China's rare earths weapon is losing its bite as global supply expands: David Fickling

China has leaned on rare-earth export controls to strong-arm the US and Japan, but David Fickling argues the tactic is backfiring. Neodymium and praseodymium are now too widely mined to threaten, forcing Beijing to focus on scarcer heavy rare earths like dysprosium, terbium and samarium, long thought to exist only in one Chinese deposit. New ionic-clay finds in Myanmar, Brazil, Madagascar, Malawi, Uganda and beyond, backed by processing plants from Lynas, MP Materials and others, are eroding that monopoly fast. Fickling's takeaway: China's squeeze is inadvertently building a rival global supply chain that could leave it with less leverage than ever..By David Fickling.Every time China tightens its grip on rare earths, the rest of the world becomes a little better at finding them. Rare-earth permanent magnets — which help stick charging cables to laptops, clamp mobile phones to mounting devices, and click earbuds into their cases — have become a central battleground in China’s trade wars with its rivals. Beijing used export controls on the devices to force US President Donald Trump into a humiliating retreat on his Liberation Day tariffs last year. The same tactic is being deployed against Japan following a diplomatic spat with Tokyo.It’s having to narrow its focus, though, because the world is responding in kind. Some 15 years ago, almost all rare-earth elements were mined and refined in China, but years of similar threats have significantly changed that picture. Almost a third of total production now happens in other countries, so Beijing has had to focus on the rarest of the rare earths. Neodymium and praseodymium, the elements that give the stickiness to most of the magnetic devices you’ll find in your home, are becoming too abundant to be credibly threatened.As a result, the focus has shifted to three scarcer elements: samarium, dysprosium and terbium. Conventional rare-earth magnets lose their effectiveness at higher temperatures, so in performance applications such as electric-vehicle motors, wind turbines, guided missiles and aeronautics, you need to supplement or replace them with these so-called heavy rare earths, or HRE.Go back 10 years, and most geologists would have told you this move was checkmate for China. HRE are a geological oddity. Like vibranium, the rare element in the Marvel universe found only in the fictional African nation of Wakanda, useful formations appeared to occur in just a single location on the planet: Longnan, an isolated spot in southern China, where geologists at the height of the Cultural Revolution in 1969 happened upon one such deposit.Right now, that assumption is looking far less certain. Scientists are endlessly innovative in finding ways to fix seemingly intractable problems. Industrial chemists solve scarcity by using alternative materials, as they’ve done in recent years with cobalt in lithium-ion car batteries, now mostly replaced by more abundant phosphate. Geologists scour the world and demonstrate that what we thought scarce wasn’t so rare after all. It’s the latter process we’re seeing now in the case of HRE.The type of formation found in Longnan is certainly rare, but it’s not unique. Known as an ionic-absorption clay, it typically forms when heavy tropical rainfall erodes granite mountains over millions of years, washing HRE to the valley floor where the weathered rock captures them like a geological sieve.Faced with government restrictions on their output in the mid-2010s, China’s own miners were some of the first to look elsewhere, discovering and exploiting rich formations over the border in Myanmar’s war-torn Kachin state. Those mines may already be providing more HRE than Chinese pits, with all the attendant environmental problems that come with the small-scale nature of the industry.Better-regulated work is underway elsewhere. In Brazil, Boston-based private equity firm Denham Capital Management LP spent much of the 2010s proving up a clay deposit in central Goiás state. After receiving investment from former Xstrata Plc Chief Executive Officer Mick Davis and starting production in 2024, the mine is now being taken over by magnet producer USA Rare Earth Inc. under a $2.8 billion deal announced in April.That may be the tip of the iceberg. A study last year confirmed ionic deposits on four continents, from Madagascar, Malawi and Uganda to Chile and Australia, as well as the existing sites. There’s also evidence of them in Malaysia, Thailand, Vietnam and even Finland.Companies outside China with expertise in processing these ores are building separation circuits to isolate dysprosium, terbium and samarium. Lynas Rare Earths Ltd. and Neo Performance Materials Inc. have already achieved commercial production. MP Materials Corp. and USA Rare Earth’s partner Carester SAS expect to be up and running within months..Read more:.Miningweb: Xi’s rare earth strike threatens global tech and supply chains.That’s a significant vote of confidence in upstream mines. The key investment proposition for these processing businesses is their independence from China’s rare-earth supply chain. There’s little point spending money on such equipment if they’re going to be dependent on China and its partners in Myanmar for their raw materials.All this activity represents a warning for those who would seek to impede the flow of minerals around the world for geopolitical gain. In trying to starve its rivals of rare-earth magnets, China is inadvertently cultivating a global industry that will make them more abundant than ever..© 2026 Bloomberg L.P..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. 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China's rare earths weapon is losing its bite as global supply expands: David Fickling

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