In a significant shift from past practice, China has issued its first round of rare earth mining and smelting quotas for 2025 without a public announcement. The move signals Beijing's effort to tighten control over these materials, which are vital for electric vehicles, wind turbines, and military equipment. Sources say companies were told not to share the quota numbers for security reasons.
The quiet rollout comes amid ongoing global trade tensions. It shows China's willingness to use its supply chain power as a tool in international discussions. The quotas set limits on how much rare earth material can be mined and processed within China. The country is the world's largest producer of these elements.
For the past four years, China's Ministry of Industry and Information Technology (MIIT) published the first batch of quotas in the first quarter. This year, the government issued them only last month, and without the usual public notice. The ministry did not reply to a request for comment on why the information was not released publicly.
This development fits a broader pattern of increased Chinese control over the rare earth sector. In recent years, Beijing has narrowed access to these valuable production quotas. Last year, only two state-owned groups were eligible for quotas. These are China Rare Earth Group and China Northern Rare Earth Group. This is down from six companies previously.
The quotas were delayed this year partly because of a proposal to add imported ore into the quota system. This idea faced opposition from companies that rely on imports and were concerned about losing access to needed materials.
The Geopolitical Power of Rare Earths
Rare earth elements are a group of 17 metals. They are essential for modern technology. Their unique magnetic and luminescent properties make them irreplaceable in many high-tech applications. They are used in the powerful magnets inside electric vehicle motors and wind turbine generators. They are also in smart phones, military jet fighters, missile guidance systems, and drones.
The global trade in rare earths was worth $4.27 billion in 2022. China controls about 70% of global rare earth mining. It also holds an even more commanding position in later stages of the supply chain. The country accounts for about 85% of global refining capacity. It produces an estimated 92% of the world's neodymium-iron-boron (NdFeB) magnets. These are the most powerful type of permanent magnet.
This dominance gives China substantial geopolitical influence. In April 2025, China imposed export controls on seven rare earth elements and the permanent magnets derived from them. This action forced some automakers outside China to partially stop production. It also created a pronounced price split. Costs for these materials surged in markets outside China, while domestic Chinese prices remained stable.
China has used this leverage before. In 2010, it cut off rare earth exports to Japan during a maritime dispute. More recently, it restricted rare earth magnet exports to Europe. This was seen as pressure on the European Union over its tariffs on Chinese electric cars.
Global Response and the Race for Alternatives
China's actions have sparked a urgent race in North America and Europe to build independent rare earth supply chains. The United States Department of Defense has labeled a dependable supply of rare-earth materials as critical. A 2019 report from the department estimated that a six-month supply disruption could cost the U.S. military about $1.75 billion.
The U.S. government is now funding this push. In July 2025, the Department of Defense announced $400 million in funding for MP Materials. The company operates the Mountain Pass mine in California, America's only active rare earth mine. This investment will help expand the mine's processing capabilities and fund a new magnet factory.
Private industry is also moving. Apple signed a $500 million deal with MP Materials to produce rare earth magnets in the U.S. using fully recycled materials. Production for Apple devices is set to begin in 2027.
Several companies are building rare earth magnet factories on U.S. soil.
· MP Materials is finishing a factory in Texas that will initially supply General Motors.
· The VAC Group is starting a factory in South Carolina with a capacity of nearly 2,000 tons a year.
· USA Rare Earth has built a factory in Oklahoma.
· Noveon Magnetics has a factory near Austin, Texas.
In Eastern Europe, the Canadian company Neo Performance Materials opened a new magnet factory in Narva, Estonia. This single factory has nearly doubled the available magnet production capacity in Europe and the United States.
Despite this progress, the gap with China remains massive. North America and Europe together buy nearly 40,000 tons of rare earth magnets each year. Almost all of it comes from China. The new factories outside Asia will produce only a small part of this total. China, by comparison, makes more than 200,000 tons of these magnets each year.
The Immense Challenge of Catching Up
Building a factory is one thing. Running it well is another. Creating a full rare earth supply chain from mine to magnet is a complex, expensive, and slow process. It can take up to three years for a new magnet factory to reach full production. The work requires experienced technicians, and China holds a near-monopoly on this talent.
China also produces over 99% of the world's supply of some rare earths crucial for heat-resistant magnets. Most mines outside China, including the one in California, have historically shipped their raw ore to China for refining. China also makes most of the world's rare earth processing equipment and has started restricting its export.
This helps explain why, despite years of concern, China's grip remains so strong. As one industry executive noted, if you have not run a magnet factory before, you do not know the challenges involved.
The Future of Rare Earth Supply
Global demand for rare earth elements is projected to grow sharply. It is driven by the global shift to clean energy and electric transport. Demand is expected to reach 466 kilotons by 2035, up from 170 kilotons in 2022. Electric vehicles need six times the mineral inputs of conventional cars. A single wind turbine can use up to 600 kilograms of rare earth magnets.
This rising demand creates a dual path forward. One path involves building new mines and processing plants in North America, Europe, and Australia. The other focuses on recycling and finding new materials. Recycling efforts could meet about 30% of future demand for some key rare earth elements. Companies are also developing new processes to recover these valuable metals from old electronics and industrial waste.
International cooperation is another key part of the strategy. The G7 group of nations has created a Critical Minerals Action Plan. It aims to raise standards and fund new projects. The European Union has also set targets for mining, processing, and recycling through its Critical Raw Materials Act.
For now, China's quiet issuance of its 2025 quotas is a reminder of its continued power. It shows that even without public statements or dramatic bans, the country can use its control over these critical resources to shape global markets and influence international policy. The rest of the world is building its own supply lines, but it is a race that will take many years.