A new Financial Times analysis published in late August 2025 warns that China’s dominance in the rare earths sector is tightening rather than easing, despite global efforts to diversify supply chains. China currently controls between 60–70% of global rare earth extraction and nearly 90% of processing capacity, consolidating its role as the indispensable supplier of minerals critical for renewable energy, defense, and high-tech industries. The report notes that Beijing has been using this leverage as both an economic tool and a geopolitical asset, shaping the pace and terms of the global energy transition.
Recent Chinese policy moves include export quota adjustments, stricter environmental standards for domestic producers, and tighter licensing requirements for rare earth exports. These measures have raised concerns among Western governments and manufacturers that Beijing may weaponize supply at times of strategic tension, particularly as demand for magnets used in electric vehicles and wind turbines continues to rise. While countries like the U.S., Canada, and Australia have announced new projects, the scale and speed of China’s refining advantage remain unmatched.
This development is important because it highlights the fragility of global clean energy and defense supply chains, which remain highly exposed to Chinese policy decisions. Even as the U.S., EU, and partners pursue alternative projects and recycling initiatives, the gap in refining capacity ensures China’s ability to influence prices and availability for years to come. The tightening grip underscores why allied governments are accelerating critical minerals strategies—not only to support industrial policy, but also to reduce strategic vulnerability to China’s dominance in rare earths.