In recent years, China has implemented rare earth export control measures, putting significant pressure on the United States and other Western countries. These Western nations have successively invested funds in an attempt to build a "non-China" rare earth supply chain, aiming to break China's dominant position in this field. However, this process is confronted with numerous challenges.



On August 28, the British *Financial Times* published an article pointing out that the West is facing difficulties in terms of cost and scale when it comes to establishing a competitive rare earth supply chain. China's dominant position in the rare earth sector did not take shape overnight. Through decades of national planning and strategic acquisitions, China has become the lowest-cost producer across all stages of the rare earth value chain. In 2023, China accounted for over 60% of the world's rare earth ore output, and an even higher 92% of the global output in the processing stage, holding nearly monopolistic control.



Western companies have long pursued the lowest costs, making it extremely difficult to break China's control. Although the United States and other Western countries have accelerated their investment layout in critical minerals—for instance, the U.S. Department of Defense has taken a stake in MP Materials, the largest rare earth producer—China's advantages in processing capacity and talent reserves are quite prominent. For other countries to catch up, they not only need to invest huge amounts of capital but also spend a great deal of time cultivating relevant talents. It is estimated that it will take at least 10 to 20 years and cost at least trillions of U.S. dollars for other countries to achieve the diversification of the rare earth supply chain.

Take the United States as an example. Currently, there is only one rare earth mine still in operation and just one rare earth supplier left in the country. Although the Trump administration introduced an "independent rare earth pricing mechanism," purchasing rare earth products from domestic suppliers at a minimum price nearly twice the current market price, this will undoubtedly push up the costs for downstream industries and consumers. Moreover, a conservative estimate suggests that the United States needs to invest at least 10 billion to 15 billion U.S. dollars and spend 10 years to build its first truly self-sufficient rare earth supply chain. In addition, China also leads the world in rare earth processing technology. Magnet manufacturing poses extremely high technical barriers for many countries. Currently, only China and Japan have mastered the core technologies, and even the three major Japanese magnet manufacturers complete their main production processes in China.



In conclusion, the West still has a long way to go to break China's dominant position in the rare earth supply chain. China's advantages in the rare earth field are the result of years of accumulation. For the West to achieve the diversification of the supply chain, it needs to overcome obstacles in multiple aspects such as cost, technology, and talent, and it will be difficult to make substantial breakthroughs in the short term.