Highlights
- Rare earth refining depends on specialized chemicals such as acids, solvent extractants (P204, P507), and precipitants like oxalic acid.
- China dominates the control of these chemicals, managing 85% of key inputs and creating hidden supply chain vulnerabilities.
- New Western mines and refineries risk depending on Chinese chemicals to operate, subtly shifting dependence rather than eliminating it, and turning 'mine-to-magnet' into 'mine-to-China-to-magnet.
- True independence requires:
- Reshoring critical reagent production.
- Building strategic stockpiles.
- Streamlining chemical plant permitting.
- Advancing recycling technologies.
- Forming allied chemical supply partnerships.
Rare earth refining isn’t just about digging rocks out of the ground—it’s a complex chemical process that depends on large volumes of acids, specialty solvents, and industrial salts to separate individual elements like neodymium, praseodymium, dysprosium, and terbium. These chemicals are the hidden backbone of the supply chain, and China dominates their production, controlling most key inputs such as oxalic acid, ammonium chloride, and highly specialized solvent extractants (like P204 and P507) that are essential and difficult to replace.
As a result, even if the U.S. or its allies build new mines and refineries, they may still rely on Chinese chemicals to operate them, quietly shifting dependence rather than eliminating it. True rare earth independence, therefore, requires more than mining—it demands rebuilding and diversifying the chemical supply chain through domestic and allied production, strategic stockpiles, streamlined permitting, recycling, new separation technologies, and close cooperation among trusted nations. Without securing these behind-the-scenes inputs, “mine-to-magnet” ambitions risk becoming “mine-to-China-to-magnet” in practice.
Table of Contents
Highlights:
Light vs. Heavy REEs
Separating light rare earths (like neodymium and praseodymium) and heavy rare earths (like dysprosium and terbium) requires intense chemistry. Long solvent-extraction circuits (hundreds of stages) turn a mixed rare earth solution into individual oxides such as Nd, Pr, Dy, and Tb, demanding large volumes of acids, solvents, and specialty reagents.
China’s Chemical Grip
Refining inputs – from bulk acids to niche extractants and precipitants – are often produced or controlled by China. For example, China supplies ~85% of global ammonium chloride exports and dominates oxalic acid (the main precipitation agent). Key solvent extractants like P204 and P507 (common organophosphorus solvent extractants) are made at scale in China, which has “deep domestic manufacturing and know-how” in these reagents. This chemical dominance gives Beijing leverage over any new refinery that depends on China for its supply chain.
Building Independence
True rare earth independence means securing the chemical supply chain. Solutions include domestic or allied production of critical solvents (like P507), strategic stockpiles of hard-to-substitute reagents, streamlined permitting for chemical plants, international partnerships for chemical supply, and ramping up recycling and alternative technologies.
The Chemical Ingredients of Rare Earth Separation
Rare earth refining is essentially a chemical enterprise. Upstream mining produces concentrates, but turning those into separated rare earth oxides or metals involves multiple chemical stages.
Key inputs include:
Strong Acids
Ore concentrates (whether bastnaesite for light REEs or ion-adsorption clays for heavies) are typically dissolved with sulfuric acid (H₂SO₄) or hydrochloric acid (HCl). These acids leach REEs into solution. Nitric acid plays a niche role. Western countries can make these acids, but expanding acid capacity near mines is difficult due to permitting, cost, and community opposition. China faces fewer hurdles and often co-locates acid plants with refining hubs, ensuring ample supply of leaching acids. In a pinch, the West wouldn’t run out of HCl or H₂SO₄ overnight, but a sudden export restriction from China could trigger price spikes and logistical bottlenecks.
Solvent Extraction Reagents
Once in solution, rare earths must be separated from each other. This is done by solvent extraction, where organic phases selectively pull specific REEs out of the aqueous phase. Two classes of extractant molecules form the backbone: acidic organophosphates (notably D2EHPA aka P204, and P507 aka PC-88A) and organophosphinic acids (e.g. Cyanex 272). These specialized chemicals are the “secret sauce” that binds REE ions and separates light vs. heavy elements stage by stage. China produces the bulk of these extractants and has the process expertise to manufacture them at scale.
Alternatives or suppliers exist globally, but if China were to restrict access (through export licenses or informal controls), Western separation plants would “feel it fast”. Unlike commodity acids, you can’t easily swap out these solvents without redesigning the whole flowsheet – they’re integral to each refinery’s design. The diluent oils (like kerosene or similar hydrocarbons) that carry these extractants are plentiful globally, but Western operators face higher costs to handle them (stricter flammability and environmental regulations), making chemical compliance an added “tax” on non-Chinese operations.
Precipitants and Salts
After extracting and scrubbing steps, rare earths are typically precipitated out of solution as solids (e.g. rare earth oxalates or carbonates) before final conversion to oxides. Oxalic acid is the classic reagent to precipitate REEs as oxalates. At scale, a refinery might need thousands of tons of oxalic acid per year – and here lies another choke point. China exported about 298.8 million kg of oxalic acid (and derivatives) in 2023, vastly more than any other country.
This means most refineries worldwide ultimately source oxalic acid (or its raw materials) from China’s chemical industry. A “small” chemical by cost, it becomes a big strategic lever if it’s in short supply. Other unsung salts are also critical: ammonium sulfate and ammonium chloride are used for impurity control and, uniquely, to recover heavy REEs from ionic clay deposits via in-situ leaching. China accounts for ~85% of global ammonium chloride exports and is a major exporter of ammonium sulfate, since these are also produced as byproducts of its huge fertilizer and petrochemical industries. If those “boring” inputs become scarce or pricey, a new Western refinery could stall despite having ore and equipment.
China’s Control over Chemical Supply Chains
China’s dominance in rare earths is not just about owning mines – it’s about owning the means to refine. Decades of investment in the chemical sector and lax environmental rules allowed China to build an end-to-end ecosystem for rare earth processing. Today, it’s estimated that China handles ~85–90% of rare earth refining globally.
This comes hand-in-hand with controlling the supply of critical reagents:
Extractants
Chinese firms manufacture large volumes of P204, P507 and similar extractants, and have the IP/know-how for their efficient use. Western companies have some capacity (e.g. Solvay produces Cyanex 272), but the lion’s share of the go-to REE extractants are made in or near China. If export licenses or informal barriers were applied to these chemicals (just as China has done for certain RE magnet production technologies), non-Chinese projects could be delayed or derailed.
Industrial Chemicals
Massive Chinese petrochemical and fertilizer industries underpin the cheap production of acids and salts. China’s ability to flood the market with low-cost reagents (from hydrochloric acid to ammonium salts) has made Western refineries quietly dependent on this supply chain. As one analysis noted, the supply chains for specialized chemicals needed for REE separation are already effectively “under China’s control”, giving it unseen leverage over any country trying to build a mine-to-magnet supply chain independent of Beijing.
In practice, the light REEs (like Nd, Pr, which go into NdFeB magnets) and heavy REEs (Dy, Tb for magnet heat tolerance, Eu for phosphors, etc.) all funnel through this Chinese-centric refining network. Heavy rare earths in particular often come from ionic clay leach operations in Southern China (or Myanmar) that rely on Chinese-supplied chemicals and technology – there is virtually no alternative source at scale for some of these heavies today. That’s why even if the U.S. opens a new mine or a separation plant, it might find itself importing Chinese chemicals to run it, inadvertently trading one dependency (ore) for another (reagents).
Strategies to Break the Bottleneck
Even the best new refinery is only as secure as its input supply. To truly get around these chemical choke points, a multifaceted strategy is needed:
Reshore Critical Reagents
Encourage domestic or allied production of key extractants and chemicals. Governments and industry can invest in plants to make P204/P507 solvents, oxalic acid, etc., in the U.S., Europe, or friendly nations. This might involve joint ventures with chemical firms in countries like Japan, Korea, or India to ensure a non-Chinese supply line.
Strategic Stockpiles
Just as oil or grains are stockpiled, maintain inventory of essential reagents. A year’s worth of P507 or oxalic acid, stored safely, could buffer against short-term disruptions. Stockpiling “minor” but irreplaceable inputs insulates pilot and commercial plants from sudden shortages.
Permitting & Infrastructure Support
Streamline the approvals for building acid plants, solvent handling facilities, and waste treatment in Western nations. Refining rare earths involves hazardous materials; supportive policy (and community engagement) can shorten project timelines for these chemical facilities. Without easier permitting, the West can have rich mines but nowhere to refine them.
Chemical Recycling & Efficiency
Invest in recycling of magnets and electronics to reclaim rare earths, which can reduce fresh chemical usage per unit of REE produced. Currently only ~1% of REEs are recycled, but improved processes (for example, new extraction methods or even direct remanufacturing of magnet scrap) could alleviate some pressure on upstream supply. Recycling still requires chemicals, but it provides an urban mine that is geographically distributed – making it harder for one country to control.
Alternate Separation Technologies
Pursue R&D into ion-exchange resins, membrane separation, and novel extractants (including bio-based or ionic liquids) that could simplify flowsheets or use more benign chemicals. If future refineries can use a different “toolkit” of chemicals, it opens paths to source those from diverse suppliers. For instance, some startups are exploring electrochemical separations or chromatography for specific rare earths – potentially bypassing the need for certain Chinese-made solvents.
Rare Earth Exchanges need to take a moment to elaborate on the importance of allied cooperation.
Like-minded nations can form a critical materials club to coordinate on chemical supply. For example, if one country produces excess reagent X and another produces Y, trading agreements can ensure each has what it needs without going through an adversarial supplier. Joint procurement or co-investment in chemical production (similar to how countries collaborate on strategic petroleum reserves) could bolster resilience.
In summary, separating rare earths at scale means grappling with a second supply chain beside the ore itself (and the refining know how and ultimately the magnet production)– a chain of acids, solvents, and salts often sourced from China. As experts have warned, “if the West builds refineries that still rely on China-linked reagents, it hasn’t built resilience”.
Achieving a truly secure rare earth supply will require not just mines and mills, but also a rebirth of chemical manufacturing and ingenuity outside China’s shadow. By fortifying the factors of production – the unglamorous chemicals and behind-the-scenes processes – the U.S. and its partners can chip away at China’s hidden advantage and ensure that “mine-to-magnet” doesn’t quietly translate into “mine-to-China-to-magnet.”
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