Rare earth elements are vital to the technologies that drive modern life, from smartphones and electric vehicles to renewable energy systems and national defense. While these elements are relatively abundant in the Earth’s crust, their extraction and processing remain technically challenging and environmentally taxing. In recent years, the U.S. has seen a sharp increase in the demand for rare earth elements, driven by its push toward clean energy, advanced manufacturing and strategic autonomy. As global competition intensifies and supply chains remain vulnerable, the U.S. and other nations are exploring innovative strategies to secure and expand access to these critical resources.
Rare earth elements possess unique fluorescent, conductive and magnetic properties that make them valuable in small quantities for high-tech applications. Grouped according to the classification of being either light or heavy, rare earth elements are distinguished by their atomic structure and abundance. Light rare earth elements, like lanthanum and cerium, are more common and typically found in hard rock deposits, while heavy rare earth elements, such as terbium and dysprosium, are rarer and often found in ionic clay deposits. This difference in abundance leads to a higher market price for heavy rare earth elements, but both types are crucial for various technologies.
Rare earth elements and their associated applications (Source: U.S. Department of Energy National Energy Technology Laboratory)
Globally, China holds the major share of reserves, production and refining of rare earth elements. The top five countries with the largest rare earth elements reserves, measured in million metric tons, compared to the top five producers, measured in thousand metric tons, are shown in Figure 1.
Figure 1: Global Rare Earth Element Reserves vs Production (Source: Microsoft Copilot, 2025)
The disparity is clearly illustrated between countries with the largest rare earth elements reserves and those leading in production. China’s near-70% of the world’s production of rare earth elements is disproportionate to the approximately 35% of the world’s reserves it holds. China’s share of global rare earth element refining, for which data is not shown here, is even more disproportionate, at almost 90% of the world’s total.
Another example of disproportionality exists in the 15% of world production by the U.S., compared to its relatively small proportion (around 1.5%) of world reserves. This imbalance underscores the strategic importance of diversifying supply chains and investing in domestic refining capabilities to reduce dependency on a single source.
Apart from the general dominance of China on reserves and production of rare earths, the region also dominates specifically in the production of the heavier and more valuable rare earth elements from ion-adsorption clays. This type of mineralization occurs in the south of China, where China borders with Vietnam and Myanmar.
The dominance by China in this space is not only a result of the disproportional endowment of rare earth elements reserves in the region. China’s early identification of the importance of rare earth elements, which was followed by centrally supported and funded investment in research and incentives towards the development of rare earth elements projects, have secured its position as a leader in the space. The government has also taken an active role in the central planning and regulation of the industry towards national goals.
However, this dominance was achieved at a cost. Serious environmental damage has been caused and there have been reports of illegal mining, which the Chinese authorities are trying to contain. It seems logical to conclude that the extent of the environmental damage and the difficulty of regulating the industry could at least partly be due to the ease with which the ionic-clay minerals can be exploited, lending itself to a cottage industry. This differs from monazite and bastnäsite type ores, which can be extremely complex to exploit profitably.
How to achieve economies of scale in rare earth projects
One of the very first considerations for the development of a rare earth elements project is the economies of scale that can be achieved. Gauging from the size of those projects that have remained under active development, it seems that a minimum production of 10,000 to 20,000 tonnes per annum of rare-earth-oxide should be targeted for a project that produces a mixed rare-earth precipitate. This implies that some hydrometallurgical processing is required.
For projects that envisage only the production of a physically-separated concentrate, in other words, without hydrometallurgical processing, the minimum required production seems to be of the order of 5,000 tonnes per annum of contained rare-earth-oxide equivalent.
While a sufficiently large production output will be required, the capital cost may be prohibitive. One approach is to start with only a physical separation plant consisting of crushing or milling, followed by the likes of flotation or gravity concentration. The addition of a hydrometallurgical plant can be considered at a later stage of the project.
Another possible approach to achieve economies of scale is the concept of a centralized facility, of which Wood has the specialist capabilities to design, which treats the material from multiple rare earth elements sources. The principle relies on the establishment of a central hydrometallurgical facility that would process ores or concentrates from several small regional mines. The overall process flowsheet could be tailored to accommodate various ore types, for example, by including specialized, innovative technologies on parallel smaller streams and introducing the resulting process stream into the main flowsheet where relevant, rendering it equally treatable in the central refinery.
Hydrometallurgical treatment does not need to involve ultimate separation into individual rare earth elements; in fact, that level of processing is undertaken by only a handful of refineries in the world. More typically, hydrometallurgical processing would proceed to the production of a mixture of rare earth elements salts such as oxides, carbonates, sulphates or oxalates.
No two ore bodies behave the same, so the temptation to adopt the flowsheet used for another ‘similar’ ore in the interest of ‘fast-tracking’ a project should be resisted. For example, possibilities for upgrading the ore by physical separation should be exhaustively tested since, if successful, it may offer a highly economical route towards the production of a saleable concentrate. The better an ore can be upgraded by physical separation, the lower both CAPEX and OPEX of the subsequent hydrometallurgical plant will be.
When working with our clients on rare earth element projects, we have demonstrated success by constructing a detailed flowsheet simulation based on the available test work results. This facilitates an early economic analysis of the process, even if it may initially be very rudimentary, to be refined as the project advances during the various stages. This reveals the high-cost or low-efficiency aspects to be addressed, which may call for additional test work to evaluate the possible mitigating steps, and then the cycle is repeated.
Making the business case for rare earth projects
It is a simple fact that China, Vietnam and Myanmar possess a disproportionate share of the world’s rare earth reserves, including the ionic clay deposits that are easier to exploit and that contain a larger proportion of the more valuable heavy rare earths. It is also true that China’s position of dominance did not merely come about because of its mineral endowment, but as a result of its investment, planning and governance in the rare earth elements market.
For most projects outside of China, Vietnam and Myanmar, the economics will probably hinge on the production of neodymium (Nd) and praseodymium (Pr), either as a saleable concentrate, obtained by mere physical separation, or as a precipitate of a mixture of Nd/Pr and any other co-occurring elements or, as we have recently seen some from market indicators, the duo separated into products of the individual elements. The value of the Nd/Pr precipitate may be enhanced by separating out the more abundant cerium and lanthanum by relatively simple hydrometallurgical means.
The possible contribution of by-products such as uranium, phosphates and/or others depending on each individual ore, should receive serious attention during project development. Furthermore, solar energy, where it is abundant, may make a process with a high thermal-energy requirement a more economical pursuit.
Ongoing research will continue, and new technologies and the development of concepts such as a centralized rare earth elements refinery will gradually open the way to more opportunities. A systematic approach involving a repetitive cycle of test work, process simulation, economic evaluation and mitigation can maximize the opportunity for identifying a process that yields a healthy return on investment.