China-Free Rare Earth Supply Could Meet Just 35?40% of 2035 Magnet Demand, Korean Study Warns

Highlights

• Removing China from rare earth supply chains could leave non-China production meeting only 35–40% of projected 2035 magnet-grade demand, per a Korean KITECH analysis.
• China's dominance intensifies downstream, with HHI concentration rising from ~5,000 at mining to ~9,000 at refining, and over 90% share in metals, alloys, and magnets.
• The mismatch between natural ore chemistry and industrial demand means more NdPr output also forces overproduction of lower-value lanthanum and cerium.
• Functional rare earth recycling rates remain below 1%, making it insufficient as a near-term substitute for Chinese processing capacity.
• The study concludes that replacing Chinese tonnage is far easier than replacing China's decades-built industrial ecosystem across the full mine-to-magnet chain.

A new Korean analysis (opens in a new tab) delivers a sobering message for Western industrial policy: decoupling rare earth supply chains from China is far harder than opening new mines. Min Sung Joo of the Korea National Institute of Rare Metals at the Korea Institute of Industrial Technology (KITECH (opens in a new tab)) finds that rare earth vulnerability arises from two problems operating simultaneously: nature produces rare earth elements together in proportions that do not match industrial demand, while the technically difficult separation and refining stages are overwhelmingly concentrated in China. Citing an IEA N-1 stress scenario, the paper reports that removing China from supply could leave non-China production capable of satisfying only 35–40% of projected 2035 magnet-grade rare earth demand.

REEx Insight | You Cannot Decouple From an Ecosystem With a Mine

This is the paper's most important lesson. China's advantage grows as the supply chain moves downstream. Joo estimates concentration at roughly Herfindahl-Hirschman Index (HHI) 5,000 for mining but approximately 9,000 for refining, reflecting China's extraordinary processing position. Industry estimates cited in the paper place China's shares at roughly 68–70% of mining, 85–94% of separation/refining, and more than 90% of metals, alloys, and magnets. That means a Western mine can produce ore—and still depend on Chinese industrial infrastructure. Mountain Pass historically demonstrated precisely this problem: after U.S. mining resumed, concentrate was shipped to China for separation because domestic midstream capacity was missing.

The Earth Doesn't Produce What the Magnet Industry Orders

Rare earths are co-produced. Mountain Pass's mineral mix, for example, is approximately 83% La/Ce but only around 15% Nd/Pr. Increasing NdPr production therefore also produces large quantities of lower-value elements whether customers want them or not.

Heavy rare earths create an even harder problem. Dy and Tb, important for maintaining magnet coercivity at elevated temperatures, occur in much scarcer commercially attractive resources. Myanmar's ion-adsorption deposits supply HREE material overwhelmingly into China's separation system. So "mine-to-magnet" is not one problem. It is a chain of interlocking problems: ore chemistry → separation → refining → metals → alloys → magnet manufacturing → qualification → customers.

The Great Decoupling Reality Check

The paper argues that complete short-term independence is unrealistic. China's position reflects decades of accumulated infrastructure and production capability, and replacing it rapidly faces severe practical constraints. Joo therefore favors managing individual vulnerabilities progressively rather than assuming complete near-term decoupling is achievable.

Recycling helps, particularly because magnet scrap already concentrates Nd and Dy, but reported functional recycling rates remain below 1% and cannot presently provide the volumes required. Material substitution, magnet redesign, strategic inventories, and new separation capacity therefore must develop alongside mining.

Limitations | 35–40% Is a Warning, Not Destiny

This is a review and structural analysis, not a new mine-by-mine engineering model. The author acknowledges reliance on public statistics and literature rather than company-level operating data, detailed process economics, or price modeling.

The 35–40% figure should therefore not be presented as a forecast that the West will face a 60–65% shortage in 2035. Technology, substitution, recycling, inventories, new projects, and demand can all change. But the underlying warning is difficult to dismiss: replacing Chinese tonnage is easier than replacing China's industrial system.

REEx Take: The West keeps talking about replacing Chinese supply. This study asks the harder question: how do you replace an industrial ecosystem built over decades?

Citation: Joo MS. Structural Causes of Element-Specific Supply Imbalances in Global Rare Earth Supply Chains. Resources Recycling. 2026;35(3):14–26. DOI: 10.7844/kirr.2026.35.3.14.