Chile is building rare earth mines and a metal-making pilot plant but has no facility to separate the elements in between, a new study by GEM Mining Consulting says. Without that step, Chile could stay dependent on overseas processors, MINING.COM reported.
At a glance
- China controls about 91% of rare earth separation and refining, IEA data cited by GEM show.
- Projects outside China could meet only 25% of non-Chinese separation needs by 2035, GEM estimates.
- Refining plants outside China can cost 20% to more than 150% more to build than Chinese ones.
Background
Rare earths go through three main steps before they reach a magnet: mining, chemical separation into individual oxides such as neodymium-praseodymium (NdPr) oxide, and metallization into metals and alloys. Separation is the hardest and costliest step, and it is where China's grip is strongest. NdPr magnets are used in electric vehicles, wind turbines and industrial motors.
What the study found
GEM Mining Consulting found no industrial-scale rare earth separation plant and no permanent magnet factory in Chile, MINING.COM reported on October 21. That leaves a gap between the country's mining projects and its first metal-making plant.
The gap came into focus on October 7, when Aclara Metals opened a demonstration plant at Huachipato in Talcahuano. The plant, a 50-50 venture between Aclara Resources and Chilean industrial group CAP, can turn up to 175 kg of rare earth oxides a day into metals and alloys. Without local separation, its feedstock must come from abroad.
Why separation is the bottleneck
China controls about 65% of magnetic rare earth mining, 91% of separation and refining, and 94% of magnet manufacturing, according to IEA data cited by GEM. GEM estimates that committed mining supply could reach 107% of projected demand by 2035, yet projects outside China could meet only 25% of non-Chinese separation needs.
Building that capacity is expensive. GEM says plants outside China can cost 20% to more than 150% more to build than Chinese rivals, and about 50% more to run. NdPr oxide traded at about $95 a kg in Europe and North America in August, below the $110 a kg price floors the US government has agreed with MP Materials and Lynas.
What it means
Chile's own projects do not yet close the gap. Aclara plans to separate carbonates from Chile and Brazil at a proposed plant in Louisiana, and Chilean Cobalt Corp. is targeting about 50 tonnes of carbonate a year from early 2027.
GEM says Chile's biggest opportunity may lie in processing rather than mining more ore. Without separation at home, it risks swapping dependence on Chinese processors for dependence on processors elsewhere.
Our read
Outlook: neutral. The study describes a long-term processing gap, not a change in current rare earth supply.
What to watch
- Results from the Huachipato demonstration plant's first NdPr metal runs.
- Permits and community response for Aclara's Penco Module in the Biobío region.
- Whether any company proposes a rare earth separation plant in Chile.
For information only, not investment advice.
Neodymium price in India
metalscost.com India reference price as of 2026-10-23.
Detailed analysis
Timeline
- 2026-10-07: Aclara Metals opens a rare earth metals demonstration plant at Huachipato, Chile.
- 2026-10-21: MINING.COM reports GEM Mining Consulting's study on Chile's rare earth refining gap.
Supply Drivers
Mining supply outside China is growing faster than the separation capacity needed to process it.
Government Policies
US price floors of $110 a kg for NdPr show the government support needed for processing outside China.
Geopolitical Risks
China's 91% share of separation leaves new producers dependent on Chinese or other foreign processors.
What could lift prices
- Separation outside China remains scarce and expensive to build.
- Government price floors at $110 a kg sit above the August market price.
What could weigh on prices
- Committed mining supply could exceed projected demand by 2035, GEM estimates.
- NdPr oxide traded at about $95 a kg in August, below government floor prices.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Chile | Medium | Its rare earth ambitions depend on building separation capacity it does not yet have. |
| China | Low | Its dominance of separation is unlikely to be challenged soon. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Critical Minerals | Negative | Supply chains outside China lack processing capacity between mining and magnets. |
Who gains, who loses
- Chinese rare earth processors: New mines outside China may still need their separation services.
- Chile's rare earth developers: Without local separation, they must ship material abroad for processing.
Other ways this could play out
- If US-backed price floors spread, a separation plant in Chile could become viable.
- If tailings recovery proves economic, Chile could gain more feedstock but still lack processing.
Price risks
- New Chinese export curbs could tighten supply far faster than new plants can be built.
- Falling NdPr prices would make plants outside China even harder to fund.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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