Highlights
- China’s terbium production has declined 90% since 2006 due to environmental regulations.
- Official terbium output has dropped while unregistered production fills market gaps.
- Researchers project a 15,000-39,000 ton terbium shortage by 2060.
- Green mining innovation and recycling offer potential mitigation strategies for the shortage.
- Environmental compliance is the primary barrier to rare earth element supply expansion.
- There is a need for sustainable extraction technologies, rather than geopolitical factors driving supply constraints.
A landmark peer-reviewed study published in Fundamental Research (March 2025) challenges prevailing assumptions about China’s control over heavy rare earth elements (HREs), identifying environmental constraints, rather than production quotas, as the dominant force behind China’s declining terbium (Tb) output. The study was led by Wei Chen (Institute of Urban Environment, Chinese Academy of Sciences) and Peng Wang (University of Science and Technology of China), with collaborators from Europe and Japan.
Hypothesis & Findings
The authors applied a dynamic Material Flow Analysis (MFA) to track terbium supply chains from 1990 to 2018. Key findings include:
- Official terbium production in China has declined by 90% since 2006, despite having large government-assigned production quotas.
- By 2018, only 25% of China’s quota for HREs had been utilized, largely due to the inability of miners to comply with increasingly stringent environmental standards.
- Unregistered (illegal) supply filled the gap but introduced major environmental risks and market opacity. Estimated unregistered production totaled 5,000 tons, surpassing official output (3,000 tons).
- Rising Tb demand—driven by EVs, wind turbines, and electronics—has outpaced supply. Simulations project a 15,000–39,000 ton shortage by 2060 under Net Zero scenarios.
Mitigation Scenarios
The authors model four future mitigation strategies:
- Green mining innovation could reduce shortages by up to 70%.
- End-of-life product recycling: Potential to supply 9,500 tons, alleviating shortages by 24–36%.
- Quota optimization and relaxation: Reduces shortages by 13–38% if paired with environmentally compliant mining methods.
- Imports: Minor relief (up to 22%) due to global supply constraints and geopolitical risk.
Limitations & Caveats
- The model relies on historical Chinese trade and production data, with some uncertainty due to undocumented transactions and illicit mining activities.
- MFA does not account for price volatility, market interventions, or geopolitical shocks.
- Assumes constant demand scenarios and limited resource discovery—actual outcomes could vary significantly.
Global & “Ex-China” Implications
- Environmental compliance—not geopolitical maneuvering—is the primary barrier to HRE supply expansion in China.
- Ex-China producers (e.g., Australia, Brazil, Canada) seeking to compete must prioritize green extraction technologies and recycling systems to avoid the same fate.
- The study underscores an urgent need for global investment in environmentally sustainable rare earth processing and standardized recycling infrastructure.
- Western industrial policy must move beyond security rhetoric and invest in scalable, clean hydrogen energy (HRE) supply chains.
REEx Insight
This study serves as a wake-up call: China’s rare earth dominance is eroding not from external pressure, but from internal environmental reckoning. Nations that invest now in green mining innovation, recycling, and transparent trade frameworks could seize the moment to reshape the global heavy rare earth landscape.
Source: Wei Chen et al. Reshaping Heavy Rare Earth Supply Chains Amidst China’s Stringent Environmental Regulations (opens in a new tab), Fundamental Research, Vol. 5, Issue 2 (March 2025), pp. 505–513.
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