Highlights
- China controls over 98% of global heavy rare earth supply.
- Critical applications of heavy rare earth elements include defense, electric vehicles, and advanced technologies.
- Heavy rare earth elements are challenging to extract due to complex geological deposits and high processing costs.
- Western companies are slowly developing alternative production capabilities to challenge China's current market dominance.
When it comes to the modern technological arms race, the light rare earths—like neodymium and praseodymium—often steal the spotlight. But the real strategic prize lies deeper in the periodic table. Heavy rare earth elements (HREEs)—especially dysprosium (Dy) and terbium (Tb)—are the molecular backbone of high-performance permanent magnets used in everything from F-35 fighter jets to hypersonic missiles, nuclear submarines, and directed-energy weapons. And China, along with shadowy production streams from Myanmar and Laos, controls a staggering 98%+ of the global supply.
At Rare Earth Exchanges™, we track these strategic commodities closely. Our latest HREE Project Ranking Database reveals both the concentration risk and a slow but determined Western response. So what makes the heavies so critical, and why are they so devilishly difficult to produce?
What Are Heavy Rare Earths—and Why Should You Care?
Heavy rare earths, such as dysprosium, terbium, yttrium, holmium, and lutetium, are a subgroup of the 17-element rare earth family. What separates them isn’t just atomic weight—it’s functionality. These metals enhance thermal resistance, coercivity, and magnetic performance in demanding applications where failure is not an option: warships, electric vehicle drivetrains, satellite systems, and laser guidance platforms.
Dysprosium and terbium, in particular, are used to “dope” neodymium-iron-boron (NdFeB) magnets—allowing them to operate at high temperatures, a necessity for jet engines and high-speed electric motors. Without these dopants, critical defense systems risk performance degradation under thermal stress.
Mining Heavies: Hard Rock, Harder Economics
While light rare earths are abundant in hard rock deposits like bastnäsite and monazite, heavy rare earths tend to occur in lower concentrations and often in ionic adsorption clays (IACs)—weathered, clay-rich materials primarily found in southern China and northern Myanmar. The challenge? These deposits often lack geological definition, are chemically complex, and require low-impact yet high-cost leaching methods using ammonium sulfate.
Even where heavies do occur in conventional hard rock deposits—like xenotime or gadolinite—the impurities can be extreme. Uranium, thorium, and other radioactive elements complicate environmental approvals and drive up costs. In short: HREEs are not just hard to find—they’re hard to finance, extract, separate, and sell.
China’s Hidden Hegemony: A Network of Power
China’s grip on the HREE market runs deeper than state-owned mines. Shenghe Resources, China Southern, and China Northern Rare Earth Group dominate domestic processing, but rely heavily on clandestine supply chains in Myanmar’s Kachin State, controlled by ethnic militias and warlords—a place undergoing strife and civil conflict. Despite international scrutiny, these illegal mines remain the world’s largest source of dysprosium and terbium oxides. Our REEx database ranks “Myanmar Rebels – Kachin Clays” as the top HREE source globally, based on estimated production and scale.
Even as the West targets upstream investment, China’s refining stranglehold ensures that most non-Chinese concentrate ends up in Chinese hands—often via offtake agreements and tolling arrangements.
Western Contenders: Who Can Actually Ramp Up?
Among Western companies, only a few show near-term potential to meaningfully dent the HREE deficit:
- Lynas Rare Earths (ASX: LYC) – With its Mount Weld deposit and Kalgoorlie refinery, Lynas ranks #2 on our REEx list. While primarily a light rare earth producer, it delivers meaningful dysprosium and terbium from its monazite feedstock and is expanding capacity.
- MP Materials (NYSE: MP) – Best known for Mountain Pass, MP is entering the HREE game via a Texas magnet factory and a planned separation facility. But its dysprosium production remains minimal relative to global needs. It will need to partner and access source. Note the Department of Defense in the latest equity deal can help direct the company in this endeavor.
- Brazilian Rare Earths (ASX: BRE) – An emerging contender, BRE’s Monte Alto scores high on deposit and project maturity. Its IAC-style mineralogy makes it one of the most promising non-Chinese HREE prospects—especially if backed by strategic offtake partners.
- Northern Minerals (ASX: NTU) – Its Browns Range project in Australia is one of the few in the world explicitly focused on heavy rare earths. But it’s still pre-commercial and capital-constrained.
- Ionic Rare Earths (ASX: IXR) – Uganda’s Makuutu project, through Rwenzori Metals, offers ionic clay-hosted HREEs with relatively high ESG marks. Its success will hinge on infrastructure, permitting, and regional stability.
- Aclara Resources (TSX: ARA) – The Penco Module in Chile is a unique Western hemisphere ionic clay deposit with environmental advantages. Early-stage, but highly watchlisted.
- USA Rare Earth (OTC: TMRC) and Torngat Metals (Private) – The Round Top and Strange Lake projects, respectively, hold sizable HREE endowments in North America. Both are technically complex, but potentially transformative with the right policy and financing push.
- Australian Strategic Minerals (ASM.AX) recently announced processing some heavy rare earths. See REEx report.
The Strategic Imperative: More Than Just Mining
HREEs are more than a critical mineral—they’re a strategic vulnerability. As geopolitical tensions escalate and supply chains become fragmented, the race to secure dysprosium and terbium sources outside of China intensifies. Western defense contractors, automotive OEMs, and clean tech firms cannot scale without reliable access to these materials.
However, as our REEx rankings indicate, the West’s HREE production remains a fraction of global demand. To close the gap, investors and policymakers must prioritize:
- Refining & Separation Infrastructure
- Offtake-backed Project Finance
- Permitting & ESG Acceleration
- Alliances with Friendly IAC Jurisdictions (e.g., Brazil, Uganda, Chile)
Final Thought: Eyes on the Heavies
Light rare earths may dominate headlines, but the global economic balance may hinge on the availability of dysprosium and terbium. Until Western governments treat heavy rare earths as defense-critical—not just resource-relevant—the power dynamic will remain with Beijing…and the Kachin hills of Myanmar.
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