Industrial Securities released a research report stating that domestic supply optimization combined with slow overseas production increases makes China's rare earth supply advantages irreplaceable. China dominates global rare earth reserves and production, possessing full industrial chain advantages in rare earth development. Under the implementation of total quantity control indicators domestically, China's rare earth supply growth may continue to decelerate. Although countries like the United States, Australia, and Myanmar have some rare earth mines and smelting separation facilities overseas, their supply increment releases are relatively slow, providing limited impetus to global rare earth supply growth. Therefore, China will continue to dominate the global rare earth supply landscape in the short term, and under China's implementation of rare earth total quantity controls, global rare earth supply growth may slow down. Consequently, companies possessing scarce resource assets and smelting capacity with quotas are expected to benefit.
Industrial Securities' main viewpoints are as follows:
**China Possesses the World's Only Complete Rare Earth Industrial Chain**
Rare earth resource extraction and utilization mainly involves five stages, with mining and beneficiation, and smelting and separation belonging to the traditional rare earth raw material supply segments. While countries like the United States and Australia possess abundant rare earth resource reserves and some rare earth mining and beneficiation capacity, they currently have limited rare earth smelting and separation capabilities (particularly lacking domestic medium and heavy rare earth smelting and separation capacity). Currently, only China possesses a complete rare earth development industrial chain globally, with most overseas countries relying on China's rare earth supply. Against the backdrop of ongoing China-US trade tensions, the United States seeks to establish overseas rare earth supply chains.
**China Dominates Global Rare Earth Supply**
China's rare earth supply advantage lies not only in industrial chain superiority but also in quantitative dominance. According to USGS data, global rare earth reserves totaled approximately 90.88 million tons in 2024, with China holding about 44 million tons, accounting for 48.41%. Global rare earth production totaled approximately 394,000 tons in 2024 (up 4.75% year-over-year), with China producing 270,000 tons, representing about 68.54% of the total. China's rare earth smelting and separation capacity accounts for approximately 92.3% of the global total (2023 data). Overall, China maintains absolute advantages in both rare earth mining and beneficiation, and separation segments. Therefore, changes in China's rare earth supply will significantly impact global rare earth market supply.
**China Continues to Optimize Rare Earth Supply**
Building on its industrial chain advantages and total quantity superiority, China continues to optimize rare earth supply through three main measures: First, the growth rate of total quantity control indicators has slowed, with 2024 rare earth mining indicators and smelting separation indicators increasing by only 5.88% and 4.16% year-over-year respectively, significantly lower than their respective average growth rates from 2017-2024. Second, the "Rare Earth Management Regulations" in 2024 and the "Interim Measures for Total Quantity Control Management of Rare Earth Mining and Rare Earth Smelting and Separation" in 2025 were introduced, strictly controlling rare earth production and circulation outside quotas, while incorporating imported ore smelting and separation into the total quantity control system, strengthening China's control over global rare earth supply. Finally, domestic rare earth enterprises have been consolidated into two major groups: China Rare Earth Resources And Technology Co.,Ltd. and Northern Rare Earth, creating a more concentrated and optimized supply structure. Considering China's proportion in the global rare earth supply landscape, under the backdrop of continuous domestic rare earth supply optimization, if overseas rare earth shows no significant increment, global rare earth supply may become tight.
**Overseas Mainstream Rare Earth Capacity Supply Release Generally Proceeds Slowly**
Current overseas rare earth capacity is mainly concentrated in the United States, Australia, and Myanmar. U.S. rare earth supply primarily relies on the MP mine, which is expected to expand to 60,000 tons in 2026-27, but domestic smelting capacity remains limited. Australian rare earth capacity is mainly operated by Lynas, which owns mature producing mines like Mt Weld and the Kuantan smelting plant in Malaysia, but overall capacity scale is relatively small with higher costs. Myanmar possesses overseas scarce medium and heavy rare earth mining capacity, but production fluctuates due to regional situation influences. Overall, short-term overseas rare earth supply quantity growth remains limited.
**Risk Warnings:** U.S. and Australian rare earth smelting and separation capacity construction progress exceeding expectations, Myanmar mine production exceeding expectations, and domestic rare earth total quantity control indicator releases exceeding expectations.