IEA: China Still Dominates Rare Earth Refining and Magnets

Dependence persists despite heavy investments IEA Warns of Continued Rare Earth Reliance on China

2026-06-01 From Detlev Karg 1 min Reading Time

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The International Energy Agency (IEA) has warned that global efforts to reduce dependence on Chinese rare earth supplies are progressing far more slowly than anticipated.

The mine in Baiyun Ebo, Inner Mongolia, China, which is the site of almost half the world's rare earth element (REE) production. The satellite image covers an area of 15 × 19 km.(Source: Wiki Commons, NASA/GSFC/METI/ERSDAC/JAROS & U.S. / Japan ASTER Science Team, Public domain) — The mine in Baiyun Ebo, Inner Mongolia, China, which is the site of almost half the world's rare earth element (REE) production. The satellite image covers an area of 15 × 19 km.
(Source: Wiki Commons, NASA/GSFC/METI/ERSDAC/JAROS & U.S. / Japan ASTER Science Team, Public domain)

In its latest report, the agency estimates that China still controls around 91% of global rare earth refining capacity and 94% of permanent magnet production, despite years of Western investment and diversification initiatives. While demand for magnet rare earths is expected to rise by roughly one-third by 2030, currently operating and planned projects outside China are projected to meet only about a quarter of refining demand and less than one-fifth of magnet demand by 2035. According to the IEA, the main bottleneck is no longer mining but downstream processing and magnet manufacturing.

Not mining is the problem, refining is

The agency says meaningful diversification would require a four-fold increase in refining capacity and a six-fold expansion of magnet production outside China. It identifies metallisation, alloy production, specialised equipment and skilled labour as key weaknesses in emerging supply chains. The report also highlights China's broader industrial advantages, including integrated supply networks, technical expertise and decades of operational experience, which are likely to be more difficult to replicate than mining capacity alone.

US-Iran war could intensify shortages

Just one example of the deeper challenge surrounding rare earths: China effectively controls the global commercial supply chain for Samarium, a rare earth element critical to advanced military technologies. Its dominance spans mining, processing and magnet production, enabling the manufacture of defence-grade samarium-cobalt magnets used in missile guidance systems, radar platforms and fighter aircraft such as the F-35.

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