China Expands Rare Earth Recycling Capabilities – Implications

Highlights

• China inaugurates a massive 5.69 billion yuan rare earth recycling facility in Leshan.
• The facility projects $6.7 billion in annual revenue.
• The move aims to consolidate China’s control over the rare earth supply chain through advanced recycling technologies.
• This investment highlights China’s competitive advantage in rare earth processing.
• The facility potentially widens the technological gap with Western nations.

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China has taken another major step in consolidating its dominance over the rare earth supply chain by launching a 6,000-ton-per-year rare earth recycling facility in Leshan, Sichuan Province. The Leshan Yurun Rare Earth Recycling Project, which officially broke ground on February 26, 2025 (opens in a new tab), represents a 5.69 billion yuan ($790 million) investment in rare earth material recovery. Spanning over 103,000 square meters, this facility is designed to recycle rare earth materials from discarded magnets, using a full-dissolution method that involves roasting, acid leaching, solvent extraction, ammonium carbonate precipitation, and calcination.

The Vision, Scope, and Plans

Once operational, the plant is projected to generate 48 billion yuan ($6.7 billion) in annual revenue, contribute 8 billion yuan ($1.1 billion) in taxes, and create over 200 jobs—a significant boost to the local economy and China’s overall rare earth industry.

Strategic Implications for China

This announcement is not just a technological achievement but a clear strategic maneuver. China has long dominated primary rare earth extraction and processing, but now it is expanding aggressively into rare earth recycling, further entrenching its supply chain control.

Recycling is a cost-effective and environmentally friendly way to recover high-value rare earth elements like neodymium, praseodymium, and dysprosium. These elements are crucial for permanent magnets used in electric vehicles, wind turbines, and military applications. China is strengthening its circular economy model by focusing on sustainable rare earth recovery, reducing reliance on new mining operations, and maintaining its grip on global rare earth availability.

This move also reinforces China’s ability to insulate itself from supply disruptions, ensuring a steady stream of rare earth materials for its domestic industries. Given the ongoing geopolitical tensions and the West’s push for rare earth independence, China’s investment in large-scale recycling is a preemptive strike against Western supply chain diversification efforts. The facility will reduce China’s need for imported raw materials, making it more self-sufficient and less vulnerable to trade restrictions or sanctions.

Impact on the West and the U.S.: A Growing Competitive Disadvantage?

This announcement raises serious concerns for the United States and its allies. The West has been struggling to establish an independent rare earth supply chain, with efforts often slowed by regulatory hurdles, environmental concerns, and a lack of refining infrastructure. While the U.S., EU, and Japan have made strides in launching rare earth recycling initiatives, none currently match China’s scale, efficiency, or investment in this sector.

The Leshan project exposes a critical weakness in Western supply chain strategies—the inability to match China’s vertical integration and full-spectrum rare earth processing capabilities. While the U.S. is still trying to establish basic rare earth processing facilities, China is already scaling up next-generation recycling and refining, giving it a decisive cost and supply advantage. Without similar large-scale investments, Western nations will remain dependent on China, not just for newly mined rare earths but also for recycled materials—an area that was previously seen as a potential weak spot for China.

The Global Rare Earth Race: Can the West Catch Up?

The opening of this facility sends a clear message: China is not just maintaining its dominance—it is expanding it. It’s not resting as Rare Earth Exchanges has reported, as the government pushes a relentless agenda.

While Western nations focus on new mining projects, China is securing its future through recycling, advanced processing, and supply chain control. The U.S., EU, and other allies must now decide whether to accelerate their investments in rare earth recycling and processing or continue to lag behind.

China is tightening its grip on these critical resources.

As global demand for rare earths skyrockets, particularly for electric vehicles, renewable energy, and defense applications, China’s latest move raises urgent strategic questions. Does the West have the vision, political will, and commitment to industrial policy to build a competitive rare earth ecosystem? Or will China’s expanding dominance force Western companies and governments to remain reliant on Beijing for the materials that power the 21st century?