The modern world runs on rare earth elements. Think electric vehicles, your smartphone, even advanced defence systems — they all need these crucial minerals. But there's a problem: China holds an almost complete chokehold on their supply, from mining to processing.
The Invisible Backbone of Modern Tech
These aren't just any minerals. Rare earths are a group of metals scattered thinly through the Earth's crust, yet they're indispensable to nearly every twenty-first-century technology. They create the high-strength magnets that power electric vehicle motors, the phosphors lighting up television screens, and the tiny components making your phone vibrate. The U.S. Government even calls them “essential for national security and economic resilience.”
China's dominance isn't just big; it's staggering. Estimates show China controls about 70 percent of global rare-earth mining. And it gets worse: they account for over 90 percent of the refining and magnet production.
This wasn't always the case. Back in 1952, the Mountain Pass mine in the Mojave Desert, near the California-Nevada border, was the world's leading source. It supplied materials for everything from colour televisions to early computers well into the 1980s. But then environmental rules tightened and costs shot up in the U.S. China stepped in, using cheap labour, more relaxed standards, and aggressive industrial policy to corner the market. By the early 2000s, Mountain Pass had closed its doors. China effectively controlled the entire supply chain.
Mountain Pass did reopen in 2018. It now produces roughly 47,000 metric tons of rare earths annually, which is just over 10 percent of the global supply. Some initial refining happens right there on site. Still, most of that material gets shipped to China for final processing before it's sold to manufacturers worldwide. The ripple effect of this dependency is felt across industries and economies.
Washington's Gambit: Forging New Alliances
This reliance on Beijing makes Washington and many industries pretty uncomfortable. So, the U.S. Has been pushing hard to secure alternative rare earth supplies. Former President Donald Trump, for instance, cemented a series of deals across Asia to bolster the supply of these critical minerals. He made pacts with Australia, Malaysia, Cambodia, and Japan.
These agreements aren't just handshake deals. They outline multi-billion-dollar plans, commit to fair trade practices, and aim to avoid export bans or quotas. With Japan, a recent agreement is set to secure the supply of raw and processed critical minerals, and it pledges funding for selected projects within the next six months. It's all part of Washington's bid to counter Beijing's tight grip on the sector.
Wendy Cutler, a senior vice president at Asia Society Policy Institute, sees these deals as a major step. She thinks they could “benefit immensely from being linked together in a plurilateral agreement with strong commitments, financing and pooling of resources.” And she expects more such deals to follow.
But there's a clear strategic motivation here. China has already shown it's willing to use its dominance as leverage. In April, Beijing restricted exports of seven rare-earth elements to the U.S. As a retaliation to tariffs. Then, in October, things got even tougher: China threatened to curb trade of any minerals or products that contained even trace amounts of those elements. That move really rattled suppliers globally.
A Long, Costly Road Ahead
Thing is, unwinding decades of reliance on China won't happen overnight. Dennis Wilder, a former senior U.S. Intelligence official and now a senior fellow at Georgetown University, put it plainly: “What we're trying to do now is to get off the Chinese as the primary supply chain, but that will take time.” He stressed that while the medium-term goal is to get off the Chinese supply chain, “Right now, there's still a great deal of dependency on China.”
Developing new rare earth mines is a massive undertaking. Goldman Sachs estimates these projects can take up to a decade to fully develop. Known reserves for certain elements are also pretty scarce outside of Myanmar and China. Plus, building the necessary refineries to process these raw materials? That's another five years, give or take.
Australia's resources minister, Madeleine King, doesn't mince words about the current situation. She says the “open international market in critical minerals and rare earths is a mirage. It doesn't exist.” The reason, she explains, is simple: “there is one supplier of these materials and they have the wherewithal to change where the market goes, whether that be in pricing or supply.” Sure, these deals bring much-needed financial support and may eventually challenge Beijing's stranglehold, experts agree the efforts will be costly and take years to bear real fruit.
It's a long game, and the stakes couldn't be higher for global supply chains and national security.
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The world is slowly, painstakingly, trying to build a new foundation for its critical mineral needs, but China's formidable lead means this won't be a quick or easy shift.
This article was created with AI assistance.
