What's Happening?
China continues to dominate the global rare earths market, accounting for 69.2% of global output in 2025. The country processes nearly 90% of the world's rare earths, maintaining a stronghold over the entire value chain. The United States, as the second-largest
producer, increased its output to 51,000 tonnes in 2025, supported by federal initiatives like the Defense Production Act. However, the U.S. still lacks commercial-scale refining capabilities, which limits its ability to achieve full supply-chain independence. Australia, the third-largest producer, is focusing on downstream processing and magnet supply chains through government-backed programs and partnerships with the U.S. and Japan. Meanwhile, Myanmar and Thailand are emerging as significant players, although Myanmar faces challenges due to regulatory and environmental issues.
Why It's Important?
The dominance of China in the rare earths market has significant implications for global industries reliant on these materials, such as electronics, renewable energy, and defense. The U.S. and other countries are attempting to diversify their supply chains to reduce dependency on China, which could lead to increased competition and innovation in the sector. The U.S.'s efforts to expand its mining and processing capabilities are crucial for national security and technological advancement. However, the lack of refining capacity remains a bottleneck. Australia's strategic partnerships and focus on downstream processing could position it as a key player in the global supply chain, potentially altering market dynamics.
What's Next?
As countries like the U.S. and Australia continue to develop their rare earths industries, the market is expected to shift from mining to processing and manufacturing. This transition could lead to tighter competition and potentially higher prices. The U.S. may need to invest further in refining technologies to achieve supply-chain independence. Additionally, geopolitical tensions could influence the rare earths market, as countries seek to secure their supply chains against potential disruptions. The ongoing diversification efforts by Western and ASEAN countries are likely to keep the market competitive and dynamic.
