Highlights

• China's rare earth dominance stems from processing infrastructure and know-how, not just mining—with 95% of production costs tied to industrial capability and complex separation chemistry rather than raw extraction.
• Between 2015-2022, China became a net importer by mass but a net winner by value, expanding rare earth concentrate imports 3.3× while capturing $7.57B through its 'import→process→export' model of converting raw inputs into high-value magnets and compounds.
• Heavy rare earths cost $45,000/ton to produce versus $3,900/ton for light rare earths, explaining why dysprosium and terbium supply chains remain geopolitically sensitive and difficult to replicate outside China.

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A new open-access study in Environmental Research Communications by Zewen Ge and colleagues (Jiamin Jiang, Mufan Zhuang, Yanlan Guo) maps China’s rare earth supply chain from 2015–2022 using two accounting tools: Material Flow Analysis (MFA) (where the rare earths physically go) and Material Flow Cost Accounting (MFCA) (where the costs—and value—accumulate). The lay takeaway is blunt: China’s edge is not just mining rare earths. It is processing and manufacturing higher-value rare earth products at scale, even as it becomes more dependent on imported inputs.

Key Findings

China’s rare earth system is enormous—and increasingly globalized. Between 2015 and 2022, cumulative rare earth concentrate inflows reached roughly 1,238 kilotons. While domestic mining remained the backbone of supply, China’s dependence on foreign inputs rose sharply: net imports of concentrates and primary products expanded by about 3.3× and 8×, respectively. In practical terms, China is mining a great deal at home, but it is ever more deliberately feeding its processing engine with imported material, reinforcing its role as the world’s rare earth refinery.

Where the real power lies is not energy or ore, but industrial capability. More than 95% of production costs come from system and material costs—labor, specialized facilities, capital equipment, and complex separation chemistry—underscoring that rare earth dominance is built on infrastructure and know-how. This is especially true for heavy rare earths, which cost an estimated $45,000 per ton to produce, compared with about $3,900 per ton for light rare earth oxides. That gap explains why dysprosium- and terbium-linked supply chains remain geopolitically sensitive and difficult to replicate outside China.

The value, meanwhile, accumulates downstream: functional materials, particularly magnets, carry the largest economic weight, with rare earth compounds generating the highest added value ($7.57 billion). The result is a telling paradox—China has become a net importer by mass, yet remains a net winner by value, capturing profit through an “import → process → export” model that converts raw inputs into high-value engineered materials.

Limitations

Data ends in 2022; the study excludes many finished consumer products; and it reiterates <1% recycling, a long-term vulnerability.

Citation: Ge Z. et al. (2025) Environ. Res. Commun. 7 095009. DOI: 10.1088/2515-7620/ae0300

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