China has consistently used its dominant position to influence global markets and assert geopolitical pressure. Notable examples include the 2010 rare earths embargo against Japan, which caused prices to spike tenfold and jolted governments into action. More recently, China imposed export controls on specific REEs and magnets, often in response to US tariffs. These restrictions require special export licenses and have led to supply disruptions, particularly for critical heavy rare earths like dysprosium, terbium, yttrium, and lutetium, for which Western countries have no viable import alternatives.
In a significant move in December 2023, China imposed a ban on the export of REE extraction and separation technologies. This action further hinders the development of ex-China supply chains by limiting access to specialized technical expertise and proprietary intellectual property. China’s actions are not merely commercial but reflect a “wartime mindset” aimed at asserting geopolitical influence and disrupting Western industrial chains. In contrast, Western companies have historically operated under a “peacetime mindset,” leading to underinvestment in domestic rare earth capabilities and the outsourcing of polluting processing activities to China.
This fundamental difference in strategic approach means that Western efforts, while growing, are playing catch-up against a deeply entrenched, state-backed, and strategically aggressive competitor. The economic viability of Western projects is difficult to ensure when China can artificially depress prices through its control over supply and demand.
Recognizing the vulnerabilities inherent in their reliance on China, Western nations are increasingly focusing on rare-earth recycling to enhance supply chain resilience. Western countries, particularly the United States and Europe, are actively investing in rare-earth recycling to reduce their reliance on primary mining and on China’s dominance. These efforts highlight the potential of the “urban mine,” the vast quantities of rare earths embedded in end-of-life electronics, vehicles, and industrial equipment. Billions of dollars’ worth of recoverable resources are currently squandered through landfilling or inadequate recycling.
Western Digital, in collaboration with Microsoft, Critical Materials Recycling (CMR), and PedalPoint Recycling, completed a pilot project that recovered approximately 90% of REEs from 50,000 pounds of end-of-life hard disk drives (HDDs) using eco-friendly, acid-free dissolution recycling (ADR) technology. Illumynt is also expanding its rare earth recovery business, developing sophisticated, scalable processes for e-waste, particularly from data centers.
The EU’s Critical Raw Material Act, adopted in 2024, sets firm domestic targets for recycling critical minerals. Heraeus Remloy launched Europe’s largest recycling plant for rare-earth magnets in Germany, with a processing capacity of up to 600 tonnes per year, and plans to expand to 1,200 metric tonnes per year. This facility aims to meet over 30% of European demand for new magnets. In France, a €200 million investment from France and Japan aims to recycle over 2,000 tonnes of rare earths annually.
British-based Ionic Technologies is constructing a facility in Belfast to reclaim key elements, especially neodymium, from retired wind turbines, electric motors, and loudspeakers using liquid-liquid extraction technology.
The University of Birmingham in the UK operates a pilot plant utilizing Hydrogen Processing of Magnet Scrap (HPMS) to reclaim neodymium-iron-boron (NdFeB) from end-of-life products, consuming 88% less energy than primary production. Broader advancements in recycling include hydrometallurgical processes (achieving 90% recovery rates for neodymium), direct recycling methods that preserve the value of magnet alloys, and automated disassembly systems. Beyond these, bioleaching, ion-selective membranes, robotic disassembly, and AI-driven sorting are being explored to improve purity, recovery rates, and efficiency.
Despite these promising technological developments, the challenge lies in successfully transitioning lab-proven methods to economically viable industrial operations, often referred to as crossing the “technological valley of death.” The current low recycling rates indicate that widespread commercialization and integration into the broader supply chain are still in their nascent stages.
Despite increasing focus and investment in recycling, its current contribution to overall rare-earth demand remains minimal. Globally, only approximately 1% of rare earth elements are currently recycled. This figure is strikingly low compared to recycling rates of 30-70% for other base metals such as aluminum, copper, and lead.
The global generation of e-waste is rising rapidly, reaching a record 62 million tonnes in 2022 and projected to hit 82 million tonnes by 2030, a 33% increase from 2022 levels. However, less than a quarter (22.3%) of the e-waste generated in 2022 was properly collected and recycled, and this rate is projected to drop to 20% by 2030 due to the widening gap between waste generation and recycling efforts. It creates a “recycling paradox”: the potential resource from e-waste is growing exponentially, but the actual recovery rate is negligible and even declining relative to generation. It means that despite Western recycling efforts, the reliance on primary mining, and consequently China’s dominance, is actually deepening rather than diminishing, as the vast majority of REEs in end-of-life products are lost to landfills or informal sectors.
Despite the emergence of new mines and processing facilities outside China, China’s market share in processing (approximately 90%) and magnet manufacturing (92-93%) remains overwhelmingly dominant. The United States, for instance, still relies on imports for 80% of its rare earths, with 56% sourced from China, and has 100% import dependence on yttrium, 93% of which comes from China. Crucially, there are currently no viable import alternatives for four heavy REEs on China’s restricted list: dysprosium, terbium, yttrium, and lutetium.
Recycling, while a promising avenue, currently accounts for only a minuscule 1% of global REE demand. This situation creates an “illusion of progress” in which significant investments and policy actions are being taken and incremental gains are visible (e.g., US production increases, new recycling plants, new processing facilities). However, when juxtaposed against China’s enduring, multi-faceted dominance across the entire value chain, these gains appear relatively small. The fundamental dependency on China, particularly for critical heavy rare earths and advanced processing, persists in the short- to medium-term.
The long-term vision for rare-earth independence must acknowledge that it is a “marathon, not a sprint.” Success should be measured not by immediate self-sufficiency, but by the sustained development of diversified, resilient supply chains that gradually erode China’s leverage. It requires managing expectations among policymakers and industries to maintain political will and consistent investment over the necessary long haul.
Ultimately, achieving true independence requires establishing a resilient, circular rare-earth economy that minimizes environmental impact while maximizing resource security and technological sovereignty. It will involve a synergistic combination of domestic mining, advanced processing, robust recycling, and innovative substitution, all underpinned by strong governmental support and deep international collaboration.