The rare earth elements (REEs) market in 2025 remains a critical battleground for global economic and military influence. China continues to dominate the supply chain, leveraging its control to shape geopolitics and technology. Western countries, especially the United States, are intensifying efforts to reduce dependency through mining, recycling, and strategic partnerships. The rare earths race marks the intersection of natural resources, industrial capacity, and global power.
Historical Context of Rare Earth Minerals
Rare earth minerals have long been vital for defence and technology. Their extraction in Burma during colonial times financed military efforts, including Japan’s war machine in World War II. Early struggles with transportation and local resistance limited full resource utilisation but set a precedent for strategic competition over these metals.
China’s Dominance in Rare Earths
China controls about 70% of mining, 90% of processing, and over 90% of magnet production globally. This dominance stems from Deng Xiaoping’s 1992 vision that rare earths would be China’s equivalent of Middle Eastern oil. Through state-led consolidation and vertical integration, China built a complete industrial ecosystem. This control allows Beijing to influence global supply and wield rare earths as geopolitical tools.
Western Efforts to Diversify Supply
The US relies heavily on China despite having the Mountain Pass mine in California. Pentagon investments aim to develop domestic magnet manufacturing and reduce import dependence. Greenland’s Tanbreez mine and other unconventional sources are explored to diversify supply. Recycling of mining byproducts also shows promise but faces economic and technological hurdles.
Geopolitical Implications of Rare Earth Control
China’s export restrictions in 2023 disrupted US and Japanese industries, showing how rare earths can be weaponised. The G7’s 2025 Critical Minerals Action Plan calls for diversification, sustainability, and innovation to counter non-market practices. However, Western companies face cost pressures and regulatory challenges that hinder efforts to match China’s scale and efficiency.
Technological and Industrial Challenges
China’s mastery includes decades of patent filings and perfected refining techniques. The US abandoned some rare earth processing methods due to environmental rules, allowing China to lead. Emerging green technologies, like microbe-based extraction, remain experimental. Regulatory and infrastructure gaps continue to impede Western supply chain independence.
Future Strategic Alignments
Global rare earth dynamics influence diplomatic and military strategies. Upcoming meetings among leaders like Xi Jinping and Narendra Modi may redefine alliances in this sector. The rare earth supply chain is now inseparable from statecraft. Control over technology and processing capacity is as crucial as mineral reserves themselves.
Questions for UPSC:
- Critically analyse the role of natural resources in shaping the geopolitical strategies of major powers in the twenty-first century.
- Explain the challenges and opportunities in developing sustainable and independent supply chains for critical minerals with suitable examples.
- What are the implications of China’s rare earth monopoly on global trade and security? How can other countries effectively respond?
- With reference to rare earth elements, discuss the impact of technological innovation and environmental regulations on industrial competitiveness.
