Highlights

• China currently controls 90% of rare earth mining, processing, and magnet production, creating a critical geopolitical vulnerability for global tech and defense industries.
• Governments and private investors are pouring billions into developing alternative rare earth supply chains, presenting a unique investment opportunity across mining, processing, and manufacturing.
• Rare earth elements are not traditional commodities, but strategic assets crucial for emerging technologies like electric vehicles, renewable energy, and advanced defense systems.

---

Rare earth elements (REEs) aren’t just another commodity play – they’re the linchpin of the 21st-century tech economy, and one country holds a chokehold on their supply. While copper, oil, or gold flow freely in global markets, rare earths are trapped in a geopolitical vice grip. Here’s the hard truth on why betting on rare earths is a radically different game – and how you can seize the opportunity before it’s too late.

China’s 90% Grip: A Geopolitical Time Bomb

It’s no exaggeration: China controls the rare earth kingdom. By some estimates, China accounts for about 70% of global rare earth mining and a staggering 90% of the processing that turns those raw ores into valuable materials. Even more alarming, China produces over 90% of the world’s rare earth magnets – the powerful components at the heart of EV motors, wind turbines, and missile guidance systems. This near-monopoly isn’t just a statistic; it’s a strategic vulnerability for the rest of the world, as we have chronicled in Rare Earth Exchanges (REEx).

Think of it this way: if Beijing coughs, the global tech supply chain gets pneumonia. In 2010, during a diplomatic spat, China slashed rare earth exports by 37%, and prices spiked 700% almost overnight reports (opens in a new tab) the Comptroller of Texas. Fast forward to 2025 – China imposed new export controls on critical rare earth alloys and magnets, causing its overseas magnet shipments to plunge by 52% in a month, the lowest in years. Supply chains from Detroit to Düsseldorf shuddered as Chinese customs slowed approvals, rocking industries from autos to defense. Imagine if OPEC controlled 90% of oil refining – that’s the level of leverage China wields over rare earths, and it’s using it as a geopolitical weapon.

For investors, this dominance cuts two ways. In the short term, it’s a source of fear, uncertainty, and volatility – Beijing’s policy tweaks can whipsaw prices and cripple companies dependent on Chinese supply. But in the long term, it’s driving an international scramble to break free. The U.S. and its allies are finally waking up: policymakers now openly admit that reliance on a single country for 90% of these critical materials is untenable—see the Department of Defense's (opens in a new tab) position (opens in a new tab).

This is the inflection point, and those who understand it can position themselves for substantial gains as the West invests resources in achieving rare earth independence.

Rare Earths vs. Traditional Commodities: A Different Ballgame

Don’t confuse rare earth elements with traditional metals like copper or gold – they play by different rules. Rare earths aren’t traded on major exchanges with transparent pricing; instead, they’re like specialty chemicals, requiring complex processing and often sold in opaque deals. Consider a few key differences.

First REEs aren’t like other commodities—and treating them as such leads investors astray. 

While copper, gold, or oil have well-established trading platforms and transparent pricing, REEs exist in a fragmented, opaque market with no broad futures contracts. Each of the 17 rare earths has its own unique supply-demand curve, processing challenges, and end-use applications. Unlike gold, which is valuable once extracted, a rare earth oxide is essentially useless until it’s chemically separated, refined, alloyed, and converted into a high-performance magnet or component. That complexity makes the REE supply chain a multi-step industrial system, not a raw-material market.

Moreover, the value in REEs is overwhelmingly captured downstream—in the magnets, motors, wind turbines, and missile systems they enable, not in the mined ore itself. A neodymium-iron-boron magnet is worth exponentially more than the ore it came from, but investors can’t access that value without understanding the full pipeline. Compounding the issue is China’s near-total control of the midstream and downstream segments, where over 90% of rare earth processing and magnet production occurs. 

That level of concentration makes REEs a national security concern, not just an economic one. In this way, rare earth investing is not just about mining—it’s about supply chain systems, geopolitical risk, and the strategic industries they support. This is what sets rare earths apart—and why traditional commodity platforms and funds often fail to grasp it.

The bottom line: investing in rare earths isn’t a simple commodity play; it’s a value-chain play. The opportunities (and risks) extend beyond mines into processing plants and factories that produce the magnets, alloys, and components used in these operations. It requires understanding a convoluted supply chain that traditional commodity investors rarely contemplate.

The Education Gap: Wall Street’s Blind Spot

If rare earths are so crucial, you’d think investment platforms and analysts would be all over it, educating investors… but you’d be wrong. Most retail investment platforms barely scratch the surface. They might list a mining stock or a bland ETF inclusive of Chinese mining interests, but they seldom explain that mining is just one piece of an interdependent puzzle. This ignorance isn’t benign – it leads to poor decisions and unwelcome surprises.

Industry veterans have been shaking their heads at the misinformation floating around. 

Jack Lifton, a noted rare earths expert, laments the “staggering volume of errors” he sees in analyses of critical minerals. He stops reading when he finds glaring mistakes, and he finds them often reported at Investor News, another platform that Rare Earth Exchanges supports and is grateful for.

Analysts with no background in chemistry or metallurgy make rosy predictions about rare earth supplies and prices, unaware of the technical challenges involved in extracting and refining these elements. For example, pundits have hyped junior mining companies as if a big rare earth discovery = instant fortune. Reality check: without a viable separation plant and a customer for the refined oxide, that “valuable” rare earth deposit might as well be moon dust.

Traditional stock research platforms rarely mention that Mountain Pass (the only U.S. rare earth mine) still (at least up until the trade war) ships its concentrate to China for processing, or that Lynas (the Australian rare earth miner) had to build a refining plant in Malaysia because nobody else would process its output. Important context like that is usually buried in technical reports, not on the front page of your brokerage app. 

The result? Investors get blindsided. They’ll see a government announcement about “building a rare earth supply chain” and assume a mining company will profit, not realizing the real bottleneck (and value-add) might be a magnet factory in Japan or a separation facility in Estonia.

Even institutional investors often misunderstand the systemic interdependencies at play. Rare earths straddle multiple sectors – mining, chemicals, manufacturing, defense – making it nobody’s specialty and everyone’s problem. Wall Street, with its siloed sector analysts, has largely failed to connect the dots. This education gap is precisely what creates the opportunity for those willing to learn: when a market is poorly understood, it’s often mispriced. And rare earths are grossly mispriced in terms of strategic importance.

Rare Earth Exchanges: A Full Value-Chain Solution

Amid this confusion, Rare Earth Exchanges (REEx) emerged in late October 2024 with a radically different approach. Rather than focusing solely on mining or end products, REEx takes a value-chain approach, spanning from upstream to downstream, and shines a light on each critical link. With the website launched in October 2024 and the company in January 2025 to fill a “critical gap in understanding,” Rare Earth Exchange was born to connect the dots for investors.

Its mission is to provide end-to-end insight – from the moment rare earths come out of the ground, through separation and refining, all the way into magnet manufacturing and high-tech assembly.

What sets Rare Earth Exchanges apart is this holistic lens. For example, on REEx’s platform, you’ll find real-time news about mining projects and updates on new magnet factories, important project (company) rankings, a social forum to discuss companies, news, and financial aspects, as well as a YouTube podcast.

It’s not just reporting that China holds “over 85% of midstream and downstream processing” – it’s also tracking which Western companies are closing that gap. Scroll through REEx and you might see a profile on MP Materials ramping up a Texas magnet plant, an analysis of Neo Performance’s Estonia refinery, or a forum discussion linking an Australian mine deal to a South Korean magnet venture. This integrated view is invaluable in a market where success hinges on aligning all stages of the supply chain.

Crucially, REEx emphasizes transparency and investor access across the global rare earth value chain. Traditional investment platforms don’t have dedicated sections for “midstream refining” or “magnet alloy producers” – REEx does. It curates data like a proprietary ranking of NdPr (neodymium-praseodymium) projects by viability, helping investors discern which upstream projects have a realistic chance of reaching production. It’s a one-stop nexus where a retail investor can educate themselves on how a junior miner in Africa, a separator in Europe, and an EV magnet maker in Japan are all interlinked pieces of the same puzzle.

In short, REEx is demystifying this complex sector. By adopting a value-chain approach, it equips investors with the full picture – something you won’t get from a generic commodities blog or a stock tip on CNBC. This approach doesn’t just inform; it empowers investors to make smarter bets in a space where knowledge is truly power. 

Here’s the big play: the world is pouring resources into breaking China’s rare earth stranglehold, and that means massive investment opportunities for those ahead of the curve. We’re not talking millions – we’re talking billions upon billions of dollars mobilizing to build mines, refineries, and factories from the ground up. BCG analysts estimate that about $30 billion is needed (opens in a new tab) just to develop sufficient rare earth mining by 2035, and that’s before considering the cost of new separation plants, metal smelters, and magnet production lines. 

A study recently tracked by REEx suggested $100 billion over a decade. In the U.S., the Department of Defense has already invested nearly $440 million since 2020 to kickstart a domestic mine-to-magnet supply chain, specifically to “signal to private capital” that now is the time to invest. The message is clear: governments are in – they need private investors to join the fight.

Why is this such a differentiated opportunity for retail investors? Because it’s not just about economic upside – it’s about shaping national security and supply chain resilience. We’ve entered an era where supply chains can be weaponized. Investing in rare earths is effectively investing in the West’s industrial independence. It’s akin to buying into the oil industry in the early 20th century or semiconductor fabs in the late 20th century – except this time the stakes are arguably higher. If the supply of rare earths falters, entire industries (such as electric vehicles, renewable energy, aerospace, and defense) falter with it. That’s why the U.S., EU, Japan, and others are throwing weight behind rare earth projects like never before.

For the retail investor, this means a few things:

Tailwinds, Not Headwinds

Government support is a tailwind, not a risk. Policies like the Defense Production Act and EU subsidies for magnet production are actively de-risking rare earth investments by aligning public capital with private opportunity.

Undervalued Assets

Many rare earth ventures remain undercapitalized and misunderstood. As awareness grows, overlooked mining and midstream processing firms could surge in value, just as MP Materials did, transforming from a penny stock to a multi-billion-dollar leader.

Resilience = Returns

In an era of fragile supply chains, resilience commands a premium. Companies helping to diversify the rare earth supply away from China are well-positioned to meet the rising demand from manufacturers seeking secure, strategic materials.

Lastly, consider the macro trend: the clean energy and high-tech revolution is accelerating. EV sales are climbing, wind farms are expanding, and every F-35 fighter jet or advanced drone still needs magnets and components that only rare earths can provide. Global demand for rare earth magnets is projected to triple by 2035. This represents explosive growth in volume against a supply chain that’s essentially being rebuilt from scratch outside of China. It’s hard to find a better recipe for an investment boom.

The call to action for investors is clear: Rare earths present a once-in-a-generation opportunity where economic interests meet national interests. It’s a chance to invest not just in a commodity, but in a strategic asset class underpinning the future. Platforms like Rare Earth Exchange are making it easier to understand and access this space, a feature that no ordinary trading app or generic ETF can offer. As China’s dominance faces its biggest challenge yet, those who fund the alternatives stand to reap enormous rewards.

In investing, the best returns often come from recognizing what others underestimate. Wall Street has long underestimated rare earth elements, treating them as niche metals. They’re not–they are the irreplaceable gears of the modern economy, and the scramble to control those gears is on. For savvy retail investors with an eye on both profit and progress, rare earths are a differentiated opportunity you can no longer afford to ignore. The rare earth revolution is here – will you be part of it?