Goldman Sachs has issued a sobering assessment of the global rare earths industry, warning that China’s near-total control over these critical materials is so entrenched that Western economies may need as long as a decade to build a meaningful challenge to the East Asian powerhouse. The investment bank’s analysis suggests that the process of reducing global dependence on Chinese refining and manufacturing will be slow and complex, requiring enormous capital investments, time, and coordinated governmental support before any real shift in market power can occur.
Daan Struyven, the co-head of global commodities research at Goldman Sachs, underscored the sheer scale of China’s influence in this sector during a podcast released on Tuesday. He characterized the country’s dominance as “truly massive,” noting that China currently accounts for roughly 92% of global rare-earth element refining capacity and an astounding 98% of magnet production derived from those materials. These magnets, essential for technologies ranging from electric vehicles to wind turbines and advanced electronics, are a linchpin in modern industry. Such overwhelming market control gives Beijing extraordinary leverage in geopolitical and trade negotiations, enabling Chinese policy shifts or export restrictions to send immediate ripples through global markets and industries reliant on these valuable minerals.
Struyven’s remarks came at a moment of heightened diplomatic activity, as former U.S. President Donald Trump continues his official tour of Asia. During the trip, Trump has signed a series of agreements with Japan and several Southeast Asian nations aimed explicitly at diversifying and stabilizing global supply chains for rare-earth materials. These initiatives underscore a shared recognition that the world’s dependence on China represents not only an economic vulnerability but also a potential strategic liability in times of international tension.
Rare earth elements—comprising a group of 17 metallic elements—have emerged as some of the most geopolitically sensitive resources on the planet. Their unique chemical and magnetic properties make them indispensable components in products such as advanced semiconductors, renewable energy systems, and sophisticated defense technologies, including missile guidance and radar systems. As a result, they have become a persistent flash point in the ongoing geopolitical rivalry between Washington and Beijing. Despite their immense strategic significance, the overall rare earths market remains tiny when measured by production value; it is approximately thirty-three times smaller than the global copper market. Yet, this modest economic footprint belies the minerals’ outsized role in underpinning the world’s technological and defense infrastructure.
In response to these challenges, many Western governments have announced plans to invest billions of dollars into revitalizing domestic rare-earth mining and refining industries. However, Struyven cautioned that such efforts, while commendable, will not yield rapid results. Developing independent production capacity requires years of sustained effort: constructing a new mine alone could take up to a decade, while building a functional refinery to process the extracted materials may require an additional five years. These long timelines illustrate both the technical and regulatory complexities involved in creating a self-sufficient supply network from the ground up.
Meanwhile, rare earths are expected to feature prominently in upcoming diplomatic exchanges. Trump is scheduled to meet Chinese President Xi Jinping in South Korea on Thursday, and analysts anticipate that the subject of critical mineral supply chains will occupy a central place in their discussions. Earlier this month, Beijing moved to tighten its control even further by expanding export regulations on rare-earth materials. The new restrictions, slated to come into force on November 8, strategically coincide with the expiration of a 90-day trade truce between China and the United States. This timing highlights how Beijing continues to view these minerals not merely as commodities but as tools of economic and political influence.
As negotiations between the two major powers continue, Struyven emphasized that the final details of any forthcoming U.S.–China trade accord will require formal approval from both heads of state. He also expressed skepticism that the rare-earth issue would fade from the geopolitical agenda anytime soon. Given the material’s central role in global technology and defense supply chains, and China’s almost unassailable dominance in production and processing, he warned that the West’s path toward diversification and independence would be lengthy, uncertain, and fraught with geopolitical complexity.
Sourse: https://www.businessinsider.com/china-rare-earth-monopoly-west-supply-chain-goldman-sachs-2025-10
