China controls approximately 90% of global rare earth refining capacity and 70% of mining output, making yttrium's end-to-end supply chain a stark example of Beijing's strategic leverage. Yttrium, a heavy rare earth essential for high-temperature coatings in jet engines and turbines, follows a precise path: mine extraction, concentration, separation and refining, intermediate oxide production, alloy or coating precursor formation, and final manufacturing in aerospace and energy products.
Mining begins at sites like Bayan Obo in Inner Mongolia, China's largest rare earth deposit, where yttrium-bearing bastnasite and monazite ores are extracted via open-pit methods. Output faces chokepoints from Beijing's crackdowns on illegal mining, which previously flooded markets and depressed prices by over 10%; a new tracing system with certified invoices now enforces quotas, prioritizing state firms and curbing smuggling via Vietnam or Hong Kong. Economically, this stabilizes prices but geopolitically weaponizes supply, as seen in 2025 export bans on dual-use materials targeting foreign militaries.
Ore undergoes concentration through flotation to produce rare earth concentrates (50-60% REO), shipped to facilities in Baotou or Longnan. Separation, the key bottleneck requiring solvent extraction with hundreds of stages, yields high-purity yttrium oxide (YO3 >99.99%). China holds this expertise; Western attempts falter due to environmental costs and technical complexity, explaining 76% reliance by Japan despite diversification efforts. This stage matters as it enables purity for downstream uses, with quotas limiting output to manage global pricing.
Refined yttrium oxide converts to intermediates like yttrium nitrate or metal via electrolysis, then alloys such as YSZ (yttria-stabilized zirconia) for thermal barrier coatings. Processing dependency peaks here: non-Chinese concentrates often ship to China for separation before looping back, inflating costs and risks amid tightened licensing.
Final manufacturing integrates yttrium into products: aerospace firms plasma-spray YSZ coatings onto turbine blades for heat resistance up to 1500°C, vital for F-35 jets and GE engines; energy sectors use it in gas turbines; defense in missile nozzles. No substitutes exist, driving shortages in US aerospace despite trade truces, forcing rationing. Geopolitically, China's chain enables targeted restrictions, as in late 2025 bans on military-bound materials, threatening Western production while Beijing absorbs losses (90% of producers unprofitable yet sustained by subsidies).
This integrated system, unlike fragmented Western efforts, underpins dominance: from mine quotas to magnet exports, every stage enforces control, surging NdPr prices as a proxy (to $123/kg) and highlighting needs for alternatives like Lynas or REalloys, though scaling separation remains years away. Diversification demands full-chain replication to mitigate risks.