“Whoever Controls Rare Earths Controls the Future”
“Whoever controls rare earths controls the future,” a Chinese policy advisor told a Western diplomat in 2019. The statement, shrugged off at the time, now reads like prophecy.
In July 2023, China restricted exports of gallium and germanium, two lesser-known but essential metals used in semiconductors and satellite systems. The message was unmistakable. This wasn’t a trade tweak. It was a shot across the bow.
In a world scrambling to secure electric vehicle components, wind turbines, missile systems, and advanced electronics, rare earths have become geopolitical currency. And for now, China holds the bank.
I. Rare Earths: The Unseen Bedrock of Global Industry
Rare earth elements (REEs) a family of 17 metals including neodymium, dysprosium, and terbium—are crucial to almost every frontier industry:
- Neodymium magnets power electric motors in EVs and drones.
- Europium and yttrium are used in lasers and medical imaging.
- Samarium is integral to precision missile guidance systems.
Yet, despite being relatively abundant in Earth’s crust, over 80% of REEs are processed in China (Mancheri et al., 2022). This is not an accident. It is the result of a multi-decade strategy: dominate not just the mining, but the value-added refining, magnet-making, and export controls that form the true bottlenecks.
The U.S. was once a leader. In the 1980s, California’s Mountain Pass mine supplied much of the world. But environmental costs, cheaper Chinese labor, and policy neglect led to an industrial exodus. Today, the West finds itself dangerously exposed.
II. 2023: When the Minerals Struck Back
2.1 Strategic Choke Points
In mid-2023, citing national security concerns, Beijing imposed licensing restrictions on exports of gallium and germanium, metals used in radar, solar panels, and advanced chipmaking (Kuo & Lee, 2023). Overnight, prices spiked. German auto suppliers and U.S. defense contractors were left scrambling.
While the measures were portrayed as defensive, they were retaliatory—China’s answer to U.S. and EU export bans on high-end semiconductors. In effect, China said: You block chips. We block what you need to build them.
The world took notice.
2.2 A Fragile Supply Chain Fractures
Across sectors, the effects were swift:
- Semiconductors: Germanium is essential in photonic chips and military optics.
- EV Manufacturing: Gallium nitride semiconductors are more efficient in electric drivetrains.
- Defense: U.S. missile and drone systems rely heavily on REEs for precision components.
These are not theoretical disruptions. These are industrial dominoes and China, for now, stands poised to tip them.
III. Global Response: Mining, Recycling, and Alliance-Building
3.1 Digging In: Domestic Mining Resurgence
The United States has begun investing in domestic extraction under the Inflation Reduction Act, with grants flowing to sites in California, Wyoming, and Texas. Australia is ramping up output via Lynas Rare Earths, and Canada is exploring deposits in Ontario and the Yukon.
Japan, ever pragmatic, has intensified exploration in Vietnam and Kazakhstan to diversify its input streams.
Africa, meanwhile, offers a high-risk, high-reward frontier. Burundi, Madagascar, and South Africa possess untapped deposits. But concerns around governance, environmental standards, and Chinese investment complicate Western partnerships.
“Multiple countries are reviving rare earth mining to reduce dependence on Chinese monopolies,” write Jowitt et al. (2022).
Yet building a full supply chain, from mine to magnet, takes years. The refining stage remains especially vulnerable.
3.2 Urban Mining and Circular Solutions
In the EU and Japan, attention has turned to recycling or what Tokyo calls urban mining. By extracting rare earths from discarded electronics and batteries, countries aim to close the loop.
The potential is vast: billions of smartphones, old wind turbines, and EV batteries contain significant mineral value. But the infrastructure to harvest it remains limited.
Still, over time, recycling could reduce global dependence by 15–20%, a meaningful buffer if the trade war escalates (Jowitt et al., 2022).
3.3 Strategic Alliances and Resource Diplomacy
2023 also saw the deepening of resource alliances:
- The Minerals Security Partnership (MSP) now includes 14 nations working on shared sourcing and transparency.
- The U.S.-EU Critical Minerals Agreement (CMA) created a shared framework for sustainable mining and trade incentives.
- The Quad nations (U.S., Japan, India, Australia) are coordinating rare earth logistics as part of Indo-Pacific stability efforts.
“These alliances are not just economic—they’re geostrategic,” said a U.S. State Department official in late 2023. “They’re about securing the future.”
IV. If the Trade War Drags On: Three Scenarios
What happens if this standoff doesn’t resolve in a year, but defines the next decade?
Scenario 1: Two Worlds, Two Supply Chains
A prolonged rare earth trade war could accelerate the bifurcation of global technology:
- China-led ecosystem: Leveraging control over REEs to maintain supply dominance across Belt & Road partners.
- U.S.-EU-Quad ecosystem: Relying on alternative sources, circular economy, and strategic reserves.
This “tech decoupling” could mirror the Cold War’s economic split, but at nanometer scales and elemental levels.
Industries would bear higher costs. Innovation might slow. But strategic autonomy would grow.
Scenario 2: Permanent Price Instability
If restrictions and retaliations persist, rare earth markets will remain volatile. Manufacturers will face longer lead times, speculative spikes, and black-market activity.
This could force governments to intervene, nationalizing rare earth facilities, offering subsidies, or even engaging in direct stockpiling akin to oil reserves.
Global inflationary pressures could increase, particularly in tech-heavy sectors like renewable energy and defense.
Scenario 3: Climate Transition in Crisis
The clean energy shift hinges on rare earths:
- Wind turbines use neodymium magnets.
- EV motors need dysprosium and terbium.
- Solar panels rely on gallium.
A prolonged conflict could delay climate targets, drive up costs for renewables, and ironically increase reliance on fossil fuels, at least temporarily.
The energy transition, once thought inevitable, would become contingent not just on science, but on supply chains and diplomacy.
V. What Comes Next: Beyond Extraction
The world is learning an old lesson in a new language: control of materials equals control of markets. Rare earths are not just a mining challenge. They are a mirror for the broader tensions shaping this century.
China’s strategy is clear. It has built a mineral empire with patience and foresight. Now it is leveraging that empire to counter economic containment and shift power away from traditional Western institutions.
The West’s response is taking shape—but slowly. There are encouraging signs: smarter trade policy, sustainable mining, and real innovation in recycling. But the scale must grow. The coordination must tighten. The investment must endure beyond news cycles and election years.
As Gracelin Baskaran of CSIS noted, “We’re in a race—but we didn’t hear the starting gun.”
The Deep Logic of Dirt
The story of rare earths is not about scarcity—it’s about systems. Who extracts them? Who processes them? Who controls the chokepoints?
As the geopolitical ground shifts, so too must our assumptions. What looks like a minor metal may shape major moments. What feels like a trade skirmish may morph into a long war of attrition over the building blocks of modern life.
The West must think differently—not just in terms of supply chains, but in terms of sovereignty, strategy, and resilience.
In the struggle to secure the minerals beneath our feet, the stakes are not just industrial—they are existential.
References (APA 7th Edition)
Brattberg, E., & Goldgeier, J. (2024). The future of NATO in an age of strategic uncertainty. Carnegie Endowment for International Peace. https://carnegieendowment.org/2024/01/18/future-of-nato-in-age-of-strategic-uncertainty-pub-91123
Jowitt, S. M., Mudd, G. M., & Werner, T. T. (2022). Recycling, substitution and circular economy: Critical pathways for critical minerals. Resources Policy, 77, 102627. https://doi.org/10.1016/j.resourpol.2022.102627
Kuo, L., & Lee, A. (2023, July 4). China curbs exports of two metals critical for chipmaking. The Washington Post. https://www.washingtonpost.com/technology/2023/07/04/china-gallium-germanium-export-restrictions/
Mancheri, N. A., Sprecher, B., Bailey, G., Ge, J., & Tukker, A. (2022). Effect of Chinese policies on rare earth supply chain resilience. Resources, Conservation and Recycling, 180, 106195. https://doi.org/10.1016/j.resconrec.2022.106195
Tagliapietra, S. (2023). Energy geopolitics and the EU’s response to Russia. Bruegel. https://www.bruegel.org/policy-brief/energy-geopolitics-and-eus-response-russia
U.S. Department of State. (2023). The Minerals Security Partnership: Strengthening global critical mineral supply chains. https://www.state.gov/minerals-security-partnership/
