The research focuses on what many industry insiders already consider the most difficult step in rare earth production: separating neodymium and praseodymium to the ultra-high purity levels required for permanent magnets.
Rare earth elements often occur in clusters and behave almost identically on a chemical level. Neodymium and praseodymium, two of the most important inputs for powerful magnets, sit next to each other on the periodic table.
This close proximity makes it extremely difficult to separate them cleanly. Even when it comes to viable ore, the separation step is so complex and capital-intensive that it still favors countries like China, which already operate such systems extensively.
What makes this stage more complex, according to the research, is that separating neodymium from praseodymium to magnet purity requires an extraordinary number of repetitions.
Their modeled plant design requires roughly 62 equilibrium stages, compared to only 16 stages for previous bulk separations. In practical terms, this means that a facility that can produce magnet-quality material must be large, expensive and technically advanced.
Loosening the grip
China’s dominance stems largely from its ability to meet this demand on an industrial scale. Although the country accounts for about 60 percent of global rare earth mining, it processes nearly 90 percent of global supply.
This dominance did not arise by chance. After acquiring early separation know-how from France in the 1980s, China spent decades refining solvent extraction techniques, training engineers and scaling up factories far beyond what most countries were willing or allowed to build.
Today, China produces about 70,000 tons of refined rare earths per year. It also controls almost all processing of heavy rare earth metals, which are even more difficult to separate and are critical for high-temperature and defense applications.
So the Malaysian study reinforces why that advantage persists. It shows that even when the geology is favorable, processing remains the real barrier to entry.
This reality has heightened concerns among the US and its allies, especially as China has shown a willingness to use rare earths as a geopolitical tool.
In 2010, Beijing restricted exports to Japan during a diplomatic dispute. This was imposed in 2023 global restrictions on the export of rare earth processing and separation technologies, making it more difficult for competitors to build midstream capacity.
These steps have increased the urgency in Washington. Rare earth metals are essential for modern defense systems, from fighter jets and submarines to precision-guided munitions, as well as for electric vehicles and consumer electronics.
Despite being the world’s second-largest producer of rare earths, most material mined domestically has historically been sent to China for separation. Until recently, the country lacked commercial-scale facilities that could process ore into finished magnet materials.
This is the reality that the rest of the world is slowly trying to change. Since 2020, the US Department of Defense has poured hundreds of millions of dollars into rebuilding a country supply chain from ‘mine to magnet’with projects largely concentrated in Texas.
These include light and heavy rare earth separation plants, metal and alloy production and permanent magnet production.
Still, its short-term capacity remains small compared to China’s. It will take years for new facilities to come on line, and most will initially focus on light rare earths rather than the heavier elements, where Chinese dominance is almost absolute.
From Project Vault to Africa: US accelerates rare earth supply chain strategy
The United States is stepping up efforts to diversify rare earth supply outside China and is supporting early-stage projects aimed at strengthening non-Chinese production and processing capacity.
One such move came in February, when the US Trade and Development Agency (USTDA) confirmed its intention to support Altona Rare Earths’ (LSE:REE) Monte Muambe rare earths project in Mozambique.
The announcement was made by USTDA Deputy Director and Chief Operating Officer Thomas Hardy during a high-level forum on U.S. support for critical mining projects in sub-Saharan Africa, attended by Altona executives.
USTDA’s support is expected to help define the technical and financial development path for Monte Muambe, which hosts rare earth elements used in permanent magnets, defense systems and energy transition technologies. The support remains conditional on the implementation of a formal grant agreement.
The commitment aligns with broader U.S. initiatives aimed at transforming critical mineral supply chains, including recent announcements related to Project Vault – Washington’s efforts to secure strategic reserves and reduce dependence on Chinese-dominated processing and refining. It also coincides with the launch of the Forum on Resource Geostrategic Engagement (FORGE), unveiled at the 2026 Critical Minerals Ministerial as a platform to mobilize capital and diplomatic support for resilient mineral supply networks.
Although Monte Muambe is still in its early stages, Altona is also awaiting test results from recent fluorspar and gallium drilling, which the company believes could further enhance the project’s strategic appeal. Fluorspar is an important industrial mineral used in steelmaking, chemicals and battery supply chains, areas where China also has a significant market share.
Taken together, U.S. support for Monte Muambe underscores how governments are increasingly using policy tools, financing support and strategic partnerships to counter China’s continued dominance in rare earth processing, a reality highlighted in the recent Malaysian report.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
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