Highlights
- The global rare earth element market is expected to grow from $7.5 billion in 2023 to $16.9 billion by 2030, driven by electric vehicles, renewable energy, and high-performance electronics.
- China currently controls over 60% of global REE production, but other nations like the U.S. and Australia are racing to diversify and establish independent supply chains.
- Geopolitical tensions, technological demand, and the transition to green energy are reshaping the rare earth element market, with significant economic and strategic implications.
The global rare earth element (REE) market is on a rapid growth trajectory, projected to expand from $7.5 billion in 2023 to $16.9 billion by 2030 at a 12.3% compound annual growth rate (CAGR). This surge is largely driven by exploding demand in electric vehicles (EVs), renewable energy technologies, and high-performance electronics. As the world accelerates its transition to green energy, rare earth elements—particularly neodymium, praseodymium, dysprosium, and terbium—have become indispensable for manufacturing EV motors, wind turbine generators, and high-strength alloys.
The Supply Chain Power Struggle
China remains the dominant force, controlling over 60% of global REE production and wielding significant influence over pricing and supply policies. However, other nations are racing to diversify the supply chain. The U.S. has revived the Mountain Pass mine in California, while Australia’s Lynas Rare Earths Ltd. continues to expand operations, solidifying its position as the largest non-Chinese supplier. Germany’s automotive giants are deepening supply chain collaborations to support their EV boom, while Vietnam and Australia are emerging as alternative sources. Meanwhile, China’s tightening environmental regulations and export quotas could further shake global pricing and availability.
Industry Disruptors and Competition
The rare earth sector is witnessing strategic shifts and consolidation, with major players expanding extraction and refining capabilities. MP Materials is pushing to reestablish a full-fledged U.S. rare earth supply chain (see Rare Earth Exchanges “A National Treasure Trove…”)
while Arafura Resources and Iluka Resources in Australia are developing projects to meet soaring demand.
Notably, Lynas has secured a partnership (opens in a new tab) with the U.S. Department of Defense to build a processing facility in Texas, a move aimed at breaking China’s near-monopoly on refining capacity.
What’s Driving Future Demand?
According to an analyst report by Maximize Market Research (opens in a new tab) the permanent magnet sector is the largest consumer of rare earth elements, fueled by EV adoption, wind energy expansion, and the miniaturization of high-tech electronics. In addition, REEs play a crucial role in aerospace, defense, and advanced medical technologies, further strengthening their global demand. However, geopolitical instability, supply chain bottlenecks, and environmental concerns around REE mining pose challenges that could dictate future market dynamics.
The Road Ahead
With nations scrambling to secure rare earth resources, the market is poised for rapid transformation. The battle for REE independence from China is intensifying, while companies that control extraction, processing, and refinement will hold the keys to the next wave of technological innovation. As the world pivots towards sustainability and electrification, the rare earth race is no longer just about resources—it’s about economic and geopolitical power.
Trump, MAGA and ‘Drill Baby Drill’
Donald Trump’s “energy dominance” agenda and pro-hydrocarbon stance pose a direct challenge REE market, which has been booming under green energy policies. His rejection of Biden’s Green New Deal, along with efforts to expand oil, gas, and coal production, could slow the transition to electric vehicles (EVs), wind energy, and clean tech—sectors that depend heavily on rare earths. However, the impact on the REE market is not straightforward and could unfold in multiple ways.
Scenario 1: Reduced Demand for REEs in Green Tech
Trump’s push for fossil fuel expansion and deregulation could undermine the U.S. EV market, slowing domestic demand for neodymium and praseodymium magnets used in electric motors. Wind energy projects, which rely on rare earth-dependent turbines, may also face funding cuts. If the U.S. pivots away from Biden-era renewable incentives, it could dampen domestic demand for rare earths in the short term.
However, global demand for REEs—particularly from China, Europe, and developing nations transitioning to green energy—will likely continue to surge. Even if the U.S. slows its clean energy transition, the global push toward EVs and renewable energy is irreversible, meaning REE markets could shift away from U.S. dependence rather than collapse.
Scenario 2: Geopolitical Realignment & REE Supply Chain Disruptions
Trump’s “America First” policies and skepticism of international trade agreements could impact the U.S. rare earth supply chain. Biden’s administration had been investing in domestic rare earth mining and processing, supporting MP Materials and Lynas’ expansion in Texas to reduce dependence on China. Trump, however, may redirect funding away from critical mineral development, favoring traditional energy industries instead. This could stall efforts to establish a secure, independent U.S. rare earth supply chain, leaving the country even more reliant on Chinese imports.
Additionally, if Trump imposes tariffs or trade restrictions on China, Beijing could retaliate by restricting rare earth exports—something it has threatened in the past. Given that China controls over 60% of global REE production and 85% of refining capacity, such a move could spike prices and destabilize the market, affecting industries beyond clean tech, including defense, semiconductors, and consumer electronics.
Scenario 3: Alternative Uses & Military Demand for REEs
Even if Trump slows green energy investments, rare earths will still be in high demand for military applications, high-tech manufacturing, and traditional industries. The Pentagon has identified rare earths as critical to national security, and Trump’s defense priorities could strengthen U.S. investments in REE mining for weapons systems, aerospace, and communications technology. While this wouldn’t offset a collapse in EV demand, it could sustain parts of the market and push the REE supply chain toward a defense-driven model rather than a green-energy one.
The Bottom Line: Market Shift, Not Collapse
While Trump’s policies could disrupt the U.S. rare earth market, the global demand for REEs remains strong, driven by China, Europe, and other markets committed to green energy. If the U.S. reduces investments in EVs and wind power, rare earth demand may shift toward military, industrial, and global markets rather than disappear. However, if Trump abandons domestic rare earth supply chain investments, the U.S. risks falling further behind China, increasing economic and strategic vulnerabilities in critical mineral supply.
Who Wins and Who Loses?
- Winners: U.S. fossil fuel industries, oil and gas companies, traditional automakers, China (if U.S. dependence on REEs increases).
- Losers: U.S. renewable energy companies, domestic EV producers, rare earth miners in the U.S. (if funding declines), and the Pentagon (if rare earth supply chains remain dependent on China).
Trump’s hydrocarbon-first agenda may shake up the rare earth market, but it won’t erase the demand for these critical minerals—it will simply change where and how they are needed. The biggest risk? The U.S. is losing ground in the global rare earth race while China strengthens its hold on the market.
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