The Geopolitics of Rare Earth Metals: Shaping Global Alliances and Conflicts

Graphic by Minsu Kim

Rare earth metals, a group of 17 elements, are essential for modern technology: powering everything from smartphones and electric vehicles to wind turbines and advanced military equipment. Despite their name, these metals are not particularly rare; however, they are found in dispersed concentrations, making their extraction and processing both challenging and costly. As a result, they have become a strategic resource, shaping global alliances and conflicts as countries scramble to secure stable supplies while minimizing dependence on foreign sources.

The significance of rare earth metals is from their diverse applications. Electric vehicles rely on them for batteries and high-performance motors while wind turbines use them in powerful magnets that enhance electricity generation. Everyday electronics, including smartphones, laptops, and other digital devices, depend on these metals for screens, speakers, and circuit boards. Furthermore, military technologies, from jet engines and radar systems to satellites and missile guidance systems, are heavily reliant on rare earth materials.

With the global shift toward renewable energy and electric transportation, demand for rare earth metals is projected to surge. The International Energy Agency (IEA) estimates that this demand could rise by as much as 700 percent by 2040, driven by the rapid adoption of electric vehicles and renewable energy infrastructure. Consequently, ensuring a stable and sustainable supply of these metals has become a top priority for governments and industries worldwide.

China has long dominated the rare earth metals market, a position it has maintained through strategic investments in mining and refining. In 2022, the country accounted for approximately 70 percent of global rare earth production and processed over 85 percent of the world's supply. This dominance is not accidental; through decades of state-backed investment, China has built a formidable rare earth industry that gives it significant leverage in global trade. In 2010, for example, China restricted exports of these metals, triggering a sharp spike in prices. While the official explanation cited environmental concerns, many analysts viewed the move as a strategic maneuver in ongoing trade disputes.

This concentration of supply has raised alarm bells in nations heavily reliant on Chinese exports, particularly the United States, Japan, and European Union member states. In 2021, the U.S. imported nearly 78 percent of its rare earth metals from China, a dependence that poses serious risks. If geopolitical tensions escalate, China could impose export restrictions, disrupting supply chains and hampering industries that rely on these critical materials. The U.S. defense sector, which incorporates rare earth metals into advanced weaponry and military infrastructure, is particularly vulnerable to such disruptions.

In response, several countries are working to diversify their supply chains and boost domestic production. The United States has reopened rare earth mines and is investing in new processing facilities to reduce reliance on imports. Australia, which currently produces about 15 percent of the world's rare earth metals, has also expanded its role, forging partnerships to increase output and build a more resilient supply chain. The European Union has taken a strategic approach by promoting mining and recycling initiatives within its borders, while Japan has partnered with Lynas Rare Earths, an Australian company that operates one of the few major rare earth mining and processing facilities outside China.

Despite this, breaking free from China's dominance remains a formidable challenge. Mining and processing rare earth metals is an expensive and environmentally taxing process. Extracting these elements requires extensive energy inputs and generates large quantities of toxic waste, which many countries struggle to manage. Moreover, establishing a fully operational rare earth mine can take over a decade even with significant investments.

Environmental controversy further complicates rare earth metal production. Mining operations can lead to severe soil and water contamination, damaging ecosystems and threatening local communities. China, which has faced significant criticism for the environmental impact of its rare earth industry, has introduced stricter regulations to mitigate harm. Other nations expanding their mining operations face similar challenges, prompting a growing push for sustainable solutions. Researchers are increasingly exploring ways to recycle rare earth metals from discarded electronics and industrial waste, a practice that could help reduce the need for new mining operations while addressing supply shortages.

Given the geopolitical and environmental stakes, international cooperation is extremely crucial for ensuring a stable and sustainable supply of rare earth metals. Countries are forming alliances to share resources, technology, and supply chains. The Quad—comprising the U.S., Japan, Australia, and India—has discussed strategies to enhance rare earth production and trade.

Ultimately, these initiatives go beyond reducing dependence on China. Through strategic investments, partnerships, and sustainable practices, the global community has an opportunity to build a better supply chain for these indispensable materials.