The minerals known as rare earths are vital inputs in the production of smart electronic devices, smartphones, microchips, wind turbines, electric cars and military equipment, among others. Its demand has skyrocketed in recent years and is projected to develop even further worldwide.

Although the Chinese communist regime’s world production of these essential minerals has been almost exclusive for decades, it is now declining considerably as other countries are starting to step in. Thus, after producing 86% worldwide in 2014, production dropped to 58.3% in 2020, thus losing over 20% of market share in 7 years, which has meant a hard blow, according to last year’s United States Geological Survey (USGS) report. 

This decline occurred despite the fact that over the past three decades China has invested heavily in facilities to develop most of the world’s rare earth mining and do processing work.

In a bid to maintain leadership in this field, the merger of three specialized Chinese state-owned mining companies into one was announced on Dec. 23, according to Asia Nikkei. This allows the CCP regime to control almost 70% of the country’s key metals production.

For analysts, the importance of countering the Chinese regime’s global dominance in rare earths production is pressing, given the geopolitical implications. This is the view of author Liam Gibson, who writes: “Breaking China’s grip on rare earths should be a mission of AUKUS”. AUKUS, a strategic military alliance between the United States, United Kingdom and Australia announced in September, with focus on the Indo-Pacific region.

He added: “The economics of rare earths means that commercial companies will always be beaten on price by state-backed companies who exist not so much for profit as for the geopolitical gain of monopolizing such a strategic asset,” as he mentioned in one of his articles in last month’s Nikkei Asia media. 

Likewise, TechMet President and CEO Brian Menell said, “To remain a leader in the energy and automotive areas, the U.S. must secure adequate supplies of the metals necessary to power the 21st Century’s industrial revolution.” 

He also stated, “The United States cannot afford to be a bystander in the most significant transformation of the global industrial and technological landscape since the invention of the steam engine,” quoted by author Duggan Flanakin in May. 

In this context, author Kristin Vekasi of the University of Maine, said: “Rare earths are one of the choke points in the global supply chain for high-tech goods, making them a point of vulnerability for supply chains in the United States, Japan and elsewhere.”

Now, countries such as the United States, Australia and Myanmar (Burma), among others, have increased production of these scarce minerals at a much faster rate than processing has grown in China, reaching about 40% of total world supply, according to Statista. 

The main objective is to limit the dependence on the Chinese government for obtaining and processing these strategic materials, necessary for technology-based industries.

So, a 36% growth in the U.S. production of rare earths in 2020, highlights the effort of this country to obtain 38,000 tons while in 2019 it extracted 28,000. As part of this strategy, it is also installing a processing plant, which would avoid sending its rare earths production to Chinese territory where they were previously processed in their entirety.

This processing plant is located in Hondo, Texas, about 72 km west of San Antonio, and is funded with US$30.4 million by the U.S. Department of Defense in a joint venture with Australian rare earths company Lynas Rare Earths Ltd. This facility, initially announced in 2019 with private investors and still under development, could be a step toward an effective risk management strategy.

Lynas CEO Amanda Lacaze said the plant “will ensure the U.S. has a secure domestic source of high quality separated light rare earth materials.” Last year, this company and the Texan Blue Line Corp, received financing for the production of the so-called heavy rare earths, used in armaments. Lynas’ goal is to process a volume of rare earths equivalent to 25% of world demand when the facilities are operational.

On the other hand, China imported 35,500 tons of rare earths from Myanmar in 2020, according to The Irrawaddy media on April 26, 2021, which cites official data provided by Chinese mouthpiece Global Times.

Given that the USGS report for 2020 only reports 30,000 tons, uncertainty surfaces regarding how much of these scarce minerals are illegally mined. According to Myanmar environmentalists, since the military government takeover, irregular mining has skyrocketed, with as many as “100 rare earth mines in Pangwa and Chipwe townships controlled by the militia and Chinese investors” being counted.

During the same report, in Myanmar, the increase of rare earth production was 20%, being largely surpassed by Madagascar, which doubled its production. These rates contrast significantly the increase of extraction in China, which only reached 6%, revealing that, while the rest of the countries shot up their production, the latter lagged even further behind, resulting in a more balanced market behavior for all the countries. 

The tipping point that alerted countries to the importance of increasing their production of rare earths was given by the risk that the Chinese regime may unexpectedly block the development of countries that do not bow to its demands. As was the case in 2010, when the Chinese Communist Party (CCP), according to claims, denied Japan exports of rare earths vital to its industrial production, forcing it to release the captain of a Chinese ship, Zhan Qixiong, and his crew, who collided with two Japanese Coast Guard vessels on Sept. 7, accused of doing so deliberately to avoid an inspection.

This incident prompted Japanese private companies and the Japanese state to initiate assertive diversification strategies to alleviate the choke point in the critical mineral supply chain.

Negative environmental effects

For the extraction of rare earths, the Chinese regime adopted a strategy of low environmental standards, which together with low wages for labor led to meager international prices, making it the largest producer of rare earths. However, in the long run, the environmental costs have proven to be exorbitant. 

One of the detrimental effects that hampers the extraction of rare earths is the complexity of the chemical processes used and the high costs of cleaning up the environmental pollution caused by the resulting toxic wastewater. The traditional method of extracting these metals involves injecting ammonium sulfate and ammonium chloride into the ground to help separate the ore. 

In an attempt to lessen the damage, the Chinese regime began shutting down illegal miners in 2010, when the environmental impact caused by rare earth mining had already affected such large tracts of land in Jiangxi province that they were visible from space. 

However, “thousands of rivers in China have disappeared, while industrialization and pollution have spoiled much of the remaining water. 80% to 90% of China’s groundwater and half of its river water is too dirty to drink; more than half of its groundwater and one-quarter of its river water is unusable even for industry or farming, according to some estimates,” Bloomberg described on Dec. 29. 

Additionally, pollution resulting from rare earth mining has created soil incapable of supporting crops. In addition to the fact that the ravages left on the large exploited areas can take 50 to 100 years to recover, pollution from existing mines threatens not only the areas in which they are located, but the major cities downstream, such as Ganzhou in southern Jiangxi province, with a population of more than 8 million people.

This dire situation has been recognized by the CCP at least since 2008, when China’s State Council warned that China’s water resources would be basically depleted by 2030. “Taking into full account water-saving, by 2030 our country’s water use will reach or approach the total volume of exploitable water resources, and the drought-fighting situation will be increasingly serious,” stated the directive issued by that body, according to Reuters. 

Characteristics of rare earths

The rare earth group consists of 17 chemical elements that are used in a wide variety of applications and its demand has grown disproportionately in recent times. They range in appearance from iron gray to silvery lustrous metals. They also tend to be soft, malleable and ductile and generally reactive, especially at elevated temperatures or when finely divided. Although there are substitutes, these are much less effective. 

“Rare earths are relatively abundant in the Earth’s crust, but minable concentrations are less common than for most other mineral commodities. In North America, measured and indicated resources of rare earths were estimated to include 2.7 million tons in the United States and more than 15 million tons in Canada,” states the USGS. Global reserves are estimated at 120 million tons. 

They also tend to be dispersed and mixed with other elements, which makes their extraction and separation costly, difficult and involves great environmental risks. They are found in proportions ranging from 60 parts per million to around 0.5 parts per million. Elements classified in this group include minerals such as bastnasite, monazite and loparite, as well as scandium, yttrium and lanthanides, as designated by the United States Geological Survey (USGS).

To get an idea of the specific applications of some of them, we find that neodymium is used in lasers and electric car motors. Lanthanum is used in telescope and camera lenses, praseodymium is used in aircraft engines and scandium is used in aerospace components. Dysprosium is used in nuclear reactors. 

Dysprosium can be easily cut with a knife, it is a source of energy between magnets and makes electric car motors considerably lighter. The U.S. Department of Energy listed it as the most critical element among rare earths, warning that bottlenecks could negatively affect the clean energy industry.


Although the Chinese regime remains the world’s largest producer, the scenario that could arise from an eventual suspension of its exports tends to be minimized and, apparently, no longer looks so bleak, given the large increase in the supply of rare earths by other countries. In fact, the CCP’s monopoly has collapsed. 

Moreover, according to authors Michael Beckley and Hal Brands: “China has been experiencing, for years, a pronounced economic slowdown. It confronts looming political, social, and demographic challenges.”

They add: “Not least, the Communist Party has now triggered a strategic backlash from not just America but also democratic societies around the world. Beijing is a revisionist power whose strategic window has begun to open—but may not remain open for long.”

Nevertheless, the challenge persists given that, as The Wall Street Journal describes it, “the Chinese government helped establish five well-funded national rare earth laboratories by 2021, China holds more patents for rare technologies than the US and the rest of the world combined.”

In addition, “by 2020 China controlled 54% of global rare earth mining capacity and 85% of rare earth refining capacity,  it’s the only country that has a full industrial chain of rare earth and has virtually dominated certain segments of this chain. More than 80%of the U.S. and 95% of the E.U.’s rare earth are imported from China.”    

However, the international market has behaved exceptionally well as demand has outstripped supply. This circumstance could be the reason why the Chinese Ministry of Industry and Information Technology convened delegates from the materials and manufacturing industry on Jan. 26.

No details were given about the meeting, but Bloomberg’s unnamed sources indicated that the aim was to find out what is going on in an attempt to keep rare earth prices under control after they shot up unusually. Prices, according to a composite index compiled by the China Rare Earth Industry Association, have risen 88% in the past year.

In this context, Bloomberg reported, “A power shortage exacerbated disruptions and a broad commodity rally has increased production costs. Soaring rare-earth prices are boosting costs at manufacturers including automakers as the country grapples with the fastest inflation in over two decades.”

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