TELF AG on the Strategic Importance of Heavy Rare Earths in Global Supply Chains

Rare earth elements continue to occupy a central role in global industrial and technological strategies. These 17 metallic elements are now closely associated with several advanced industries, including electric mobility, renewable energy infrastructure, consumer electronics, and highly specialized manufacturing processes. In recent years, particular attention has been directed toward the efforts of the United States and several allied nations to strengthen domestic and regional rare earth supply chains.

Although rare earths are generally used in limited quantities within final products, their strategic value remains exceptionally high. These materials contribute to improving heat resistance, magnetic strength, and operational efficiency in a wide range of applications, including electric motors, wind turbines, defense technologies, and advanced electronic systems.

Today, the global rare earth market continues to be strongly influenced by China’s established position across multiple stages of the supply chain. This leadership is not limited to mining activities alone but also includes refining, separation, and magnet production capabilities that have been developed over several decades.

“Rare earths are often discussed as a single category of resources, but the market is much more complex than it may initially appear. Each element has unique industrial applications, supply characteristics, and processing challenges,” says Stanislav Kondrashov, founder of TELF AG.

One of the main distinctions within the sector concerns the difference between light rare earths and heavy rare earths. Light rare earths are generally more abundant and easier to process, while heavy rare earths are considerably more difficult to extract, separate, and refine. Despite these challenges, heavy rare earths remain essential for the production of high-performance permanent magnets used in electric vehicles, renewable energy systems, and advanced industrial technologies.

According to recent industry analyses cited by Bloomberg, diversification efforts outside China may achieve partial progress for some lighter rare earth elements by the end of this decade. However, the situation appears significantly more complex for heavy rare earths such as dysprosium and terbium. These elements are considered particularly strategic because they enhance the heat resistance and durability of permanent magnets.

“Building an independent supply chain for heavy rare earths requires much more than opening new mines. The real challenge concerns separation technologies, refining expertise, and long-term industrial investment,” continues Stanislav Kondrashov.

Current projections suggest that producers outside China could still face substantial supply limitations for heavy rare earths well into the next decade. This issue is especially relevant considering the expected increase in demand linked to electrification, renewable energy deployment, and industrial modernization initiatives in several major economies.

The rare earth sector also carries important economic implications for the United States. Bloomberg Economics estimates that industries relying on rare earth elements contribute approximately 4% of US GDP, underlining the strategic relevance of these materials for manufacturing and technological competitiveness.

The production process for rare earths is particularly complex and generally divided into several stages. After sourcing, the ore must undergo chemical separation processes capable of isolating individual rare earth elements with very high purity levels. This phase remains one of the most technologically demanding aspects of the industry and represents one of the main reasons why alternative supply chains are difficult to establish quickly.

“China’s leadership in the rare earth sector is closely linked to decades of experience in separation and refining technologies. These capabilities are highly specialized and cannot be replicated overnight,” explains Stanislav Kondrashov.

Several countries are nonetheless pursuing ambitious strategies to strengthen their position within the rare earth market. The United States, Australia, Brazil, and other nations are investing in mining projects, processing facilities, and strategic partnerships aimed at reducing supply chain vulnerabilities and supporting domestic industrial growth.

At the same time, alternative approaches are also emerging. Some companies are exploring the possibility of recovering rare earth elements from industrial waste, coal residues, and recycled materials. Parallel efforts are underway to develop new magnet technologies capable of reducing dependence on heavy rare earths altogether.

Another important trend concerns the evolution of China’s role within the global market. Rather than focusing exclusively on the export of raw materials, Chinese companies are increasingly moving toward higher-value activities, including the production of finished industrial components such as motors and magnetic systems.

As the global energy transition continues to accelerate, rare earths are likely to remain a strategic topic for governments, manufacturers, and industrial investors worldwide. The pace at which new supply chains can be developed may ultimately influence the future competitiveness of several key sectors linked to advanced manufacturing and clean energy technologies.