RARE EARTHS
Rare-earth concentration forces Western supply re-shoring.
62/100 conviction▲ +3 strengtheningUpdated 8 Jul 2026
The rare-earth story isn’t about mining — it’s about processing. China controls the overwhelming majority of global rare-earth refining and permanent-magnet production — the NdFeB magnets that drive EV motors, wind turbines and defence systems. That single point of failure is now a strategic priority for Western governments and manufacturers, but building processing and magnet capacity takes years, and the strategic premium is widening.
What’s driving it
- China accounts for roughly 85–90% of global rare-earth processing and refining capacity — a far higher share than its ~60–70% of mining (IEA; USGS).
- Export controls and allied policy responses — US Department of Defense magnet-supply investments, stockpiling, and “friend-shoring” — are accelerating.
- Western capacity is being built (MP Materials’ US mine-to-magnet build-out; Lynas’ Malaysia and Texas processing) — but on multi-year timelines.
The bear case
Substitution research — motor redesigns that reduce heavy-rare-earth content — could ease demand faster than expected, and a thaw in trade tensions or faster-than-expected Western capacity could compress the premium.
What would prove us wrong: a credible, scaled ex-China magnet supply chain emerging within ~24 months, or lab-stage substitution reaching commercial motors.
Where the exposure sits
Companies described by what they do in the affected layer — not securities we’re selecting, and nothing here is a buy or sell.
- MP Materials — US mine-to-magnet rare-earth producer
- Lynas Rare Earths — non-China mining and processing (Australia, Malaysia, US)
- Defence / EV / wind OEMs — end-users most exposed to magnet supply
Sources: IEA Critical Minerals reviews; USGS Mineral Commodity Summaries; company disclosures.