Highlights
- CSIS report reveals China’s near-monopoly on rare earth processing.
- China controls 90% of refining and 99% of heavy rare earth processing.
- The study develops a scoring model ranking potential rare earth processing hubs.
- The U.S. scores highest (2.7/3.0), followed by Australia and Saudi Arabia.
- Report highlights challenges in executing rare earth processing strategies:
- Bureaucratic delays
- Infrastructure bottlenecks
- Market complexities
A newly released CSIS white paper, Developing Rare Earth Processing Hubs: An Analytical Approach (opens in a new tab) by Gracelin Baskaran and Meredith Schwartz, lays out a sweeping strategy to counter China’s dominance in rare earths by promoting midstream processing hubs. The report is exhaustively detailed, packed with data and policy logic—but how much of it reflects pragmatic pathway versus aspirational blueprint?
Solid Foundation: The Data Holds
To its credit, the report builds on well-documented realities: China controls ~90% of rare earth refining and 99% of heavy rare earth processing. It highlights key U.S. vulnerabilities—like the fact that until 2024, most Mountain Pass output was sent back to China for separation—and outlines the Department of Defense’s multi-pronged response, including its $400M equity investment in MP Materials and long-term offtake commitments. The report’s clear-eyed review of energy, water, labor, and permitting infrastructure in allied nations such as Australia, Saudi Arabia, and Canada is highly informative.
It’s interesting how CSIS is now trying to rank assets much like Rare Earth Exchanges (REEx) has done with its proprietary ranking system.
Its scoring model, based on ten weighted criteria, gives the U.S. the edge (2.7/3.0) as the top candidate for a rare earth processing hub, followed closely by Australia and Saudi Arabia. This model is methodical, and the report succeeds in mapping global capabilities with unusual rigor.
Where It Leans: High-Trust in Bureaucracy and Markets
But here’s the catch: the CSIS paper often assumes that countries with the right ingredients (infrastructure, water, permitting reform, investment incentives) will simply execute efficiently. This is especially evident in its treatment of Saudi Arabia’s Vision 2030 or Australia’s downstream ambitions—both of which face internal delays, workforce shortages, and uncertain offtake realities.
Also glossed over is the slow and fragmented nature of U.S. industrial execution. The paper treats Texas as a rising hub, yet doesn’t fully address the on-the-ground bottlenecks: Lynas’s Seadrift plant has stalled over water discharge permits, and MP Materials’ magnet ramp-up, while promising, still accounts for less than 1% of China’s 2018 output.
Premium Consulting with Policy Optimism?
Let’s also address the institutional layer: CSIS does not take policy positions, but this report leans heavily on the belief that “anchor markets” and public-private coordination will deliver. The consultancy, of course, is for hire to help navigate all of the complexities. For a group that charges premium fees for strategic consulting, the optimism here sometimes masks the risk of execution. The tone is technocratic and idealist—but global mineral supply chains are not built in Excel. They depend on politics, inertia, and capital market patience—factors underemphasized in this otherwise strong document.
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