Global supplies of magnetic rare earths could fall short by as much as 30% by 2035 unless China expands output or other producers move much faster, according to McKinsey & Company analysts. The gap would hit the materials that keep electric motors efficient, stabilize missile guidance fins at supersonic speeds, and sit inside every F-35, every EV drivetrain and every wind turbine nacelle.
The warning is drawing fresh attention now because rare earths sit at the center of the fight over industrial power, and China remains the dominant player in a market it spent decades learning to control. Earlier this month, Soumaya Keynes said China “didn’t just fall into that” position and that Beijing “learned about those supply chains” and had “a strategy to become the world’s leader.”
That strategy matters because producers outside China are expected to meet less than 20% of global demand for dysprosium and terbium by 2035, leaving the rest of the world dependent on a supply chain Beijing can influence. China won the rare earths race by mastering refining, not by owning all the ore, and President Xi Jinping’s dual circulation doctrine is meant to make other countries dependent on China while shielding China from similar dependence.
The minerals themselves are not especially rare in the earth’s crust. What is rare is the ability to separate and refine them at scale. That work is toxic, expensive and technically demanding, which is why new mines do not quickly translate into new supply. McKinsey’s projection is a warning that geology alone will not solve the problem, and that the bottleneck sits in the processing chain where most countries still lag far behind China.
Michel Van Hoey put it bluntly: “Meaningful diversification will take longer than many anticipate.” The U.S. has already poured billions into the CHIPS Act to expand domestic semiconductor production, but it never required buyers to purchase those chips, a reminder that industrial policy can build capacity without guaranteeing demand. For rare earths, the open question is whether any combination of new investment, new processing plants and new supply deals can narrow the gap before 2035 — or whether China keeps the leverage that comes with being the world’s indispensable supplier.
