Highlights

• China's rare earth dominance stems from control over refining chemistry—specialized extractants, oxalic acid, and processing know-how—not just mineral deposits, creating strategic leverage that Western nations have largely overlooked.
• Critical chemical inputs like P204/P507 extractants and oxalic acid (298M kg exported by China in 2023) represent chokepoints that can't be easily substituted without redesigning entire separation plants.
• True supply chain resilience requires:
  • Domestic production of reagents
  • Strategic stockpiles
  • Permitting reform for chemical infrastructure
  • Comprehensive industrial policy—not just building refineries dependent on China-sourced chemistry

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Is chemistry the battlefield everyone keeps skipping? America talks “mine-to-magnet.” Investors obsess over grade, tonnage, permits, capex. But the rare earth supply chain doesn’t usually fail at the pit. It can fail later—inside a chemical plant—where 17 stubbornly similar elements get separated through long solvent-extraction circuits that can run hundreds of stages, sometimes more than a thousand, depending on the flowsheet.

China’s dominance is not just a geological accident.

It’s industrial chemistry at scale—plus a demonstrated willingness to control the knobs: technology, licensing, and (if it chooses) the reagents themselves. In late 2023 and into 2025, China banned exports of certain rare earth processing technologies—including technology used to extract and separate rare earths and to make rare earth magnets.

Fast-forward to late 2025, and as Rare Earth Exchanges™ (REEx)China issues new “streamlined” rare earth export licenses after months of disruption tied to expanded export controls—an admission that global production can be throttled by paperwork and gatekeeping, then partially relieved on Beijing’s timetable.

Now turn the spotlight to the quieter truth: chemical availability equals refining capacity. If the West can’t reliably source the chemicals, it can’t reliably separate the elements.

Background

For three decades, global supply chains were built on a simple logic: outsource production to wherever it was cheapest, fastest, and most efficient. In that world, it made perfect sense (at least to corporate and political elites) for rare earth refining—and the chemical ecosystems that support it—to consolidate in China. But that world is fading fast. As geopolitical rivalry intensifies and industrial policy returns, critical minerals and their upstream chemical inputs are no longer just commodities; they are bargaining chips. What once looked like rational specialization could now very well turn into strategic exposure. In this new environment, the rare earth supply chain is being reinterpreted not through the lens of efficiency, but of leverage—and chemistry sits squarely at the fault line.

The Acid Front: not scarce, but brutally hard to expand in the West

Rare earth refining begins with leaching—dissolving ore into solution. The workhorses are sulfuric acid (H₂SO₄) and hydrochloric acid (HCl); nitric acid (HNO₃) appears in niche roles.

The U.S. and Europe can produce these acids. The problem isn’t “no acid.” The problem is surge capacity and siting. Acid plants and handling systems invite long permitting timelines, community resistance, and costly safety/environmental engineering.

China can more easily co-locate acid production near mining and refining hubs—and scale faster when policy demands it. If Beijing ever tightened exports of bulk reagents, the West might not “run out” overnight, but it could face price spikes, logistics stress, and commissioning delays.

This matters because refinery economics can hinge on mundane inputs. In a high-throughput separation plant, chemistry is not overhead—it’s the bloodstream.

A significant choke point: extractants, the “secret sauce” molecules

Acids are blunt instruments. Organic extractants are scalpels—specialized molecules that bind rare earth ions and shuttle them between phases, stage after stage, until “mixed rare earth” becomes praseodymium, neodymium, dysprosium, terbium, and the rest.

Two families are especially central:

• D2EHPA (often called P204) and P507/PC-88A: acidic organophosphorus extractants that anchor many rare earth separation flowsheets.
• Cyanex-class extractants (e.g., Cyanex 272): widely used in metal separations and sometimes in REE circuits depending on design.

Here’s the key reality: global extractant supply exists, but China has deep domestic manufacturing, process know-how, and scale. Public “market share” numbers for P204/P507 often come from vendor-driven market reports—directionally useful but not always rigorous enough to quote as an ironclad fact. So the strongest claim isn’t a percentage. It’s this: if China treated extractants the way it treats other strategic inputs—licenses, administrative friction, customer-by-customer approvals—Western separation plants would feel it fast.

Unlike commodity acids, you don’t casually swap extractants without risking redesign, kinetics changes, altered selectivity, and product requalification. This is what “refining independence” actually means: not just owning mixer-settlers, but securing the chemical intelligence inside them.

Solvents and Diluents: plentiful barrels, expensive compliance

Solvent extraction runs on a “body” of diluents—kerosene, naphtha, isoparaffinic solvents—that carry extractants and control viscosity and phase separation.

These petroleum-derived fluids are globally available. China doesn’t “own” kerosene. But the West pays a different price: flammability controls, emissions rules, solvent recovery, worker safety systems, and ESG-driven design requirements. Translation: the West can buy the solvent, but it pays more to use it, and it takes longer to permit.

The Unglamorous Salts

Refining doesn’t just separate rare earths; it polices impurities. Scrubbing, stripping, buffering—this is where “boring” chemicals become existential.

Ammonium chloride is a vivid example. Trade data (opens in a new tab) compilations show China accounted for about 85% of global ammonium chloride exports in 2023. Export dominance matters because export markets are where supply shocks hit allies first. You can have a plant, a flowsheet, and a signed offtake—and still stall because a low-cost salt becomes scarce, late, or suddenly expensive.

For ammonium sulfate (opens in a new tab), the key point is less the exact export share and more the pattern: China is a major fertilizer-linked exporter, and policy changes can ripple globally. Projects don’t fail only on big-ticket items. They fail on missing consumables.

Oxalic Acid: the “small” Chemical & Outsized leverage

If you want one chemical that screams vulnerability, it’s oxalic acid (opens in a new tab)—the classic reagent used to precipitate rare earth oxalates before calcining to oxides.

World Bank WITS trade data (opens in a new tab) show China exported roughly 298,756,000 kg of oxalic acid (and related salts/esters) in 2023—dwarfing other exporters. That’s the kind of dependency that doesn’t look scary until you’re commissioning a refinery and realize your “minor consumable” is, in fact, a strategic lever. Think that’s not an item in a Beijing planning matrix? Think again.

What China has already demonstrated

Two points are no longer theoretical:

1. Technology controls are real. China has already banned the export of certain rare earth extraction/separation and magnet-making technologies.
2. License friction disrupts the industry. REEx documents China issuing “streamlined” rare earth export licenses after disruption triggered by expanded export controls—tighten, loosen, repeat.

Once you accept that, the chemicals story becomes obvious: if the West builds refineries that still rely on China-linked reagents, it hasn’t built resilience. It has built a new dependency with better branding.

Resilience Means Reagents: not slogans

If the U.S. and allies want true rare earth refining sovereignty, they need more than separation plants. They need as REEx continues to publish a comprehensive, extensive, and enduring critical minerals and rare earth element supply chain industrial policy:

• Domestic or allied production of critical extractants (P204/P507 class), not just “access.”
• Strategic stockpiles of hardest-to-substitute reagents (extractants, oxalic acid).
• Permitting reform and industrial siting support for chemical infrastructure (acids, solvent handling, waste treatment).
• A serious playbook for chemical logistics, because the West can’t regulate itself into fragility and then act surprised when timelines slip.

Another View

But does our analysis risk overstate fragility by treating chemical dependence as binary rather than dynamic? After all, many of the inputs discussed above—acids, solvents, salts—are globally traded commodities with multiple producers, and China’s export controls to date have been selective, calibrated, and often aimed at signaling rather than sustained disruption.

Market forces also respond: higher prices incentivize new production, allied suppliers can emerge, and alternative separation chemistries (ion exchange, membrane systems, molecular recognition) continue to mature.

Thus, from this view, the system is not brittle but adaptive, and China’s leverage is constrained by its own export revenues, diplomatic costs, and the risk of accelerating Western substitution. In other words, chemistry may be a pressure point—but not an immediate chokehold.

Only the Paranoid Survive

Mining is hard. Separation chemistry is harder. And the next supply-chain shock may not necessarily announce itself as “rare earths.” Could it manifest as a missing drum of reagent—followed by a refinery that can’t run?

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