Global Rare Earth Trade Flows: Supply Chain Routes and Vulnerabilities
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Rare earth supply chains involve multi-stage trade flows: mining countries export concentrates → processing countries import and separate → magnet makers import metals/oxides → OEMs consume magnets. Understanding these flows reveals geopolitical chokepoints and supply chain vulnerabilities.
Stage 1: Mining and Concentrate Trade
Global Rare Earth Ore Concentrates Export
| Exporter Country | Annual Concentrate Exports (tonnes REE content) | Primary Destination | Ore Type | Concentration % |
|---|---|---|---|---|
| China (domestic consumption) | 0-5,000 (minimal external exports) | N/A (mostly internal) | Bastnaesite, monazite | 60-75% REE oxide |
| Myanmar | ~5,000-8,000 | China (informal routes) | Monazite (artisanal) | 40-50% REE oxide |
| Malaysia (Lynas) | ~3,000-5,000 | Australia (downstream processing) | RE minerals; also imports from Australia | Separated oxides/metals (value-added) |
| USA (Mountain Pass) | 0-1,000 (currently export-limited) | Domestic; limited international sales | Bastnaesite concentrate | 65-70% REE oxide |
| India | ~500-1,000 | China; domestic (limited export) | Monazite | 3-7% REE (low grade) |
| Vietnam (if resumed) | ~0 (halted since 2020) | Would export to China or Western buyers | Bastnaesite + monazite blend | 40-60% REE oxide |
Concentrate Trade Dynamics
- Concentration effect: Mining produces 0.5-2.5 tonne concentrate per 1 tonne ore (depends on ore grade)
- Trade advantage: Concentrates vs raw ore (4-5x volume reduction); more economical to ship
- China dependency: 90%+ of global ore concentrates flow to China for processing (separation)
- Strategic leverage: Even if mining developed outside China, supply still flows through China for separation (chokepoint)
Stage 2: Separation and Rare Earth Oxide/Metal Trade
Separated Rare Earth Products Trade
| Exporter | Product Type | Annual Volume (tonnes) | Primary Destinations | Value Chain Stage |
|---|---|---|---|---|
| China | REE oxides, metals, alloys | ~400,000-500,000 | Global (40% to Asia, 30% to EU, 20% Americas, 10% other) | Separation + intermediate processing |
| Lynas (Malaysia processing) | HREE oxides (Dy, Tb, Gd focused) | ~8,000-12,000 | Japan, USA, Europe, South Korea | Specialized separator |
| China rare earth companies | Alloys, magnets (value-added) | ~150,000 | Global EV and wind supply chains | Downstream processing (magnet precursor) |
Export Control Mechanisms
- Chinese government licensing: Export quotas set annually; "strategic material" classification limits external supply
- Tariffs and VAT rebates: Export tax fluctuations (2-10%) used as policy tool
- Unofficial routes: Smuggling through Hong Kong, Myanmar avoids official tracking; estimated 10-20% of flows
- Geopolitical risk: Export controls can be sudden (2010-2015 saw multiple announcement and reversal cycles)
Stage 3: Alloy and Magnet Trade
NdFeB Magnet Production and Trade
- Global magnet production: ~150,000 tonnes sintered NdFeB annually
- China share: 70-85% production; 60-70% of global exports
- Western production: USA, Japan, Germany (Vacuumschmelze), Korea; ~25-30% global capacity
- Trade direction: Chinese magnets export to USA, EU, rest of world; premium Western magnets also exported globally
Magnet Export Routes
| Producer Region | Primary Customer Regions | Export Volume (% of global) | Price Premium |
|---|---|---|---|
| China | Asia (domestic + Vietnam, Thailand), USA, EU | 60-70% | Baseline (cost leadership) |
| Japan (Shin-Etsu, Hitachi) | USA (Tesla, Ford, GM), EU (Siemens, Vestas), Japan (domestic) | 15-20% | +10-20% vs Chinese |
| USA (legacy suppliers) | North America (primary), Europe (secondary), some Asia | 5-10% | +15-25% vs Chinese |
| South Korea | Asia (EV motors, appliances), USA, EU | 5-10% | +5-15% vs Chinese |
Stage 4: Final Product (Motors, Magnets in Equipment)
EV Motor and Magnet Supply Chain
- China EV makers (BYD, NIO, etc.): Mostly source from Chinese magnet suppliers; some import from Japan, Korea
- Western OEMs (Tesla, VW, BMW, Ford): Mix of Chinese, Japanese, and Korean magnet suppliers; quality and supply security premium justifies higher cost
- Trade route: China-produced magnets → EV assembly (China, Mexico, EU, USA) → final vehicle export
- Strategic consideration: If Western EV production increases (US, EU) while using Chinese magnets, supply chain vulnerability persists
Wind Turbine Supply Chain
- Turbine makers (Vestas, Siemens, GE): Multi-sourced magnet supply (Japan, Germany, China)
- Direct-drive turbines: 200-300kg magnets per unit; long-term supply contracts with magnet makers
- Geographic concentration: Offshore wind concentrated in Europe/Asia; onshore in USA, China, EU
- Trade route: Components and magnets shipped to assembly plants; turbine generators exported globally
Geopolitical Trade Chokepoints
Critical Control Points
| Chokepoint | Control Entity | Criticality | Risk Scenario | Supply Impact if Disrupted |
|---|---|---|---|---|
| China separation capacity | Chinese government + SOEs | Extreme (85-95% global) | Export quota restrictions; production shutdown orders | 50-80% global supply reduction possible |
| Myanmar monazite exports | Myanmar (military/political entities) | High (9% global supply) | Political upheaval; export ban; sanctions | 10-15% supply loss; HREE premium spike |
| Lynas LAMP (Malaysia processing) | Malaysian government approval | High (only major non-China HREE separator) | Political reversal; environmental closure order | 5-10% global HREE supply loss; +40-60% Dy/Tb price spike |
| Mountain Pass expansion | US government permits; environmental approvals | Medium (once operational, ~10-15% global supply) | Permitting delays; construction shutdown | Supply relief delayed; prices elevated longer |
Trade Flow Analysis by Element
Magnet REE Trade Concentration
- Nd/Pr: Bastnaesite-source (China dominant); some monazite (distributed); ~60-70% China processing concentration
- Dy/Tb: Ionic clay source (China, Myanmar, Vietnam); 90-95% China processing concentration; Myanmar informal exports to China
- Separation bottleneck: Even if mining moved outside China, 80-90% must flow to China for processing (extreme dependency)
LREE Trade (Ce, La)
- Oversupply situation: Multiple producers; competition drives prices down
- Trade dynamics: Producers compete on price; minimal geopolitical control
- Export routes: China dominant but not monopolistic; some USA, India, Vietnam competition
Supply Chain Vulnerability Scenarios
Scenario 1: Chinese Export Control (Historical Precedent)
- 2010-2011 precedent: China announced export quotas; prices spiked 200-1,400%
- Supply availability: Even if mining diverse, 85-95% of global ore still flowed to China for processing
- Duration: 18-24 months before new capacity and alternative routes developed
- Probability: Medium-High (geopolitical leverage tool); could recur if US-China tensions escalate
Scenario 2: Myanmar Production Disruption
- Impact: ~8,000 tonnes/year monazite exports frozen; 5-8% global HREE supply shock
- Consequence: Dy prices +40-60%; Tb prices +50-80%
- Duration: 6-12 months if temporary disruption; 2-3 years if structural (regime change)
- Probability: Medium (political instability ongoing)
Scenario 3: Western Supply Chain Diversification Success
- Outcome: Lynas, Mountain Pass, Rare Element Resources ramp on schedule; 40,000 tonnes/year new supply by 2027
- Market impact: Magnet REE prices normalize; scarcity premium compresses 20-40%
- Probability: Medium-High (projects currently in capex phase; execution risk manageable)
- Timeline: 2027-2030 supply relief if realized
Key Takeaways
- 90%+ of ore concentrates flow to China for processing (chokepoint)
- Even fully diversified mining cannot bypass China separation bottleneck
- Myanmar monazite exports (9% supply) critical vulnerability to geopolitical disruption
- Lynas HREE separator only major non-China alternative; critical geopolitical importance
- Chinese export controls remain credible threat; 2010-2011 precedent shows 200-1,400% price spikes possible