Why Rare Earth Processing Remains China’s Strongest Leverage Point
As governments scramble to secure supplies of rare earth elements, a new engineering study from Malaysia has cast fresh light on why China continues to dominate one of the most critical parts of the supply chain—processing.
The research zeroes in on what many industry insiders already regard as the hardest step in rare earth production: separating neodymium and praseodymium to the ultra-high purity levels required for permanent magnets.
Rare earth elements tend to occur in clusters and behave almost identically at the chemical level. Neodymium and praseodymium, two of the most important inputs for high-performance magnets, sit next to each other on the periodic table.
This proximity makes them extremely difficult to separate cleanly. Even with viable ore, the separation step is so complex and capital-intensive that it continues to favor countries like China that already operate such systems at scale.
What makes this phase more complex, according to the research, is that separating neodymium from praseodymium to magnet-grade purity requires an extraordinary number of repetitions.
Their modeled plant design calls for roughly 62 equilibrium stages, compared with as few as 16 stages for earlier, bulk separations. In practical terms, this means that a facility capable of producing magnet-grade material must be vast, expensive, and technically sophisticated.
Loosening the grip
China’s dominance stems largely from its ability to meet this requirement at industrial scale. While the country accounts for about 60 percent of global rare earth mining, it processes close to 90 percent of the world’s supply.
That dominance did not happen by accident. After acquiring early separation know-how from France in the 1980s, China spent decades refining solvent extraction techniques, training engineers, and scaling plants far beyond what most countries were willing or permitted to build.
Today, China produces roughly 70,000 metric tons of refined rare earths per year. It also controls nearly all processing of heavy rare earth elements, which are even more difficult to separate and are critical for high-temperature and defense applications.
Thus, the Malaysian study reinforces why that advantage persists. It shows that even when geology is favorable, processing remains the true barrier to entry.
This reality has sharpened concerns in the US and its allies, especially as China has shown a willingness to use rare earths as a geopolitical tool.
In 2010, Beijing restricted exports to Japan during a diplomatic dispute. In 2023, it imposed global restrictions on the export of rare earth processing and separation technologies, making it harder for competitors to build midstream capacity.
Those moves have heightened urgency in Washington. Rare earths are essential to modern defense systems, from fighter jets and submarines to precision-guided munitions, as well as to electric vehicles and consumer…
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