficult and costly to refine. Today, China commands ~70% of mine production, more than 85% of refining, and about 70% of global consumption. This dominance, cemented through state-owned enterprises and long-term industrial planning, leaves the U.S., EU, and other regions exposed to geopolitical shocks. The 2010 rare earth crisis, triggered by a diplomatic clash between China and Japan, remains a warning sign of how quickly markets can seize up when Beijing tightens exports.

The analysis suggests that while new reserves in the U.S., EU, Greenland, and Australia hold promise, the real bottleneck, as Rare Earth Exchanges (REEx) often highlight, lies in refining and downstream product manufacturing, still overwhelmingly controlled by China. Without breakthroughs in recycling or diversification of processing, supply chains remain brittle.

Implications: Risks and Opportunities

For Western policymakers, the findings highlight both urgency and opportunity. U.S. and EU legislation—such as the Critical Raw Materials Act—seeks to nurture domestic mining and recycling, but the study warns that building refining capacity remains the harder, less palatable challenge due to its environmental burden. The study also points to a possible “codependent equilibrium”: the U.S. and EU may continue to export unrefined minerals to China while importing finished goods, perpetuating dependence even as mining ramps up elsewhere.

The analysis further stresses the balance problem: the most valuable elements (neodymium and dysprosium) cannot be extracted independently, meaning large surpluses of lower-value REEs must be managed. Finding uses for abundant elements like lanthanum and cerium—or replacing critical ones in magnets—will be essential for stabilizing markets.

Limitations: Scope and Data Gaps

Hyyryläinen acknowledges that this is a literature-based review, not a field or lab-based investigation. The work synthesizes ~30 academic papers and major datasets, but the data remain incomplete, and the global picture is fragmented. The study also focuses primarily on the U.S., EU, and China, leaving the role of BRICS reserves—particularly Brazil and India—underexplored.

Conclusion: The Chain Is Only as Strong as Its Refining Link

This thesis reminds us that rare earth supply chains are no longer defined by geology alone, but by geopolitics, environmental policy, and industrial strategy. As governments scramble to “de-risk” the green transition, the next decade will hinge not just on finding ore but on solving the refining bottleneck—and on whether recycling and substitution can move from theory to practice.

Citation: Hyyryläinen, A. (2025). Rare Earth Metals as Part of a Global Supply Chain: A Literature Review and Industry Macro-Risk Analysis of Global Rare-Earth Supply Chains (opens in a new tab). Bachelor’s thesis, LUT University, School of Engineering Sciences. Examiner: Postdoctoral researcher Müge Tetik.

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