As the West’s sourcing of key minerals diversifies, China remains in control of value chains

As the US, Europe and Japan accelerate their efforts to secure critical minerals and friend-shore supply chains, China is maintaining its dominance of the value-added industries downstream from mining itself. This has implications for end users concentrated in high tech — from clean power generation to EVs and advanced manufacturing.

Minerals can be extracted from nations other than China, but Asia’s largest economy specializes in stages of the resource industry that are truly hard to replace; separation, refining and the creation of compounds, magnets and functional components. (Indeed, the latest Mineral Commodity Summaries from the US Geological Survey notes a high reliance on imports across a range of critical minerals.)

Our first chart examines US imports in eight categories of critical minerals, broken down by source country since 2021. It’s not just rare earths: for graphite and antimony, Chinese supply dominates imports. China is also America’s single largest producer of tungsten. (Our chart also reveals key players for other minerals, such as Mexico’s dominance of fluorspar, the roles of Brazil and Canada in shipping silicon and Argentina’s supplies of lithium.)

CEIC’s granular trade data lets us take a detailed look at China’s side of these supply chains. Our second chart revisits a theme explored in our previous story on the rare-earth market. China’s exports are dominated by value-added processed products — permanent magnets and compounds. Meanwhile, imports were led by compounds and ores. This demonstrates how China is a pivotal hub for midstream conversion and re-export.

Our third chart looks at where China sources the necessary inputs. Rare-earth compound imports are highly concentrated in a small number of sources, especially Myanmar, while Malaysia and Laos have also become increasingly important; ore imports, by contrast, are more exposed to swings in US supply.

Our fourth chart compares China’s biggest export markets in this industry: the US, Europe and Japan. Using magnets as a proxy for the rare-earths industry more broadly, we can see that Japan is the outlier — diversifying its supply to a range of nodes in the ASEAN countries. Still, about a quarter of Japan’s magnet imports come from China. (For the US, the share is more than 70%; in the EU, it has reached 80%, despite the introduction of the Critical Raw Materials Act.)