World’s top rare-earth magnet maker gives Xi leverage over US

In 2024, China dominated rare earth permanent magnet manufacturing, producing about 94% of the global supply. The city of Baotou, near the Gobi Desert, is known as the "Silicon Valley of rare earths" and is home to JL Mag Rare Earth, the world's leading manufacturer of high-performance magnets. With more than ten times the production capacity of its nearest US competitor, JL Mag is now a major supplier to the electric vehicle industry, supplying magnets to top EV brands like Tesla and Volkswagen.

The company's rapid expansion, both within China and into Mexico, highlights China's efforts to maintain its leverage over global supply chains. Despite US and allied efforts to develop alternative sources of rare earths, China's scale and advanced technology give it a significant advantage. Beijing is weighing whether to expand export curbs, using JL Mag as a bargaining chip at a summit with the US.

The company's dominance in the industry is evident, with analysts estimating its share of the global market at 10-20%, while its three closest rivals are also Chinese. JL Mag's expansion plans, including a 50% increase in capacity by 2028, demonstrate the difficulty US competitors face in catching up to its advanced production capabilities.