Rare earth elements (REEs) are a group of 17 metals, including lanthanides, scandium, and yttrium, that are crucial for modern technology and defense systems. They’re found in products like electric vehicle (EV) motors, wind turbines, and missile guidance systems. Although these elements are relatively abundant in the Earth’s crust, they’re rarely found in concentrations that are economically viable to mine. Extracting and processing them is complex, expensive, and environmentally challenging. This makes REEs strategically important, linking their supply to national security, economic competitiveness, and technological leadership.
The global competition for REEs isn’t just about industrial supply chains; it’s a high-stakes geopolitical and economic contest that influences alliances, trade policies, and military strategies. As countries vie for control over these critical materials, the interplay of power, economics, and innovation shapes the rare earth landscape. This article delves into the geopolitical dynamics, economic implications, and overarching strategies surrounding REEs, offering insights into their role in shaping the global order.
Global Production and Supply Chain Dynamics
In 2024, global REE production reached approximately 390,000 metric tons, a 3.72% increase from the previous year, driven by growing demand for clean energy technologies and advanced electronics. China dominates the market, accounting for about 69% of global production. Other significant producers include the United States, Australia, and Myanmar. However, production is just one part of the story—China’s control over the REE supply chain is nearly complete, with an estimated 85% of global processing capacity and 90% of rare earth magnet manufacturing.
This concentration creates significant vulnerabilities for other nations. REE processing involves multiple stages—mining, separation, refining, and magnet production—each requiring specialized infrastructure and expertise. China’s vertically integrated industry allows it to dictate prices, control exports, and use REEs as a geopolitical tool. For instance, in 2010, China temporarily halted REE exports to Japan amid a territorial dispute, exposing the risks of overreliance on a single supplier. Since then, nations have sought to diversify their supply chains, but progress has been slow due to high capital costs, environmental regulations, and technical barriers.
The supply chain’s fragility is compounded by the uneven distribution of REE deposits. While countries like Greenland, Canada, and Brazil hold significant reserves, their development is hindered by logistical challenges, environmental concerns, and political instability.
Meanwhile, China continues to invest in overseas mining projects, securing stakes in African and Latin American deposits to maintain its dominance.
Geopolitical Maneuvering
The strategic importance of REEs has sparked intense geopolitical competition, with nations deploying diplomatic, economic, and military strategies to secure access. Here’s an analysis of key players and their maneuvers:
United States Reclaims Strategic Autonomy
The United States, once a leader in REE production, now relies heavily on Chinese imports, with over 70% of its rare earth oxides sourced from China between 2020 and 2023 . Recognizing this as a national security risk, the U.S. has launched a multi-pronged strategy to rebuild its domestic industry. The Department of Defense has invested heavily in revitalizing the Mountain Pass mine in California, operated by MP Materials. Additionally, significant grants have been allocated to establish commercial-scale refining capacity in Texas.
In May 2025, the Trump administration announced a rare earth partnership with Ukraine, leveraging the country’s untapped deposits to diversify supply sources. This move aligns with broader U.S. efforts to forge alliances with resource-rich nations, including Canada and Australia, under frameworks like the Quadrilateral Security Dialogue (Quad). The U.S. is also exploring Greenland’s Kvanefjeld deposit, one of the world’s largest undeveloped REE sites, though environmental opposition and Arctic logistics pose challenges.
The U.S. strategy extends beyond mining to include technological innovation. The Department of Energy is funding research into REE recycling and synthetic substitutes, aiming to reduce dependence on primary extraction. However, rebuilding a full-spectrum REE industry will take decades, and the U.S. remains vulnerable to Chinese supply disruptions in the interim.
European Union is Balancing Security and Sustainability
The European Union, a major consumer of REEs for its green energy and automotive sectors, imported 12,900 tonnes of rare earths in 2024, a 29.3% decrease from 2023 . This reduction reflects the EU’s push for self-sufficiency under its Critical Raw Materials Act, which aims to limit imports from any single country to 65% of demand by 2030. The EU is investing in domestic projects, such as Sweden’s Norra Kärr deposit, and fostering partnerships with Canada and Australia.
Geopolitically, the EU faces a delicate balancing act. It seeks to reduce reliance on China while maintaining stable trade relations, given China’s role as a major supplier of other critical materials like lithium and cobalt. The EU’s emphasis on sustainability adds complexity, as REE mining often involves significant environmental degradation. To address this, the EU is prioritizing recycling initiatives and circular economy models, with companies like Solvay developing advanced separation technologies.
The EU’s strategy also involves deepening ties with the Global South. For instance, it has signed critical mineral agreements with African nations like Namibia and the Democratic Republic of Congo, aiming to secure ethical and sustainable supply chains. However, these partnerships must navigate local political instability and competition from Chinese state-backed firms.
China is the Rare Earth Superpower
China’s dominance in REEs is a cornerstone of its geopolitical strategy. By controlling the supply chain, China can influence global markets, deter adversaries, and advance its Belt and Road Initiative (BRI). Chinese firms have secured mining rights in Africa, Southeast Asia, and Latin America, ensuring long-term resource access. Domestically, China is consolidating its REE industry under state-owned enterprises, enhancing efficiency and strategic coherence.
China has not hesitated to use its REE monopoly as leverage. In 2023, it imposed export restrictions on gallium and germanium, citing national security, a move widely seen as a response to U.S. semiconductor sanctions. Similar restrictions on REEs could disrupt global supply chains, particularly for defense and clean energy sectors. However, China’s dominance is not without risks. Overproduction has led to environmental degradation, and declining ore grades in its Bayan Obo mine may strain output in the coming decades.
Australia is Emerging as a Strategic Partner
Australia is positioning itself as a reliable alternative to Chinese REEs, leveraging its significant deposits and stable political environment. In 2024, Lynas Rare Earths, Australia’s flagship REE company, produced 17,000 tonnes of rare earth oxides, primarily from its Mount Weld mine. The Australian government has committed substantial funds to create a national critical minerals reserve, aiming to support domestic manufacturing and supply allies like Japan, South Korea, and the United States.
Australia’s strategy emphasizes collaboration with like-minded nations. It is a key member of the Minerals Security Partnership, a U.S.-led initiative to diversify critical mineral supply chains. However, Australia faces challenges, including high labor costs and environmental regulations that slow project development. Its reliance on Chinese processing facilities for some REE products also underscores the need for greater downstream investment.
Greenland and the Arctic become the New Frontier
Greenland’s vast REE reserves, estimated at over 1.5 million tonnes, have drawn global attention as a potential game-changer. The Kvanefjeld and Kringlerne deposits could supply a significant portion of global demand, reducing dependence on China. The U.S. has engaged Greenland through diplomatic and economic channels, with former President Trump famously proposing to “buy” the island in 2019—a notion rooted in its strategic mineral wealth.
However, Greenland’s Arctic environment poses formidable challenges. Mining operations face harsh weather, limited infrastructure, and opposition from indigenous communities concerned about ecological damage. Geopolitically, Greenland is a flashpoint, with China also seeking influence through investments in mining and infrastructure. The island’s future could reshape the global REE balance, but development remains speculative.
Other Players: Canada, India, and the Global South
Canada is emerging as a critical player, with deposits in Saskatchewan and Quebec. The Canadian government is streamlining regulations and offering tax incentives to accelerate REE projects, with companies like Wyloo and Neo Performance Materials expanding operations. India, meanwhile, is investing in domestic processing to reduce reliance on Chinese imports, though its industry remains nascent.
In the Global South, countries like Brazil, South Africa, and Vietnam hold significant REE potential but face barriers such as political instability and inadequate infrastructure. Chinese firms have capitalized on these regions, offering financing in exchange for resource access, often under BRI frameworks. This dynamic raises concerns about neo-colonial exploitation and debt-trap diplomacy.
Geoeconomic Implications: Markets, Prices, and Power
The geoeconomics of REEs is shaped by supply-demand dynamics, price volatility, and their role in global trade. In 2024, the market for rare earth magnets, particularly neodymium-iron-boron (NdFeB) magnets, grew by 8%, driven by EV production and wind turbine installations. China exported 58,152 tonnes of permanent magnets, a 10% increase from 2023, reinforcing its grip on downstream markets.
However, demand growth is expected to moderate, with analysts forecasting a 5% increase in 2025, down from earlier projections of 9%. This slowdown is attributed to China’s economic challenges, fluctuating REE prices, and shifts in EV technology, such as the adoption of magnet-free motors by some manufacturers. Price volatility remains a critical issue. For example, dysprosium, essential for high-performance magnets, could reach $1,100/kg by 2034, a 340% increase from 2024 levels, due to supply constraints and rising demand.
REEs also influence global trade patterns. The U.S.-China trade war has accelerated efforts to decouple REE supply chains, with tariffs and export controls reshaping markets. Meanwhile, the EU’s carbon border adjustment mechanism could penalize high-emission REE imports, favoring sustainable producers but raising costs for consumers.
Economically, REEs are a double-edged sword. For producing nations, they offer revenue and leverage, but overreliance can lead to “resource curse” dynamics, as seen in some African nations. For consuming nations, securing stable supplies is essential to maintaining industrial competitiveness, particularly in high-tech and green energy sectors.
Continuing from the previous analysis, let’s delve deeper into the evolving landscape of rare earth elements (REEs), focusing on recent developments, challenges, and strategic shifts shaping the global dynamics of these critical materials.
Recent Developments and Strategic Shifts
United States is Strengthening Domestic Capabilities
In 2024, the U.S. made significant strides in bolstering its domestic rare earth production. MP Materials achieved record-breaking output at its Mountain Pass facility, delivering over 45,000 metric tons of rare earth oxides, marking an all-time high for U.S. primary production. Additionally, the company produced approximately 1,300 metric tons of neodymium-praseodymium (NdPr) oxide, essential for manufacturing high-strength magnets used in electric vehicles and defense applications.
Despite these advancements, financial challenges persist. MP Materials reported a net loss of $22.6 million in the first quarter of 2025, attributed to rising production and interest costs, as well as underutilized refining facilities . To mitigate supply chain vulnerabilities, the U.S. government is considering establishing a strategic reserve of critical rare earth minerals, aiming to secure supplies essential for advanced technologies.
European Union is Diversification and Sustainability Efforts
The European Union (EU) continues its efforts to reduce dependency on Chinese rare earth imports. In 2024, the EU imported 12,900 tonnes of rare earth elements, marking a 29.3% decrease compared to the previous year . China remained the largest supplier, accounting for 46.3% of the total imports.
To enhance supply chain resilience, the EU is investing in domestic projects and fostering partnerships with countries like Canada and Australia. These initiatives aim to develop sustainable and ethical supply chains, aligning with the EU’s emphasis on environmental responsibility and reducing reliance on single-source suppliers.
Australia is Capitalizing on Resource Potential
Australia is positioning itself as a key player in the global rare earth market. The country currently accounts for approximately 5% of the world’s total rare earth production . Companies like Wyloo are expanding their investments in rare earth projects, such as securing a 60% stake in Hastings Technology Metals’ Yangibana project and a 19.9% stake in Neo Performance Materials, a supplier of permanent magnets for electric vehicles and defense.
However, Australia’s rare earth sector faces challenges, including environmental concerns and opposition from local communities, particularly in regions like South Australia’s southeast . Balancing resource development with environmental and social considerations remains a critical aspect of Australia’s strategy.
China: Maintaining Dominance Amidst Global Shifts
China continues to dominate the rare earth industry, controlling approximately 69% of global rare earth production and about 85% of the global processing capacity. In 2024, China’s rare earth mining output quotas reached a new high of 270,000 tons.
In response to geopolitical tensions, China has implemented export restrictions on critical minerals, including rare earth elements, gallium, and germanium, citing national security concerns . These measures have significant implications for global supply chains, particularly for countries heavily reliant on Chinese exports.
Conclusion
The global rare earth elements landscape is characterized by strategic maneuvers, supply chain realignments, and geopolitical considerations. While efforts by the U.S., EU, and Australia to diversify sources and build domestic capacities are gaining momentum, China’s entrenched position in the market presents ongoing challenges.
Achieving a balanced and secure rare earth supply chain will require sustained investments, international collaboration, and a commitment to environmental and ethical standards. As technological advancements and clean energy initiatives continue to drive demand, the strategic importance of rare earth elements will remain a focal point in global economic and security discussions.
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Geopolits Research Desk
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