The High-Value Bottleneck: Why Critical Minerals mining is not enough without Rare Earth refining and magnet autonomy

China plays a dominant role in the refining and processing of critical raw materials. In the case of Rare Earth Elements (REEs), the country controls an estimated 60–70% of global mining and nearly 90% of refining capacity. These elements are vital for electronics, renewable energy technologies, and defense applications.

Regarding key battery metals such as lithium, cobalt, and nickel, China's mining reserves are limited, yet it commands the mid-stream processing stage, refining approximately 60% of the world's lithium and 70% of its cobalt. Similarly, for graphite, China produces about 65% of the world's natural graphite and refines over 90% of battery-grade graphite, cementing its central position in these essential supply chains (Figure 1).

Mineral: Lithium

• Leading Country & Share: China (60.86%)
• Other Major Players: Chile (11.59%), Argentina (11.58%)
• Other (15.98%)

Mineral: Cobalt

• Leading Country & Share: China (71.42%)
• Other Major Players: Finland (5.87%), Canada (5.73%)
• Other (16.97%)

Mineral: Graphite (Natural)

• Leading Country & Share: China (70.50%)
• Other Major Players: US (7.22%), South Korea (3.56%), Indonesia (6.30%)

Mineral: Rare Earth Elements (REE)

• Leading Country & Share: China (86.11%)
• Other Major Players: US (5.14%), Malaysia (2.27%)
• Other (6.49%)

Mineral: Copper

• Leading Country & Share: China (44.63%)
• Other Major Players: DRC (7.96%), India (6.41%)
• Other (40.99%)

Mineral: Nickel (Key exception)

• Leading Country & Share: Indonesia (71.24%)
• Other Major Players: China (6.24%), Russia (3.26%)
• Other (19.27%)

The current data indicate substantial growth and potential bottlenecks:

• Market Growth: The global critical minerals refining market is projected to grow from $16.82 billion in 2024 to $25.39 billion by 2032.
• Surging Demand: To meet global climate goals, annual demand for critical minerals is forecast to increase six-fold by 2030, from 4.7 million tons in 2022 to 30 million tons. This could lead to potential supply gaps, particularly for lithium, cobalt, natural graphite, and rare earths.
• Required Investment: Closing this supply-demand gap will require massive capital. Estimates suggest nearly $500 billion is needed in the lithium battery supply chain alone by 2030, and over $1.4 trillion by 2040.

The dominance of China has triggered strategic actions by other nations:

• Policy Efforts: The U.S. and European Union have enacted policies (like the U.S. Inflation Reduction Act and the EU's Critical Raw Materials Act) to build domestic capacity and secure partnerships.
• International Agreements: Countries are forming "minerals security partnerships" and striking deals with resource-rich nations (e.g., U.S. agreements with Australia and Saudi Arabia) to diversify supply chains.
• Export Controls: China has used its dominant position as a geopolitical tool, announcing export controls on rare earth elements and related technologies in 2025.

Beyond new mining, strategies to mitigate supply risks include:

• Technological Substitution: Shifting battery chemistries (e.g., to lithium iron phosphate/LFP batteries that use no cobalt or nickel) can reduce dependence on the most constrained minerals.
• Building a Circular Economy: Recycling end-of-life products (like EV batteries) is becoming crucial. Companies like Nth Cycle in the U.S. are pioneering cleaner, modular refining technologies to recover minerals from scrap. 

A compilation the projected 2030 refining market shares for key critical minerals from the latest available data, is shown in the table below.

The refining landscape must be seen in the context of massive projected growth and significant challenges:

• Surging Demand: To meet climate goals, global demand for critical minerals could more than double by 2030 and triple by 2040. Demand for minerals like lithium could increase six-fold by 2030.
• Looming Supply Gaps: This growth is set to outpace supply. Lithium and copper are at particularly high risk, with potential deficits of up to 38% and 33% respectively by 2035.
• Geopolitical Leverage: High concentration gives nations like China significant influence. Recent export controls on rare earths, gallium, and germanium demonstrate this leverage.

Major economies are taking action to diversify supply and reduce risk:

• Policy & Investment: The U.S. (Inflation Reduction Act), EU (Critical Raw Materials Act), and others are investing billions to build domestic capacity and secure international partnerships.
• "Friendshoring": Alliances like the Minerals Security Partnership (MSP) aim to co-finance projects in "trusted" countries to build non-Chinese supply chains.
• Resource Nationalism: Countries like Indonesia (nickel export ban) and Zimbabwe are restricting raw exports to capture more value domestically.

Beyond new mining, two strategies are crucial for sustainable supply:

• Technological Substitution: Shifting to battery chemistries that use less cobalt and nickel (e.g., Lithium Iron Phosphate/LFP batteries) can reduce pressure on constrained minerals.
• Recycling & Reuse: Building a circular economy is essential. For example, repurposing retired EV batteries for grid storage keeps minerals in circulation.

For example, the central question today is no longer whether REEs matter, but whether countries can secure resilient and affordable supply chains without reproducing the environmental damage and governance failures of the past.

The principal vulnerability in the REE supply chain lies not in mining, but in high-performance permanent magnets - especially neodymium-iron-boron (NdFeB) magnets. These magnets are indispensable for EV traction motors and direct-drive wind turbines. When supply disruptions occur, it is these elements —not the entire basket of rare earths— that transmit shocks across industrial economies.

Countries can announce new mines and still remain strategically dependent if they lack downstream chemical separation and magnet manufacturing capacity (Figure 2). This "internal" dependence is even more acute when considering the data from the table above:

• China: 86.11% of REE refining, ~94% of REE magnet production
• European Union & USA: ~0% production of NdFeB magnets, despite efforts to develop capacity. 

A mine in Europe exports a mixture of rare earths that must travel to China for separation into individual elements and then be transformed into a magnet, before returning to Europe for assembly into a motor. Over 90% of the final value and strategic autonomy is created in the chemical separation and magnet plants.

The real issue for REE supply chain sustainability has shifted from raw material availability to the capacity to process and manufacture it into high-tech products. China's dominance is not accidental but the result of decades of strategic investment in these critical processing links.

To loosen this chokepoint, the rest of world (e.g., EU, USA) does not simply need more mines. It needs a coherent industrial policy specifically targeting magnet manufacturing, supported by research programs for material saving and recycling. Developing this "critical skill" is the new frontier for energy sovereignty.

[1] https://www.energy.gov

[2] Benchmark Mineral Intelligence and International Energy Agency (IEA), visualized by Visual Capitalist

[3] Bloomberg NEF, 2023 (Disclaimer: These maps are provided for illustration purposes only. Boundaries and names shown on the maps do not imply any endorsement or acceptance by IRENA)

Cover photo by Peggy Greb, US department of agriculture - http://www.ars.usda.gov/is/graphics/photos/jun05/d115-1.htm, Public Domain, https://commons.wikimedia.org/w/index.php?curid=10512749