- Study mapping China’s rare earth flows (2015–2022) shows heavy rare earths cost about 11× more than light REEs ($45,015/ton vs $3,912/ton), with magnetic materials driving value concentration.
- China has become a net importer by mass but maintains a monetary trade surplus through downstream processing, with import dependence for primary products rising 8×.
- Less than 1% of China’s rare earths are recycled, highlighting a gap between circular-economy goals and reality and creating a potential opening for ex-China recycling competition.
An open-access study published late last year by Zewen Ge, School of Accounting and Finance, Xiamen University, Tan Kah Kee College, with colleagues Jiamin Jiang and Yanlan Guo and Mufan Zhuang, Institute of Ecology and Sustainable Development, Shanghai Academy of Social Sciences, maps China’s rare earth economy from 2015–2022—not just in tons, but in costs and value. Using a combined Material Flow Analysis (MFA) and Material Flow Cost Accounting (MFCA) framework, the authors conclude that China’s REE machine is increasingly defined by high-cost heavy rare earths, value capture in functional materials (especially magnets), and a strategic shift from net exporter to net importer by mass—while still remaining a net winner in monetary value via downstream processing and exports.
Methods
The team traced rare earths through five stages—mining/beneficiation → refining/separation → fabrication → use → waste—tracking physical flows in “rare earth metallic equivalent.” They then layered on MFCA (splitting costs into material, energy, and system costs) and compared those costs to market price flows. Trade flows were built from UN Comtrade/China Customs data; production data came from Chinese REE yearbooks; cost/price inputs included company reports, databases, and site investigations, with uncertainty tested via Monte Carlo simulation.
Key Findings
- Scale: China’s cumulative concentrate inflows totaled 1,238 kilotons (2015–2022), with domestic mining the largest source.
- Costs: System + material costs dominate production, accounting for >95% of total costs. Heavy rare earth oxide production was far more expensive—about $45,015/ton vs $3,912/ton for light rare earth oxides.
- Where the money concentrates: “Functional materials” carried the largest cost and value flows; the authors highlight magnetic materials as the major driver.
- Value-add hotspot: Rare earth compounds showed the highest cumulative added value (reported as $7.57B).
- Trade reversal: China shifted to a net importer in physical terms but maintained a positive monetary balance—consistent with an “import-process-export” pattern. Dependence on external REEs rose sharply: net imports of concentrates and primary products increased 3.27× and 8.02×, respectively.
Limitations (why investors should stay cautious)
This is a macroeconomic reconstruction: it depends on the quality of source data, assumptions when granular data are missing, and nominal (not fully inflation-normalized) cost/price series—though the authors report sensitivity checks. MFCA is designed to trace production costs, not to “predict markets,” and informal/illegal flows are inherently hard to capture.
Implications
In its supply-chain strategy, the paper quietly underscores a geopolitical reality: China’s control is less about ore than about processing economics and downstream value capture, even as China becomes more reliant on imported feedstocks. For sustainability, the finding that <1% of REEs are recycled in China (with most end-of-life material landfilled) signals a major gap between “circular economy” rhetoric and industrial reality—an opening for ex-China recycling/refining competitiveness, but only if it can beat heavy-REE cost structure.
Citation: Ge, Z., Jiang, J., Zhuang, M., & Guo, Y. (2025). Revealing the material, cost, and monetary value flows of rare earth elements in China (opens in a new tab). Environmental Research Communications, 7(9), 095009. https://doi.org/10.1088/2515-7620/ae0300 (opens in a new tab)
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