Rare Earth Elements

Beneath the surface of twenty-first-century technology lies a group of obscure metals that most people have never heard of. Neodymium strengthens the magnets in electric vehicle motors. Europium produces the red phosphors in display screens. Lanthanum enables the catalytic cracking of petroleum. These rare earth elements, despite their name, are not particularly rare in the Earth’s crust—but their concentration in economically viable deposits, and especially the capacity to refine them, is extraordinarily limited. This scarcity has transformed these seventeen elements into objects of intense geopolitical competition.

The numbers tell the story of dependence. Global rare earth production reached approximately 300,000 metric tons in 2023, with the market valued at roughly $5.5 billion. This seemingly modest figure belies the materials’ strategic importance: those 300,000 tons enable trillions of dollars in downstream manufacturing, from electric vehicles (a $500+ billion industry) to wind turbines ($100+ billion annually) to smartphones (over 1.4 billion units sold yearly). Without rare earths, the modern economy would grind to a halt.

What Rare Earths Are¶

The rare earth elements comprise the fifteen lanthanides (atomic numbers 57-71) plus scandium and yttrium, which share similar chemical properties. They include familiar names like cerium (the most abundant, comprising about 66 parts per million in the Earth’s crust) and lanthanum alongside more exotic elements such as praseodymium, dysprosium, and gadolinium. Their designation as “rare” dates to the eighteenth century, when they were isolated from unusual mineral formations; they are in fact more abundant than gold or platinum, but rarely occur in concentrations sufficient for economical extraction. Cerium, for instance, is more common than copper or lead—yet economically viable deposits remain limited.

What makes rare earths strategically significant is their irreplaceable role in advanced technologies:

Permanent magnets containing neodymium and dysprosium are essential for wind turbines, electric vehicles, and precision-guided munitions. A single F-35 fighter jet contains approximately 920 pounds (417 kg) of rare earth materials. Each DDG-51 Arleigh Burke-class destroyer requires approximately 5,200 pounds. A Virginia-class submarine contains roughly 9,200 pounds of rare earths. Each offshore wind turbine requires 600-700 kilograms of rare earth magnets for its direct-drive generator; a single electric vehicle motor uses 1-2 kilograms of neodymium-iron-boron magnets. With annual EV sales projected to exceed 40 million vehicles by 2030, the demand implications are staggering.

Electronics and displays depend on europium, terbium, and yttrium for color screens and energy-efficient lighting. Smartphones, televisions, and computer monitors all rely on rare earth phosphors. A typical smartphone contains approximately 0.2 grams of rare earths—seemingly trivial until multiplied by 1.4 billion annual units.

Catalysts and refining use cerium and lanthanum in petroleum cracking, automotive catalytic converters, and glass polishing. Modern fuel production is impossible without them. The global fluid catalytic cracking market, essential for gasoline production, consumes approximately 25,000 tons of rare earth catalysts annually.

Defense applications extend from guidance systems and radar to night-vision equipment and communication satellites. The entire architecture of modern military superiority rests on reliable rare earth supplies. The US Department of Defense estimates its annual rare earth consumption at approximately 5,000 tons—small in absolute terms but critical for systems where alternatives do not exist.

The energy-transition has dramatically increased demand. As economies shift from fossil fuels to renewables and electric transportation, the rare earth intensity of global production rises sharply. The International Energy Agency projects that rare earth demand could increase by a factor of seven by 2040 under scenarios consistent with climate targets. Neodymium and dysprosium demand for clean energy applications alone could grow from approximately 30,000 tons in 2020 to over 200,000 tons by 2040.

China’s Dominance¶

No discussion of rare earth geopolitics can avoid China’s commanding position. Chinese dominance operates at two levels: mining and, more critically, processing.

China currently produces approximately 210,000 metric tons annually—roughly 60-70 percent of the world’s mined rare earths. This share has actually declined from its peak of over 95 percent in 2010, as other nations have developed mining capacity. Myanmar (producing approximately 38,000 tons annually, mostly controlled by Chinese interests), the United States (43,000 tons from Mountain Pass), and Australia (18,000 tons from Mount Weld) have emerged as significant producers. But mining represents only the first stage of a complex supply chain. The more consequential bottleneck lies in processing—the separation, refining, and manufacturing of rare earth oxides, metals, alloys, and magnets.

Here China’s position is even more formidable. Chinese facilities process roughly 85-90 percent of the world’s rare earth oxides and an even higher share of rare earth metals and permanent magnets. MP Materials, the only major US rare earth miner, ships its concentrate to China for processing—a round trip of over 15,000 kilometers—because no American facility can separate the 17 elements economically. The Lynas rare earth facility in Malaysia, built with Japanese investment after the 2010 shock, represents the only significant non-Chinese processing outside of the former Soviet bloc.

This dominance did not emerge by accident. Beginning in the 1980s and accelerating under Deng Xiaoping’s economic reforms, China invested systematically in rare earth extraction and processing. Deng’s famous 1992 observation that “the Middle East has oil; China has rare earths” signaled strategic intent. The Bayan Obo mine in Inner Mongolia, developed under Soviet technical assistance in the 1950s, became the world’s largest rare earth deposit. State subsidies, relaxed environmental enforcement (rare earth processing generates radioactive thorium waste and acidic runoff), and long-term industrial planning built an ecosystem that foreign competitors could not match. When American and European producers faced tightening environmental regulations in the 1990s, they effectively ceded the market to China.

The concentration has strategic implications beyond commercial markets. In 2010, following a maritime dispute with Japan over the Senkaku/Diaoyu Islands, China restricted rare earth exports to Japanese manufacturers. Though Beijing denied any formal embargo, customs delays effectively cut off supplies for weeks. Rare earth prices spiked by 600% or more for some elements. Japanese electronics and automobile firms faced production disruptions; Toyota reportedly idled some production lines. The episode exposed how dependency on Chinese rare earths created vulnerability to political pressure.

More recently, China has restricted exports of gallium and germanium (August 2023), graphite (December 2023), and various rare earth processing technologies in response to American semiconductor export controls. Export licenses for rare earth magnets to American defense contractors have reportedly been denied. The message is clear: weaponized interdependence operates in both directions. If the United States can restrict Chinese access to advanced semiconductors, China can restrict access to the materials those semiconductors require.

Supply Chain Vulnerabilities¶

The rare earth supply chain presents multiple points of failure:

Geographic concentration means that disruptions in a small number of locations—whether from natural disasters, political instability, or deliberate action—can cascade through global manufacturing. The Bayan Obo mine in Inner Mongolia alone accounts for a substantial fraction of world production.

Processing bottlenecks are even more severe than mining constraints. Building separation and refining facilities requires billions of dollars in capital investment, years of construction, specialized expertise, and tolerance for significant environmental impacts. The chemical processes involved generate radioactive thorium and uranium byproducts, acidic wastewater, and air pollution that many jurisdictions refuse to accept.

Single points of failure exist throughout the chain. Certain rare earth magnets essential for defense applications come from a handful of Chinese suppliers. Replacement would require not merely finding new sources but recreating entire industrial ecosystems.

Long lead times characterize new projects. Developing a rare earth mine from discovery to production typically takes seven to fifteen years. Processing facilities require similar timescales. This means that even aggressive diversification efforts today will not yield results for a decade or more.

The vulnerability extends beyond individual companies to national security. A conflict in the Taiwan Strait, for example, would likely disrupt rare earth flows regardless of whether China formally weaponized supplies. Maritime shipping disruptions through the Strait of Malacca or the South China Sea could interrupt deliveries even if Chinese export policy remained unchanged.

Diversification Efforts¶

Recognition of these vulnerabilities has prompted efforts to diversify rare earth supply chains, though progress remains slow relative to the scale of the challenge:

Mining expansion outside China has accelerated. Australia’s Lynas Rare Earths operates the Mount Weld mine and has constructed processing facilities in Malaysia (the only significant separated rare earth oxide production outside China) and, more recently, a heavy rare earth separation facility in Texas under a $120 million Department of Defense contract. The Mountain Pass mine in California, once the world’s largest rare earth operation (producing 70% of global supply in the 1960s-1980s before Chinese competition drove it into bankruptcy in 2015), has resumed production under MP Materials, which went public in 2020 and is investing $700 million to build domestic processing capability. Projects in Canada (Vital Metals’ Nechalacho mine began production in 2021), Greenland (the Kvanefjeld project faces environmental opposition), Brazil (Serra Verde), and various African nations are in development, though few have reached commercial production.

Processing investment has become a priority. The United States has allocated billions of dollars through the Defense Production Act (with $35 million specifically for rare earth processing), the Inflation Reduction Act (which includes production tax credits for critical minerals), and the Bipartisan Infrastructure Law (with $140 million for rare earth demonstration projects) to develop domestic separation and refining capacity. The Department of Energy’s Critical Materials Institute coordinates research into processing technologies and substitutes. The European Union’s Critical Raw Materials Act aims to ensure that at least 10 percent of European rare earth consumption comes from domestic extraction and 40 percent from domestic processing by 2030—targets requiring massive investment in a region with minimal current capacity.

Japan, traumatized by the 2010 disruption, has invested heavily in alternative supplies and processing partnerships. JOGMEC (Japan Organization for Metals and Energy Security) has funded projects in Australia, Kazakhstan, India, and Vietnam. Japanese companies have reduced rare earth content in motors and developed partial substitutes. Japan has also explored deep-sea mining of rare earth-rich mud deposits in its exclusive economic zone—potentially containing centuries of supply at current consumption rates, though extraction technology remains unproven.

Stockpiling provides short-term resilience. The United States maintains rare earth reserves in the National Defense Stockpile, though the exact quantities remain classified; reports suggest holdings are sufficient for only weeks to months of defense production. Japan’s rare earth stockpile reportedly covers 60 days of consumption. China itself maintains a strategic reserve, giving Beijing additional leverage to influence global markets. Stockpiles buffer against temporary disruptions but cannot substitute for diversified production in extended conflicts or permanent supply shifts.

Allied coordination has intensified. The Minerals Security Partnership (MSP), launched in June 2022, brings together the United States, European nations, Japan, South Korea, Australia, Canada, and others to coordinate investment in critical mineral supply chains. The partnership aims to reduce collective dependence on China while avoiding destructive competition among allies for limited non-Chinese supplies. Initial projects have focused on lithium, cobalt, and nickel as well as rare earths.

Progress has been real but limited. China’s processing advantage reflects decades of accumulated investment, expertise, and infrastructure that cannot be replicated quickly. Developing a new mine takes 7-15 years from discovery to production; building separation facilities requires specialized expertise concentrated in China. Moreover, new projects outside China often face environmental opposition (rare earth processing is genuinely polluting), permitting delays (the Mountain Pass facility spent years navigating California regulations), and difficulty attracting capital for facilities that compete against established Chinese operations enjoying implicit state support. China can expand or contract production to manipulate prices, making Western investments risky.

Recycling and Alternatives¶

The long-term response to rare earth vulnerability includes reducing dependence on primary extraction:

Recycling offers theoretical promise but practical challenges. Less than one percent of rare earths are currently recycled. The elements are used in small quantities dispersed across millions of devices; collection and separation are expensive and technically difficult. End-of-life electronics contain valuable rare earths, but recovering them economically requires technologies still in development. Wind turbines and electric vehicle batteries present more concentrated sources, and recycling infrastructure for these applications is expanding.

Substitution research seeks alternatives to rare earth magnets and other critical applications. Some progress has been achieved: ferrite magnets can substitute for rare earth magnets in certain applications, albeit with performance penalties. Toyota has developed electric motors that reduce dysprosium content. Academic researchers are exploring entirely new magnetic materials that might eventually displace rare earth magnets altogether.

Design efficiency can reduce rare earth intensity. Improving motor designs, extending product lifespans, and engineering applications to use smaller quantities of rare earths all contribute to demand management. These approaches are incremental but cumulatively significant.

Urban mining—recovering rare earths from waste streams, mine tailings, and industrial byproducts—represents an emerging opportunity. Coal ash, phosphate mining residues, and electronics waste all contain rare earth concentrations that may become economical as primary prices rise and extraction technologies improve.

None of these approaches will eliminate reliance on primary rare earth production in the foreseeable future. Demand growth from the energy transition will likely outpace gains from recycling and substitution for decades. But a portfolio of approaches can reduce the severity of dependency and limit the leverage that supply concentration provides.

Geopolitical Implications¶

Rare earths illustrate broader patterns in geoeconomic competition and carry lessons applicable across critical mineral supply chains:

Resource geography shapes strategic options. China’s rare earth dominance reflects geological endowments but also industrial policy choices. Other nations possess deposits but not the processing infrastructure to exploit them. The United States has estimated reserves of 2.3 million metric tons; Australia has 4.2 million tons; Brazil has 21 million tons. Yet reserves mean little without the capacity to extract and process them economically. The distribution of critical minerals influences which states can pursue genuine strategic-autonomy and which remain dependent on others.

Technology and resources intertwine. The minerals that enable advanced manufacturing are themselves products of sophisticated industrial processes. Access to rare earths depends not merely on mining rights but on mastering complex metallurgy, chemistry, and engineering. Separating the 17 rare earth elements from one another requires thousands of stages of solvent extraction—a process China has optimized over decades while the rest of the world lost institutional knowledge. Rebuilding this expertise is possible but requires years of investment and experimentation.

Environmental externalities concentrate where regulations permit. Chinese rare earth processing imposes significant environmental costs that other jurisdictions have been unwilling to accept domestically. The town of Baotou, near the Bayan Obo mine, contains a toxic lake of rare earth processing waste covering 10 square kilometers—a “black, gangrenous scar” visible from space, as one reporter described it. Local cancer rates are reportedly elevated; agricultural land has been destroyed. The result is a form of pollution arbitrage that reinforces geographic concentration: Western consumers enjoy the benefits of rare earth-enabled technology while Chinese communities bear the environmental burden.

Time horizons differ between markets and strategy. Private capital seeks returns within years; building resilient supply chains requires patient investment over decades. A rare earth processing facility might take 10 years to develop and 20 years to profit; investors with shorter horizons will not commit. This mismatch helps explain why diversification rhetoric often exceeds actual progress. Government intervention—through subsidies, loan guarantees, offtake agreements, and regulatory streamlining—is likely necessary to overcome the market’s reluctance to challenge Chinese incumbents.

Interdependence is asymmetric. China depends on the world for oil (importing 70%), semiconductors (particularly advanced chips), and agricultural products. The world depends on China for rare earth processing, solar panels (80%+ of global production), and countless manufactured goods. These dependencies create mutual vulnerability but not equal leverage. China’s rare earth dominance in a narrow but critical sector gives Beijing a precise weapon; Western leverage over China operates through broader but less precise instruments like financial sanctions or technology controls.

The rare earth challenge will persist for the foreseeable future. No near-term scenario eliminates Chinese processing dominance; even aggressive diversification will take 10-15 years to alter the fundamental supply picture significantly. Managing this dependency—through stockpiles, diversification, recycling, substitution research, and diplomatic engagement—will remain a central task for policymakers navigating the intersection of technology, resources, and great power competition. The minerals that power the energy-transition and undergird military capability will remain objects of strategic competition for decades to come.

Sources & Further Reading¶

• The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age by David S. Abraham — Accessible introduction to how obscure elements became strategically essential, with field reporting from mines and factories across the globe.

• Rare Earth Frontiers: From Terrestrial Subsoils to Lunar Landscapes by Julie Michelle Klinger — A scholarly examination of how rare earth extraction reshapes landscapes and communities, from Inner Mongolia to speculative lunar mining.

• The War Below: Lithium, Copper, and the Global Battle to Power Our Lives by Ernest Scheyder — Investigative journalism on the critical mineral supply chains underpinning the energy transition, including the geopolitics of rare earth dependencies.

• China’s Quest for Foreign Technology: Beyond Espionage edited by William C. Hannas and Didi Kirsten Tatlow — Examines Chinese strategies for technological acquisition, including control over critical mineral processing as a source of leverage.