JULY 2025
Developing Rare Earth
Processing Hubs
An Analytical Approach
By Gracelin Baskaran and Meredith Schwartz
Introduction
The United States led global production of rare earth elements (REEs) until the mid-1990s, when
China emerged as the dominant supplier. China maintained near-total control of the market until
2012. This monopoly began to face limited competition with the entry of two commercial producers:
U.S.-based Molycorp, which later declared bankruptcy, and Australia’s Lynas Rare Earths. Today,
REEs are once again in the spotlight as China has leveraged its market dominance by imposing export
restrictions that limit U.S. access to these key minerals.
The restrictions pose signicant risks to U.S. national, economic, and enery security. REEs are
essential components in numerous advanced defense systems, including F35 ghter jets, Virginia-
and Columbia-class submarines, Tomahawk missiles, radar systems, Predator drones, and Joint Direct
Attack Munition (JDAM) smart bombs. For instance, an F35 contains more than 900 pounds of REEs,
an Arleigh Burke–class DDG51 destroyer requires approximately 5,200 pounds, and a Virginia-class
submarine uses about 9,200 pounds. On the civilian side, REEs are essential for cancer treatment,
MRI and PET scanners, automotives (both internal combustion engines and electric vehicles), and
consumer electronics such as phones, computers, and other products that contain semiconductors.
All these industries are acutely aected by REE shortages.
China has demonstrated a willingness to weaponize REEs over the last 15 years. In 2010, it banned
the export of REEs to Japan over a shing trawler dispute. More recently, in 2023, it imposed a global
ban on the export of technologies for rare earth processing and separation, aiming to obstruct
the development of midstream capabilities outside its borders. This move had particularly severe
consequences for two key reasons: First, China holds unmatched technical expertise in rare earth
processing, especially in solvent extraction—a critical and complex step in REE separation—whereas
