China currently controls approximately 70% of global rare earth element (REE) mining and over 90% of processing and refining capacity. The 17 known rare-earth elements are indispensable for permanent magnets in electric vehicle motors, wind turbines, defense systems, and electronics. This dominance gives Beijing extraordinary geopolitical leverage, allowing it to restrict exports or manipulate prices as strategic tools. In the last year, China has instituted export controls on REEs very similar to the "end user certificate" required in arms deals; Chinese REEs can't be sold to anyone without China's approval. Yet history shows that technological innovation, not raw resource control, ultimately dismantles such monopolies. Examples of how this will play out include Tesla's revolutionary lithium refining process and the Flash Joule Heating facility being brought online, where REEs are refined from ore and recovered from waste materials without negative environmental impact.
Even though different REEs require different processes, they all have one thing in common: it is difficult to extract the REE from native ore. Across the board, rare-earth ores usually contain less than 10 percent REE. To be processed, the ore has to be upgraded to about 60 percent purity. This is accomplished by a combination of crushing, grinding, magnetic and electrostatic separation, and flotation in a process known as "beneficiation." For more on the subject than you ever wished to know, read: Advanced Rare Earth Processing Methods: From Ore to Oxide - Skillings Mining Review.
Once REE concentration reaches 60 percent, it is subjected to one of the many processes classified as "cracking." The major ones are "acid baking" with concentrated sulfuric acid at 150–400°C and alkaline cracking. After cracking, the product is leached with water to produce what is charmingly called a "pregnant leach solution" (PLS). This witch's broth will contain some amount of all 17 rare earth elements, plus "impurities like iron, aluminum, and the industry's biggest headache: thorium and uranium."
If you thought the process was complicated so far, it only gets worse.
We mix the aqueous PLS with an organic solvent containing a specific extractant, such as PC-88A or various phosphonic acids. The extractant selectively grabs specific REEs and pulls them from the water into the organic phase.
The catch? A single stage only achieves a tiny bit of separation. To get to 99.9% purity, you need hundreds: sometimes thousands: of stages of mixer-settlers.
This is a massive footprint. We are talking about facilities the size of several football fields, filled with millions of gallons of flammable solvents and acidic solutions.
There are no authoritative figures, but it is estimated that 200 cubic meters of water (52,834 gallons in real-world measurements) is required to process 1 ton of REE.
While the process is grueling, the kicker is in the waste products.
China’s approach to critical minerals extraction shows the same respect for the environment that the Cultural Revolution and the One Child Policy showed for the Chinese people. China prioritized production and the political and economic power that comes with it over public health and environmental stewardship. The natural byproducts are radioactive waste from uranium and thorium; about 2,000 tons of toxic chemical waste per ton of extracted REE is generated; the phenomenal amount of water used, and the interesting stuff the water picks up in the process, can render entire aquifers unusable; and the open-pit mines typical of REE extraction destroy acres of land that are frequently not reclaimed.
The laser-like focus on establishing a near monopoly on REE has led to massive environmental disasters in Baotou, Inner Mongolia, where the groundwater is so contaminated that REEs have been found in children’s urine. No word yet on whether the Chinese government has found a way to process them. Bayan Obo, also in Inner Mongolia, has experienced heavy releases of radioactive elements into the environment and considerable heavy metal contamination of groundwater and soil. In Jiangxi, Guangdong, and Guangxi provinces in South-Central China, the landscape has been devastated by “illegal” mining, and the groundwater is contaminated.
But the widespread environmental degradation and morbidities among Chinese citizens are not a byproduct of REE extraction and processing; it is simply part of the cost of doing business. China has its monopoly position because First World countries have elected to lay off the human and environmental costs onto nations willing to accept those downsides. This willingness to kill as many of its own people as necessary to maintain its monopoly position is what has led to the current situation.
China’s monopoly on REE is founded on a disregard for its land and people. But it is kept in place by ruthless business practices. Government subsidies are structured to ensure that no one else can compete with them profitably.A bipartisan Congressional probe released in November 2025 laid out the playbook in detail.
Beijing hands “tens of billions of dollars, including zero-interest-rate loans” to state mining firms. It built a legal framework for controlling mineral prices. And whenever the West started to invest, China flooded global markets to crush it.
If any competition appears on the horizon, then China dumps product on the market to put the competition out of business.
New data from Baotou’s Industry and Information Technology Bureau reveals a significant decline in rare earth prices in January 2025, reflecting broader shifts in supply and demand within China’s dominant rare earth sector. Among eight key rare earth products, five saw month-over-month price declines, with lanthanum metal experiencing the steepest drop at 9.4% from the previous month and a 13.6% year-over-year decline. Only two rare earth products saw price increases, while one remained unchanged.
This price downturn suggests China is managing its rare earth market with strategic precision, adjusting output and pricing dynamics to maintain its global market dominance reports Baotou-based China Northern Rare Earth Group.
The Trump administration is the first to take this matter seriously. It has taken a financial stake in several U.S. REE producers to insulate them from Chinese trade practices:
USA Rare Earth, based in Stillwater, Oklahoma, is the third U.S. operator in which the Trump administration has invested in recent months.
The Pentagon invested $400 million in rare-earth producer MP Materials. It gave the U.S. company a $150 million loan in August.
The Trump administration and private investors in November announced a partnership with rare earth startups Vulcan Elements and ReElement Technologies. The $1.4 billion deal is intended to scale up U.S. access to materials and technology that are crucial for producing an array of high-tech goods and military equipment.
The Trump administration's tax and spending cut bill includes $2 billion for the Pentagon to boost the U.S. stockpile of critical minerals and $5 billion more through 2029 to invest in those supply chains.
The real break in China’s monopoly is coming through technology. Naturally, an Elon Musk company is on the cutting edge.
This is more advanced than you think
— X Freeze (@XFreeze) January 15, 2026
Tesla’s Texas lithium refinery is the first in North America to convert raw spodumene ore directly into battery-grade lithium hydroxide, skipping the intermediate steps the rest of the industry relies on
It went from groundbreaking to first… https://t.co/09YzpEfaWB pic.twitter.com/1f23XEZZMM
This is more advanced than you think
Tesla’s Texas lithium refinery is the first in North America to convert raw spodumene ore directly into battery-grade lithium hydroxide, skipping the intermediate steps the rest of the industry relies on
It went from groundbreaking to first production in just 19 months, an unheard-of timeline at this scale
The process is cleaner too: no hazardous sodium sulfate waste, and a useful byproduct that can be turned into concrete
This single refinery can supply lithium for over 500,000 EVs per year and directly challenges China’s ~60% grip on global lithium refining
One of the biggest bottlenecks in the EV supply chain just got an upgrade
This plant completely upends lithium production by avoiding hazardous materials, using a nearly closed water-recycling system, and cutting the number of steps in the process, all while reducing costs by about one-third. In short, lithium is destined to become the new steel. The process doesn’t rely on lax environmental standards and killing off the local population. It secures the U.S. supply chain and is impervious to Chinese pricing attacks. Best of all, it was accomplished by rethinking the entire process, not by doing it the old way.
Musk’s Tesla is not alone. A company called Flash Metals USA, a subsidiary of the Australian company Metallium, Ltd., has commissioned a plant in Chambers County, Texas, that recycles everything from circuit boards and toxic waste to old airplanes to recover rare earths. They use a process called Flash Joule Heating that I can relate to because it is based on my family’s traditional business of moonshining. The process is incredibly simple in concept. High-intensity electrical current is passed through materials, heating them to over 3,000°C in milliseconds to seconds. As each element has a different melting point, they are effectively distilled and collected.
Not only can this method be used to produce rare earths, but it can also remove contaminants from industrial waste and super-refine mining tailings to fully extract all metals from what used to be hazardous waste.
The Flash Metals USA factory can even reprocess dead lithium-ion batteries for reuse...as batteries. There is even a plan to shred and process obsolete aircraft to recover REE and other metals used in their construction.
China has paid an immense social and environmental cost for what seems like an ephemeral strategic advantage. As our ability to cleanly extract and process REE increases, something that ironically would never have happened had China not tried to turn its monopoly into a predatory enterprise that endangered economies and defenses around the world.
