The intensifying strategic contest over critical materials has reached a new inflection point, as Western nations scramble to fill a looming gap in heavy rare earth elements such as dysprosium and terbium. These so-called “heavies” are indispensable for high-performance permanent magnets used in electric vehicles, wind turbines and defence systems. Yet, despite decades of talk, the dominant global supply chain remains controlled by China. As rivalry deepens, the question is how and why the West is mobilising — and what obstacles lie ahead.
Strategic Imperative and Supply Chain Dependence
Western attempts to build a home-grown magnets supply chain stem from a recognition that the existing system is deeply vulnerable. For years, China has held near-monopoly control over the heavy rare earths (HREEs) category: both in processing capacity and export terms. Analysts note that Washington’s defence and clean energy sectors remain heavily reliant on Chinese‐controlled supply, making national security and industrial policy increasingly intertwined. The reliance is especially acute for dysprosium and terbium, elements that enable magnets to retain performance at high temperatures — for example, in EV motors or advanced guidance systems.
For companies and governments alike, this dependence represents a dual risk: first, the commercial exposure of auto-manufacturers, wind-turbine makers and electronics firms; second, the strategic vulnerability of defence-related production. When China introduces export curbs or review mechanisms for critical minerals, the ripple effects extend far beyond commodity markets. In this context, Western governments have shifted from passive importers to active strategists: funding domestic mine development, subsidising processing facilities, promoting alliances with allied producers and investing in recycling technologies. The urgency of this mobilisation is driven by escalating demand for electrification and decarbonisation, weakening of old supply lines, and the geopolitical spotlight on China’s dominance in this space.
How Western Players Are Mobilising
A number of visible actions underscore the scale and ambition of the mobilisation. In the United States, companies like MP Materials are receiving major government backing to integrate mining, refining and magnet production under one roof. The idea is to replicate, outside China, a vertically integrated supply chain from ore extraction to magnet manufacturing — thereby reducing reliance on Chinese exports and processing. Complementing this, players in Europe, Australia, Canada and Brazil are being drawn into the network of exploration, extraction and refining of heavy rare earths.
For example, mining firms in Brazil and Canada are being tapped as potential sources of HREE concentrates. Processing demonstration facilities are being established in Australia and North America to separate dysprosium and terbium from other ores. Partnerships between mining companies and downstream magnet makers are proliferating, focused on establishing feedstock-to-magnet supply chains in friendly jurisdictions. Recycling of magnetic materials is also gaining traction, particularly for recovering rare earths embedded in end-of-life electronics and industrial equipment. Together, these efforts illustrate how the mobilisation is multi-dimensional: mining, separation, refining, magnet manufacturing and recycling all need to advance in parallel if the Western supply chain is to become credible.
While most public attention has focused on well-known rare earths such as neodymium or praseodymium (used in standard magnets), heavy rare earths like dysprosium and terbium represent the more difficult bottleneck. The geological reality is that global deposits outside China tend to have much smaller proportions of these heavy elements relative to lighter varieties. The separation and refining technology required to extract and purify them is also much more advanced and capital-intensive. Moreover, environmental and regulatory hurdles are higher for heavy-rare-earth projects, because the ore bodies often coexist with radioactive by-products or require more complex processing.
The economics are stark: prices for dysprosium oxide in Rotterdam are often many times higher than comparable materials processed in China, reflecting scarcity and the high cost of extraction outside the Chinese system. And while the West may produce increasing volumes of lighter rare earths, without sufficient heavy rare earth feedstock the manufacture of high-end magnets for EVs or turbines remains constrained. In other words, the heavier elements act as a choke-point: even if mining and processing of lighter rare earths scale up rapidly, the absence of heavy rare earths will limit the performance, reliability and range of applications of Western magnets — and maintain China’s leverage.
Why China’s Position Gives It Leverage
China’s dominance in the heavy rare earth supply chain is not accidental, but the result of strategic investment, policy support and industrial consolidation over decades. Beijing has invested heavily in the upstream mining of rare earths, downstream separation and magnet manufacture, and has actively used export licensing or review mechanisms to influence global supply dynamics. As a result, China refines and processes far more of the world’s critical rare earths than it mines, effectively becoming the centre of gravity for the entire value chain.
This gives China direct leverage: any disruption or policy shock in Chinese exports or processing can quickly ripple through global supply chains. Viewed through a strategic lens, this positions China as not just a supplier of commodities but a gatekeeper of key technologies — a role that is especially unsettling to Western defence and industrial planners.
In this environment, one can see why the West has shifted framing: rare earths are no longer just raw materials, but factors of strategic resilience. The decision by China to impose export controls on heavy rare earths and magnets has heightened urgency, prompting allies to reposition rapidly. Governments are increasingly recognising that securing access to heavies is not only a question of industrial competitiveness but of national security.
Obstacles and Timeline Challenges
Despite the ambition, the Western mobilization faces formidable headwinds. First, mining new heavy rare earth deposits is slow and capital-intensive. Exploration, permitting, infrastructure and environmental reviews typically require five to ten years before commercial operations ramp up. Second, separation and refining technologies for heavy rare earths are still largely concentrated in China; transferring know-how and building new capacity outside China is complex.
Third, the cost base for mining and processing heavy rare earths in many Western jurisdictions or allied countries tends to be much higher than China’s, meaning higher unit costs and slower ramp-up. Fourth, recycling as a feedstock source still remains small scale, and while promising, it will not bridge the gap quickly. Finally, geopolitical and environmental issues – from local opposition to mine development to regulatory hurdles – may delay projects.
Consequently, many analysts project that, even with ramped-up efforts, by 2035 only perhaps 30 % of heavy rare earths consumed outside China will be supplied by non-Chinese producers. That means the vulnerability remains — at least for now — and the West must balance realistic expectations with ambitious goals.
Implications for Industry and Strategy
The scramble to secure heavy rare earths carries implications across sectors. For the automotive industry, magnets built with insufficient heavy rare earth content may perform less well at elevated temperatures or in demanding applications — thereby affecting EV performance or cost competitiveness. For wind-turbine makers and renewable energy supply chains, heavy rare earth scarcity may raise costs or delay deployment. In defence, the inability to source magnets made with heavy rare earths may impair advanced systems or require reliance on Chinese-controlled supply channels.
More broadly, this supply chain tension portends a deeper shift in trade and industrial strategy: supply-chain resilience, friends-and-allies sourcing, strategic stockpiling and government backing of critical resources are now normalised in Western industrial policy.
Western efforts to build an alternative heavy rare earth supply chain reflect both commercial and strategic urgency. The ‘how’ involves mobilising mining, refining, recycling, corporate partnerships and government subsidies; the ‘why’ is rooted in industrial competitiveness, defence readiness and geopolitical risk. The path is neither fast nor easy — but in the context of China’s dominance, the heavy rare earth gap is one of the few material choke-points left in the global industrial system, and the West is now racing to close it.
(Source:www.marketscreener.com)
Strategic Imperative and Supply Chain Dependence
Western attempts to build a home-grown magnets supply chain stem from a recognition that the existing system is deeply vulnerable. For years, China has held near-monopoly control over the heavy rare earths (HREEs) category: both in processing capacity and export terms. Analysts note that Washington’s defence and clean energy sectors remain heavily reliant on Chinese‐controlled supply, making national security and industrial policy increasingly intertwined. The reliance is especially acute for dysprosium and terbium, elements that enable magnets to retain performance at high temperatures — for example, in EV motors or advanced guidance systems.
For companies and governments alike, this dependence represents a dual risk: first, the commercial exposure of auto-manufacturers, wind-turbine makers and electronics firms; second, the strategic vulnerability of defence-related production. When China introduces export curbs or review mechanisms for critical minerals, the ripple effects extend far beyond commodity markets. In this context, Western governments have shifted from passive importers to active strategists: funding domestic mine development, subsidising processing facilities, promoting alliances with allied producers and investing in recycling technologies. The urgency of this mobilisation is driven by escalating demand for electrification and decarbonisation, weakening of old supply lines, and the geopolitical spotlight on China’s dominance in this space.
How Western Players Are Mobilising
A number of visible actions underscore the scale and ambition of the mobilisation. In the United States, companies like MP Materials are receiving major government backing to integrate mining, refining and magnet production under one roof. The idea is to replicate, outside China, a vertically integrated supply chain from ore extraction to magnet manufacturing — thereby reducing reliance on Chinese exports and processing. Complementing this, players in Europe, Australia, Canada and Brazil are being drawn into the network of exploration, extraction and refining of heavy rare earths.
For example, mining firms in Brazil and Canada are being tapped as potential sources of HREE concentrates. Processing demonstration facilities are being established in Australia and North America to separate dysprosium and terbium from other ores. Partnerships between mining companies and downstream magnet makers are proliferating, focused on establishing feedstock-to-magnet supply chains in friendly jurisdictions. Recycling of magnetic materials is also gaining traction, particularly for recovering rare earths embedded in end-of-life electronics and industrial equipment. Together, these efforts illustrate how the mobilisation is multi-dimensional: mining, separation, refining, magnet manufacturing and recycling all need to advance in parallel if the Western supply chain is to become credible.
While most public attention has focused on well-known rare earths such as neodymium or praseodymium (used in standard magnets), heavy rare earths like dysprosium and terbium represent the more difficult bottleneck. The geological reality is that global deposits outside China tend to have much smaller proportions of these heavy elements relative to lighter varieties. The separation and refining technology required to extract and purify them is also much more advanced and capital-intensive. Moreover, environmental and regulatory hurdles are higher for heavy-rare-earth projects, because the ore bodies often coexist with radioactive by-products or require more complex processing.
The economics are stark: prices for dysprosium oxide in Rotterdam are often many times higher than comparable materials processed in China, reflecting scarcity and the high cost of extraction outside the Chinese system. And while the West may produce increasing volumes of lighter rare earths, without sufficient heavy rare earth feedstock the manufacture of high-end magnets for EVs or turbines remains constrained. In other words, the heavier elements act as a choke-point: even if mining and processing of lighter rare earths scale up rapidly, the absence of heavy rare earths will limit the performance, reliability and range of applications of Western magnets — and maintain China’s leverage.
Why China’s Position Gives It Leverage
China’s dominance in the heavy rare earth supply chain is not accidental, but the result of strategic investment, policy support and industrial consolidation over decades. Beijing has invested heavily in the upstream mining of rare earths, downstream separation and magnet manufacture, and has actively used export licensing or review mechanisms to influence global supply dynamics. As a result, China refines and processes far more of the world’s critical rare earths than it mines, effectively becoming the centre of gravity for the entire value chain.
This gives China direct leverage: any disruption or policy shock in Chinese exports or processing can quickly ripple through global supply chains. Viewed through a strategic lens, this positions China as not just a supplier of commodities but a gatekeeper of key technologies — a role that is especially unsettling to Western defence and industrial planners.
In this environment, one can see why the West has shifted framing: rare earths are no longer just raw materials, but factors of strategic resilience. The decision by China to impose export controls on heavy rare earths and magnets has heightened urgency, prompting allies to reposition rapidly. Governments are increasingly recognising that securing access to heavies is not only a question of industrial competitiveness but of national security.
Obstacles and Timeline Challenges
Despite the ambition, the Western mobilization faces formidable headwinds. First, mining new heavy rare earth deposits is slow and capital-intensive. Exploration, permitting, infrastructure and environmental reviews typically require five to ten years before commercial operations ramp up. Second, separation and refining technologies for heavy rare earths are still largely concentrated in China; transferring know-how and building new capacity outside China is complex.
Third, the cost base for mining and processing heavy rare earths in many Western jurisdictions or allied countries tends to be much higher than China’s, meaning higher unit costs and slower ramp-up. Fourth, recycling as a feedstock source still remains small scale, and while promising, it will not bridge the gap quickly. Finally, geopolitical and environmental issues – from local opposition to mine development to regulatory hurdles – may delay projects.
Consequently, many analysts project that, even with ramped-up efforts, by 2035 only perhaps 30 % of heavy rare earths consumed outside China will be supplied by non-Chinese producers. That means the vulnerability remains — at least for now — and the West must balance realistic expectations with ambitious goals.
Implications for Industry and Strategy
The scramble to secure heavy rare earths carries implications across sectors. For the automotive industry, magnets built with insufficient heavy rare earth content may perform less well at elevated temperatures or in demanding applications — thereby affecting EV performance or cost competitiveness. For wind-turbine makers and renewable energy supply chains, heavy rare earth scarcity may raise costs or delay deployment. In defence, the inability to source magnets made with heavy rare earths may impair advanced systems or require reliance on Chinese-controlled supply channels.
More broadly, this supply chain tension portends a deeper shift in trade and industrial strategy: supply-chain resilience, friends-and-allies sourcing, strategic stockpiling and government backing of critical resources are now normalised in Western industrial policy.
Western efforts to build an alternative heavy rare earth supply chain reflect both commercial and strategic urgency. The ‘how’ involves mobilising mining, refining, recycling, corporate partnerships and government subsidies; the ‘why’ is rooted in industrial competitiveness, defence readiness and geopolitical risk. The path is neither fast nor easy — but in the context of China’s dominance, the heavy rare earth gap is one of the few material choke-points left in the global industrial system, and the West is now racing to close it.
(Source:www.marketscreener.com)