Will China’s rare earth export rules spur production elsewhere?

New rules requiring firms in China to get a license before exporting some rare earth elements are bolstering plans to establish rare earth processing in other countries. The US and European Union are eager to support these projects, but new producers still face a difficult path forward.

Rare earth elements are used to manufacture powerful magnets for electric motors, wind turbines, missiles, and many other products. A number of mines around the world, including one in California, yield ores that contain a mixture of rare earth elements. But nearly all the rare earths in those ores are processed in China at facilities that separate them and convert them into metals.

China announced the licensing rules for seven elements—mainly heavy rare earths like dysprosium and terbium that are crucial for high-performance magnets—shortly after the US imposed high tariffs on Chinese products.

David Merriman, who covers rare earth elements for the minerals research firm Project Blue, says the licensing requirements are causing rare earths to pile up at China’s ports. He expects the backlog to clear as companies get their paperwork in order, but the regulatory changes are also a warning that China can clamp down more tightly in the future.

For example, China limited the amount of gallium and germanium that companies could export in 2023 and then escalated this limit to an outright ban on exports to the US the following year after the US prohibited the sale of advanced chip-manufacturing equipment to China. Similarly, in 2010, China significantly restricted exports of rare earths, sending prices skyward.

Aware of the economic and military importance of rare earths, policymakers in the US and Europe have been encouraging domestic production. President Donald J. Trump signed an executive order in March aimed at speeding up permitting for US mining projects. Also in March, the European Union identified dozens of mineral projects it plans to support, including rare earth–processing facilities in France, Poland, and Sweden.

And after China implemented the rare earth license rules, Trump ordered an assessment of the national security risks posed by the US’s reliance on imported minerals, including rare earth elements.

Government enthusiasm combined with rapidly growing demand for magnets is likely to drive an increase in both public and private investment into rare earth processing outside China, according to Tim Rose, director of the mineral intelligence firm Rovjok. But he warns that scaling up those facilities will take a long time.

While the European firm Solvay was a pioneer in the separation of rare earths decades ago, Rose says Chinese firms have since perfected and scaled the process, and the Chinese government has made it hard to export the improved technology. In addition, Rose says the solvent extraction process Chinese firms use to separate the elements would be difficult to permit in other places.

Some companies argue that cleaner and more efficient technologies will be needed to process rare earths outside China. The start-up ReElement Technologies produces rare earth oxides using a chromatography process in which rare earth–containing feedstock moves through a resin-filled column. Because each element has a different affinity for the resin, they travel at different speeds and separate.

Since China announced the export rules, ReElement cofounder Mark LaVerghetta says, the phones have been ringing off the hook with calls from both magnet users and policymakers.

ReElement claims that chromatography will have lower up-front costs than solvent extraction, which requires dozens of steps to separate heavy rare earths. “We achieve 100 steps in 1 column,” LaVerghetta says. “We do it in a much smaller footprint.”

LaVerghetta also says the company’s technology will solve environmental and permitting issues because it generates much less chemical waste. ReElement already produces some rare earth oxides at a facility in Indiana and plans to raise output to at least 1,000 metric tons (t) by early next year.

Phoenix Tailings is making rare earth products at a facility in Massachusetts that can separate ore into oxides. Phoenix uses solvents, but Richard Salvucci, vice president of downstream processing, says the firm completely redeveloped the chemistry to boost selectivity for rare earths and reduce the use of harsh chemicals. That means Phoenix can separate rare earths with fewer steps. “We overcome a lot of the challenges which limit its viability in the Western world,” Salvucci says.

After the separation process, Phoenix converts rare earth oxides into metals by dissolving them in molten salt, which then flows through a reactor where an electric current pulls oxygen to one side and pure metal to the other. Salvucci says that firms in China also use this molten salt electrolysis, but Phoenix employs a different approach that eliminates hazardous emissions. “We completely redeveloped the technology,” he says. “We started from the core chemistry . . . and redeveloped it to have higher yields.”

Laura Stoy, cofounder of the rare earth extraction start-up Rivalia Chemical, says that the attention on rare earth processing is a boon for the companies hoping to produce the materials outside China. Rivalia uses ionic liquids to leach rare earths from industrial waste like mine tailings and the ash from coal-fired power plants. After surviving on government grants for years, the firm is now positioned to raise money, she says.

“This is a very compelling story that I could take to investors,” Stoy says. “I’m not telling people what rare earths are anymore.”

But consultants like Merriman and Rose are skeptical that new technologies are the best way to build up rare earth–processing capabilities outside of China. Merriman says the idea that Chinese solvent extraction facilities are dangerous polluters is overblown and argues that customers might view new processes as too great a technological risk.

“Although new technologies will be useful and could have advantages, why reinvent the wheel?” Merriman asks. “If you’re in a race where you’re desperately trying to build that capacity, it might be a huge advantage to use tried and tested methods.”

Several companies in the US and Europe are also trying to move forward with conventional solvent extraction technologies. Lynas Rare Earths operates a solvent-based separation facility in Malaysia and is building a similar plant in Texas. In March, Carester lined up $236 million in funding for a rare earth–processing plant in France. On April 8, Solvay inaugurated a facility in France that uses solvent extraction to separate both light and heavy rare earths.

Last year, MP Materials, which operates the facility in California, produced nearly 1,300 t of neodymium-praseodymium oxide using solvent extraction. Because not many companies outside China can convert rare earth oxides into metals, much of MP’s output has ended up there. But MP says that the retaliatory tariffs China imposed on US goods this month effectively ended those sales. Now, the firm plans to stockpile the ore it mines while it scales up its neodymium-praseodymium processing capabilities and expands into heavy rare earth separation.

Stoy welcomes the calls to build up rare earth supply chains outside of China, but she says it won’t happen overnight. It’s a long-term project that will require sustained government support.

“Time will tell if the focus will remain on this long enough to enact meaningful change,” Stoy says. “Rare earths are not going anywhere. We need them in more and more devices.”