Finance

The West is recycling rare earths to escape China’s grip — but it’s not enough

Published

3 days ago

May 28, 2025

Annealed neodymium iron boron magnets sit in a barrel prior to being crushed into powder at Neo Material Technologies Inc.’s Magnequench Tianjin Co. factory in Tianjin, China.

Bloomberg | Bloomberg | Getty Images

BEIJING — As China tightens its grip on the global supply of key minerals, the West is working to reduce its dependence on Chinese rare earth.

This includes finding alternative sources of rare earth minerals, developing technologies to reduce reliance, and recovering existing stockpiles through recycling products that are reaching the end of their shelf life.

“You cannot build a modern car without rare earths,” said consulting firm AlixPartners, noting how Chinese companies have come to dominate the supply chain for the minerals.

In September 2024, the U.S. Department of Defense invested $4.2 million in Rare Earth Salts, a startup that aims to extract the oxides from domestic recycled products such as fluorescent light bulbs. Japan’s Toyota has also been investing in technologies to reduce the use of rare earth elements.

According to the U.S. Geological Survey, China controlled 69% of rare earth mine production in 2024, and nearly half of the world’s reserves.

Analysts from AlixPartners estimate that a typical single-motor battery electric vehicle includes around 550 grams (1.21 pounds) of components containing rare earths, unlike gasoline-powered cars, which only use 140 grams of rare earths, or about 5 ounces.

Pretty soon, the first generation of EVs will be up for recycling themselves, creating a pool of ex-China material that will be under the control of the West.

Christopher Ecclestone

Principal and mining strategist at Hallgarten & Company

More than half of the new passenger cars sold in China are battery-only and hybrid-powered cars, unlike the U.S., where they are still mostly gasoline-powered.

“With slowing EV uptake (in the U.S.) and mandates to convert from ICE to EV formats receding into the future, the imperative for replacing Chinese-sourced materials in EVs is declining,” said Christopher Ecclestone, principal and mining strategist at Hallgarten & Company.

“Pretty soon, the first generation of EVs will be up for recycling themselves, creating a pool of ex-China material that will be under the control of the West,” he said.

Only 7.5% of new U.S. vehicle sales in the first quarter were electric, a modest increase from a year ago, according to Cox Automotive. It pointed out that around two-thirds of EVs sold in the U.S. last year were assembled locally, but manufacturers still rely on imports for the parts.

“The current, full-blown trade war with China, the world’s leading supplier of EV battery materials, will distort the market even more.”

Rare torque

Of the 1.7 kilograms (3.74 pounds) of components containing rare earths found in a typical single-motor battery electric car, 550 grams (1.2 pounds) are rare earths. About the same amount, 510 grams, is used in hybrid-powered vehicles using lithium-ion batteries.

In early April, China announced export controls on seven rare earths. Those restrictions included terbium, 9 grams of which is typically used in a single-motor EV, AlixPartners data showed.

None of the six other targeted rare earths are significantly used in cars, according to the data. But April’s list is not the only one. A separate Chinese list of metal controls that took effect in December restricts exports of cerium, 50 grams of which AlixPartners said is used on average in a single-motor EV.

The controls mean that Chinese companies handling the minerals must get government approval to sell them overseas. Caixin, a Chinese business news outlet, reported on May 15, just days after a U.S.-China trade truce, that three leading Chinese rare earth magnet companies have received export licenses from the commerce ministry to ship to North America and Europe.

What’s concerning for international business is that there are barely any alternatives to China for obtaining the rare earths. Mines can take years to get operating approval, while processing plants also take time and expertise to establish.

“Today, China controls over 90% of the global refined supply for the four magnet rare earth elements (Nd, Pr, Dy, Tb), which are used to make permanent magnets for EV motors,” the International Energy Agency said in a statement. That refers to neodymium, praseodymium, dysprosium and terbium.

Bernstein's Beveridge calls CATL "the TSMC of lithium-ion batteries"

For the less commonly used nickel metal hydride batteries in hybrid cars, the amount of rare earths goes up to 4.45 kilograms, or nearly 10 pounds, according to AlixPartners. That’s largely because that kind of battery uses 3.5 kilograms of lanthanum.

“I estimate that around 70% of the over 200 kilograms of minerals in an EV goes through China, but it varies by vehicle and manufacturer. It’s hard to put a definitive figure on it,” said Henry Sanderson, associate fellow at The Royal United Services Institute for Defence and Security.

Power projection

However, there are limits to recycling, which remains challenging, energy-intensive and time-consuming. And even if adoption of EVs in the U.S. slows, the minerals are used in far larger quantities in defense.

For example, the F-35 fighter jet contains over 900 pounds of rare earths, according to the Center for Strategic and International Studies, based in Washington, D.C.

China’s rare earths restrictions also go beyond the closely watched list released on April 4.

Large rocks containing chromite, is crushed into smaller bitesize chunks, before to goes through a process to refine and extract the ore that yields chromium, a vital component of stainless steel, at the Mughulkhil mine in Logar Province, Afghanistan.

Marcus Yam | Los Angeles Times | Getty Images

In the last two years, China has increased its control over a broader category of metals known as critical minerals. In the summer of 2023, China said it would restrict exports of gallium and germanium, both used in chipmaking. About a year later, it announced restrictions on antimony, used to strengthen other metals and a significant component in bullets, nuclear weapons production and lead-acid batteries.

The State Council, the country’s top executive body, in October released an entire policy for strengthening controls of exports, including minerals, that might have dual-use properties, or be used for military and civilian purposes.

One restriction that caught many in the industry by surprise was on tungsten, a U.S.-designated critical mineral but not a rare earth. The extremely hard metal is used in weapons, cutting tools, semiconductors and car batteries.

China produced about 80% of the global tungsten supply in 2024, and the U.S. imports 27% of tungsten from China, data from the U.S. Geological Survey showed.

About 2 kilograms of tungsten is typically used in each electric car battery, said Michael Dornhofer, founder of metals consulting firm Independent Supply Business Partner. He pointed out that this tungsten is not able to return to the recycling chain for at least seven years, and its low levels of use might not even make it reusable.

“50% of the world’s tungsten is consumed by China, so they have business as usual,” Lewis Black, CEO of tungsten mining company Almonty, said in an interview last month. “It’s the other 40% that’s produced (in China) that comes into the West that doesn’t exist.”

He said when the company’s forthcoming tungsten mine in South Korea reopens this year, it would mean there would be enough non-China supply of the metal to satisfy U.S., Europe and South Korean needs for defense.

But for autos, medical and aerospace, “we just don’t have enough.”

Finance

Daniel Loeb’s next task as his hedge fund turns 30: Avoiding becoming ‘AI roadkill’

Published

18 hours ago

May 30, 2025

Business Finance News

Finance

This is why Jamie Dimon is so gloomy on the economy

Published

19 hours ago

May 30, 2025

Business Finance News

Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of Wall Street Firms, in the Hart Building on Dec. 6, 2023.

Tom Williams | Cq-roll Call, Inc. | Getty Images

The more Jamie Dimon worries, the better his bank seems to do.

As JPMorgan Chase has grown larger, more profitable and increasingly more crucial to the U.S. economy in recent years, its star CEO has grown more vocal about what could go wrong — all while things keep going right for his bank.

In the best of times and in the worst of times, Dimon’s public outlook is grim.

Whether it’s his 2022 forecast for a “hurricane” hitting the U.S. economy, his concerns over the fraying post-WWII world order or his caution about America getting hit by a one-two punch of recession and inflation, Dimon seems to lace every earnings report, TV appearance and investor event with another dire warning.

“His track record of leading the bank is incredible,” said Ben Mackovak, a board member of four banks and investor through his firm Strategic Value Bank Partner. “His track record of making economic-calamity predictions, not as good.”

Over his two decades running JPMorgan, Dimon, 69, has helped build a financial institution unlike any the world has seen.

A sprawling giant in both Main Street banking and Wall Street high finance, Dimon’s bank is, in his own words, an end-game winner when it comes to money. It has more branches, deposits and online users than any peer and is a leading credit card and small business franchise. It has a top market share in both trading and investment banking, and more than $10 trillion moves over its global payment rails daily.

‘Warning shot’

A review of 20 years of Dimon’s annual investor letters and his public statements show a distinct evolution. He became CEO in 2006, and his first decade at the helm of JPMorgan was consumed by the U.S. housing bubble, the 2008 financial crisis and its long aftermath, including the acquisition of two failed rivals, Bear Stearns and Washington Mutual.

By the time he began his second decade leading JPMorgan, however, just as the legal hangover from the mortgage crisis began to fade, Dimon began seeing new storm clouds on the horizon.

“There will be another crisis,” he wrote in his April 2015 CEO letter, musing on potential triggers and pointing out that recent gyrations in U.S. debt were a “warning shot” for markets.

That passage marked the start of more frequent financial warnings from Dimon, including worries of a recession — which didn’t happen until the 2020 pandemic triggered a two-month contraction — as well as concerns around market meltdowns and the ballooning U.S. deficit.

But it also marked a decade in which JPMorgan’s performance began lapping rivals. After leveling out at roughly $20 billion in annual profit for a few years, the sprawling machine that Dimon oversaw began to truly hit its stride.

JPMorgan generated six record annual profits from 2015 to 2024, twice as many as in Dimon’s first decade as CEO. JPMorgan is now the world’s most valuable publicly traded financial firm and is spending $18 billion annually on technology, including artificial intelligence, to stay that way.

While Dimon seems perpetually worried about the economy and rising geopolitical turmoil, the U.S. economy keeps chugging along. That means unemployment and consumer spending has been more resilient than expected, allowing JPMorgan to make record profits.

In 2022, Dimon told a roomful of professional investors to prepare for an economic storm: “Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” Dimon said, referring to the Federal Reserve managing the post-pandemic economy.

“That hurricane is right out there, down the road, coming our way,” he said.

“This may be the most dangerous time the world has seen in decades,” Dimon said the following year in an earnings release.

But investors who listened to Dimon and made their portfolios more conservative would’ve missed on the best two-year run for the S&P 500 in decades.

‘You look stupid’

“It’s an interesting contradiction, no doubt,” Mackovak said about Dimon’s downbeat remarks and his bank’s performance.

“Part of it could just be the brand-building of Jamie Dimon,” the investor said. “Or having a win-win narrative where if something goes bad, you can say, ‘Oh, I called it,’ and if doesn’t, well your bank’s still chugging along.”

According to the former president of a top five U.S. financial institution, bankers know that it’s wiser to broadcast caution than optimism. Former Citigroup CEO Chuck Prince, for example, is best known for his ill-fated comment in 2007 about the mortgage business that “as long as the music is playing, you’ve got to get up and dance.”

“One learns that there’s a lot more downside to your reputation if you are overly optimistic and things go wrong,” said this former executive, who asked to remain anonymous to discuss Dimon. “It’s damaging to your bank, and you look stupid, whereas the other way around, you just look like you’re being a very cautious, thoughtful banker.”

Banking is ultimately a business of calculated risks, and its CEOs have to be attuned to the downside, to the possibility that they don’t get repaid on their loans, said banking analyst Mike Mayo of Wells Fargo.

“It’s the old cliché that a good banker carries an umbrella when sun is shining; they’re always looking around the corner, always aware of what could go wrong,” Mayo said.

But other longtime Dimon watchers see something else.

Dimon has an “ulterior motive” for his public comments, according to Portales Partners analyst Charles Peabody.

“I think this rhetoric is to keep his management team focused on future risks, whether they happen or not,” Peabody said. “With a high-performing, high-growth franchise, he’s trying to prevent them from becoming complacent, so I think he’s ingrained in their culture a constant war room-type atmosphere.”

Dimon has no shortage of things to worry about, despite the fact that his bank generated a record $58.5 billion in profit last year. Conflicts in Ukraine and Gaza rage on, the U.S. national debt grows and President Donald Trump‘s trade policies continue to jolt adversaries and allies alike.

Graveyard of bank logos

“It’s fair to observe that he’s not omniscient and not everything he says comes true,” said Truist bank analyst Brian Foran. “He comes at it more from a perspective that you need to be prepared for X, as opposed to we’re convinced X is going to happen.”

JPMorgan was better positioned for higher interest rates than most of its peers were in 2023, when rates surged and punished those who held low-yielding long-term bonds, Foran noted.

“For many years, he said ‘Be prepared for the 10 year at 5%, and we all thought he was crazy, because it was like 1% at the time,” Foran said. “Turns out that being prepared was not a bad thing.”

Perhaps the best explanation for Dimon’s dour outlook is that, no matter how big and powerful JPMorgan is, financial companies can be fragile. The history of finance is one of the rise and fall of institutions, sometimes when managers become complacent or greedy.

In fact, the graveyard of bank logos that are no longer used includes three — Bear Stearns, Washington Mutual and First Republic — that have been subsumed by JPMorgan.

During his bank’s investor day meeting this month, Dimon pointed out that, in the past decade, JPMorgan has been one of the only firms to earn annual returns of more than 17%.

“If you go back to the 10 years before that, OK, a lot of people earned over 17%,” Dimon said. “Almost every single one went bankrupt. Hear what I just said?