Rare-earth industry in China

The People's Republic of China plays a very important role in making and providing rare-earth elements (REEs). These special materials are used in many modern technologies, such as permanent magnets, electric vehicles, wind turbines, and consumer electronics. China is especially strong in processing these elements and making permanent magnets. In 2024, it was estimated that China provided about 91% of the world's rare-earth separation and refining and 94% of sintered permanent magnet production.

China has large amounts of rare-earth elements in the ground and has built big factories to process them. Over many years, China has been the main supplier of rare-earth elements to the world and has the largest known reserves. In February 2026, the United States Geological Survey reported that China had reserves of 44 million tonnes of rare-earth elements.

China also leads in patents related to rare-earth technologies. A report in 2026 showed that from 2014 to 2024, China held 81% of the global patents in this area.

Since 2016, China has placed controls on exporting some rare-earth elements and related technology. In 2025, it introduced more export controls, but later paused some of these for one year. In 2026, new systems were added to monitor and enforce these controls in the rare-earth industry.

History

In 1927, people discovered rare earth elements, and small production began in 1958. However, the government did not see their big potential until the 1980s and 1990s.

Xu Guangxian is known as a key figure in starting China's rare earth industry. He studied in other countries and then returned to China to work at Peking University. In 1980, he joined the Chinese Academy of Sciences. He later created a special research lab for rare earth materials and held many important positions in science groups in China. In the 2000s, he helped the government limit exports of these elements to keep them available for China's own technology growth.

During the 1980s, China used policies like tax breaks to grow its rare earth industry quickly. The government also started big science programs to support this growth. China also worked with companies from other countries to build its industry.

By the 1990s, China became a major producer of rare earth elements because of these policies, low costs, and less focus on environmental rules.

In the 2000s, China started limiting exports to control the industry better. This led to higher prices and some illegal mining activities. In 2011, China created a group to help manage prices with other countries.

Today, China remains the world's biggest producer and processor of rare earth elements. These elements are important for many modern technologies like electric vehicles, wind turbines, and magnets. China continues to control exports of these materials to protect its interests.

Major firms and state research organizations

The rare earth industry in China is mainly run by companies owned by the government, private businesses, and big state-owned firms.

In northern China, the main company is the Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Company. In southern China, China Minmetals leads the industry. Other important companies include the Aluminum Corporation of China Limited and China Non-Ferrous Metal Mining.

In December 2021, China created a new big company called China Rare-Earths Group by combining several smaller companies. This new company, owned by the government, controls about 70% of China’s rare earth production.

China also has two special research labs for studying rare earth elements. One is linked to Peking University, and the other is in Changchun, Jilin province.

There are also two journals in China that share research about rare earth minerals. These are published by a group of Chinese rare earth scientists formed in 1980.

Chinese institutions have applied for many patents related to rare earth technologies. A report from 2026 showed that China was responsible for 81% of these patent applications between 2014 and 2024.

Processing sector

China plays a big role in processing rare earth elements. In 2024, China did about 91% of the world's work in separating and refining these elements, and 94% of making strong magnets from them. This strength comes from special skills in processing, not just mining.

China is especially good at working with heavy rare earth elements. It has large clay deposits that make it easier and cheaper to get these elements. China has also built up many factories and uses special methods that are hard for others to copy. Because of this, many countries send their rare earth materials to China to be processed.

Broader implications

Politics

From 2000 to 2009, China’s production of rare earth elements grew by 77 percent to reach 129,000 tons, while production from other places dropped to about 3,000 tons. Big U.S. mining companies like Molycorp closed because of China’s large supply, lower costs, and strict environmental rules from the Nixon era. With fewer competitors, China had more control over these important materials. In 1990, the government said these elements were protected and important for the country. This meant foreign companies could only work with China. All projects needed approval from the State Development and Planning Commission. Mining companies had to follow production limits, but sometimes illegal mining happened without licenses.

China also used its control over these elements to influence other countries. As production grew, China set tight rules on how much they could sell to other nations. Today, the Ministry of Commerce decides how much domestic and foreign companies can sell. In 2015, only 20 companies could sell these elements, with a total limit of 35,000 tons. These limits worried other countries because they rely on China for these materials. In 2010, during tensions with Japan over a maritime dispute, China stopped selling to Japan and cut exports by 30 percent.

Because China was the main supplier, its rules caused big changes in the global market, leading to higher prices. In 2012, the United States, the European Union, and Japan brought a case against China at the World Trade Organization. They said China’s rules unfairly helped its own industries. The WTO agreed and said China’s rules were not allowed. China changed its rules after this.

Rare earth elements are important for things like defense systems, electric cars, and clean energy equipment. Tesla switched to a new type of motor for its Model 3 Long Range car, increasing the need for neodymium. In 2018, neodymium cost about US$70 per kilogram. U.S. defense use is small compared to the world’s needs. In 2018, U.S. President Donald Trump suggested tariffs on technology products from China, and China responded with tariffs on U.S. goods. In 2024, China stopped selling gallium, germanium, and antimony to the United States.^: 221  After China began controlling exports in 2023 and banned sales to the United States in 2024, gallium prices jumped from about $110–130 per kilogram to $687 per kilogram by May 2025. In response to the 2025 tariffs imposed by USA President Donald Trump, China put new limits on rare earth exports.

In October 2025, China made new rules limiting the export of rare earth elements and related technologies, saying it was for “national security” before a meeting between U.S. President Donald Trump and CCP General Secretary Xi Jinping at the 2025 APEC meeting in South Korea. These rules require foreign companies to get approval for items that could be used in different ways. Heavy rare earths are mostly found in China’s ionic clay deposits. A 2025 analysis says the West will still need 91% of its heavy rare earths from China in 2030, only a small improvement from 99% in 2024.

Environment

Until the 1990s, the United States led the world in rare earth elements, but stricter environmental rules in the 1980s made U.S. production drop. China did not tighten its environmental regulations and instead invested heavily, taking over the industry by the early 2000s. This came at a cost to the environment, especially in areas like Inner Mongolia, where most mining happens. The Bayan Obo mine near Baotou City holds over 80% of China’s rare earth reserves. Other places include Shandong, Sichuan, Jiangxi, Guangdong, Fujian, Hunan, and Guangxi.

Factories dumped waste into nearby rivers and ponds. One person from Bayan Obo said, “Before the factories, there were just fields. Now, there is radioactive sludge where there used to be watermelons and tomatoes.” Crops and animals suffered, and many farmers left. Mining rare earths is harmful because the elements are found in very small amounts. Factories use harsh chemicals like acid baths and leaching, which pollute the air and water. Pollutants include HF, H₂SO₄, SO₂, and NH₃.

Around 2009, China started stricter environmental rules and released a plan to improve the rare earth industry from 2009 to 2015.^: 5  They increased controls on exports, mining, and production, and set environmental rules.^: 5  In 2011, China made new standards for air and water pollution in the rare earth industry. In 2012, they banned some harmful mining methods like heap leaching and pool leaching for Heavy Rare Earths (HRE). Companies had to use cleaner technologies.

In 2010, China began checking companies that did not follow these rules. Even with higher quotas, stricter rules caused a big drop in terbium production, a key heavy rare-earth. By 2018, only 25% of the allowed amount was produced because many companies could not meet the new standards.

In 2025, China started using new electrokinetic mining methods developed by the Guangzhou Institute of Geochemistry. These methods use less harmful chemicals and mining time, cutting emissions of NH₃ by 95% and improving extraction efficiency to 95% compared to 40–60% before. Scientists in China are also studying ways to clean up pollution using bacteria, but this research is still in its early stages.