Highlights

• New study reveals China's structural vulnerability: 90% of HREE imports come from Myanmar, creating severe concentration risk for dysprosium and terbium supplies critical to EVs and wind turbines.
• Recycling from tailings could offset 58% of dysprosium needs, but requires heavy investment and policy support.
• End-of-life magnet recycling won't peak until 2037, too late for current supply shocks.
• If China cannot insulate itself from HREE supply disruptions despite its scale and control, global diversification efforts face even steeper challenges in securing the energy transition's tightest bottleneck.

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A new peer-reviewed study (opens in a new tab) in Environmental Impact Assessment Review (January 2026) pulls back the curtain on a quiet contradiction at the heart of the global rare earth system. While China dominates heavy rare earth element (HREE) processing, it remains structurally exposed—particularly to Myanmar—for the most critical inputs that power magnets, EVs, and wind turbines.

Authors include Chen Zhong, Wendong Wei, both with Shanghai Jiao Tong University and colleagues.

The Science Is Solid—And Uncomfortable

The authors apply a dynamic material flow analysis (dMFA) across nine HREEs from 2011–2020—the first integrated accounting of its kind. The findings are robust and credible:

• Dysprosium and terbium emerge as high-criticality bottlenecks with chronic supply gaps.
• China sourced ~90% of imported HREE compounds from Myanmar in 2020, a striking concentration risk.
• Nearly half of the HREE supply gaps were historically filled by unregistered mining, particularly before regulatory crackdowns.

These conclusions align with long-standing industry intelligence. China’s control has never meant self-sufficiency; it has meant leverage through processing, not security through supply.

Recycling: Silver Bullet or Slow Burn?

Is the optimism outrunning the calendar? The paper highlights recycling from tailings as an “immediately available” secondary supply, potentially substituting 58% of dysprosium and 46% of terbium concentrates. This is directionally correct—but context matters.

Tailings recovery is real, but it is site-specific, capex-heavy, and policy-dependent. Meanwhile, recycling from end-of-life magnets is projected to peak around 2037—useful for planners, irrelevant for today's supply shocks. Calling this a near-term fix risks overstating readiness.

Wendong Wei, Associate Professor

The Quiet Narrative Tilt

The paper frames China’s challenge largely as a domestic management problem—efficiency, governance, circularity. Less examined is the geopolitical reality: Myanmar’s instability, cross-border armed groups, and the strategic vulnerability this creates for everyone downstream, including the U.S., Europe, India, and Japan.

This isn’t misinformation—but it is a selective lens.

Why This Matters Outside China

So what’s the real takeaway for global investors? If China—with scale, capital, and policy control—cannot insulate itself from HREE shocks, no downstream nation should assume easy diversification. This study reinforces a hard truth: heavy rare earths are the tightest choke point in the energy transition, and recycling alone will not save the decade.

Citation: Zhong C. et al., Environmental Impact Assessment Review, Vol. 116 (2026), 108125. Elsevier.

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