Geopolitics of Rare Earths
September 8, 2025
Rare earth elements are a group of 17 soft metals with unique chemical, magnetic, and optical properties.
These elements are essential components in electronics, lasers, glass and permanent magnets.
In particular, rare earths are needed for the production of most military equipment and consumer electronics: from phones and electric vehicles to missile engines and wind turbines.
Despite their name, rare earths are not actually rare.
However, they are rarely found inconcentrations suitable for mining.
In addition, their separation from ore (rock) is complex and costly.
The supply is concentrated:
China accounts for 60% of mine production and close to 90% of refining capacity of rare earths globally.
Mining: the extraction of ore (rock) that contains rare earth elements.
Refining (or separation): the chemical process that isolates the individual elements and makes them suitable for industrial use.
Mining capacity does not equal usable supply.
A country may mine rare earths ore, but if it lacks refining infrastructure, the material must be exported for processing.
For example, Brazil has the world’s third-largest reserves of rare earths (21M tonnes) but produces almost none.
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Why rare earths matter
What makes rare earth elements important is their unique properties.
They are required for the production of high-performance permanent magnets:
These magnets are critical to electric vehicle motors, wind turbines and high-tech militaryequipment such as radars and precision-guided missiles.
Rare earth elements are also used as catalysts (a substance that speeds up chemical reactions) for processes such as oil refining.
They are also used in specialty glasses, robots and consumer electronics.
Market size
The rare earths market is smaller in value compared to some other critical materials.
In 2024, it was worth about $3.95 billion.
For comparison, the lithium market size was $22 billion in 2023.
Demand is increasing, driven especially by electric vehicles and renewable energy.
Predictions suggest the market value could reach $8 billion by 2032.
Rare earths vs Critical minerals
Rare earth elements are part of the wider group of critical materials: those modern economies cannot run without and the supply of which is at risk.
This group also includes lithium, cobalt, nickel, gallium and other elements.
Why are rare earths separate?
Lithium, cobalt, and nickel are needed for energy storage (batteries), while gallium is used in semiconductors.
Rare earths are valued for their unique optical, magnetic, catalytic and other properties.
Moreover, unlike battery minerals, where existing innovations could reduce demand for cobalt or nickel, magnet rare earths have no near-future substitutes.
This makes their supply concentration a greater geopolitical concern.
Rare earthshave a more direct application in the defence sector: essential for missile guidance, stealth technologies, jet engines and radars.
Neodymium and praseodymium are used in guidance and control systems for missiles, drones and jets.
Dysprosium is added to magnets to ensure thermal stability, making it critical for fighter jet engines and systems exposed to high heat.
Lanthanum and europium are essential in lasers, night-vision devices and targeting systems
For example, a single F-35 fighter jet requires 400 kg of rare earth elements to produce.
A Virginia-class submarine requires around 417 kg for its sonar, propulsion and weapon control systems.
Cruise missiles, drones and air defence radars are also particularly reliant on rare earths.
Given the strategic importance of rare earths, countries want to set up safe supply chains.
China
China has a near-monopoly on rare earths, controlling almost 90% of refining.
Since the 1980s, China has identified rare earths as a strategic resource, supporting the sector.
How China built its monopoly:
Nationalisation (state ownership) of mining, processing and export processes
Setting production limits (quotas) to keep prices high
Lenient (weak) environmental regulations
In 2024, China formally declared all rare earths to be state property.
This reflects China’s broader strategy of treating rare earths and critical minerals as national security assets.
In 2010, China suspended rare earth exports to Japanafter a maritime dispute.
This disrupted Japan’s high-tech industries and showed how China could use its control over rare earths as a geopolitical tool.
In 2024:
The US imported 77% of rare earths from China
The EU imported 46% of rare earths from China
In April 2025, China imposed export restrictions on seven rare earth elements in response to new US tariffs.
The restrictions targeted elements vital for defence technology.
In May 2025, China and the US signed a temporary deal to lower the tariffs and resume the flow of rare earths.
United States
For much of the 20th century, the United States was the main producer of rare earths.
The Mountain Pass mine in California was the world’s main source.
By the late 1980s that dominance ended as tighter environmental rules, higher costs, and the absence of subsidies made US production less competitive.
In 2024, the United States produced about 45,000 tonnes of rare earths (all from Mountain Pass, the only active rare earths mine in the country).
However, around 80% of US demandis met by imports, coming mainly from China.
Most finished magnets still arrive as components in manufactured goods from Asia.
Today, rare earths are listed as critical minerals and a national security priority in the US.
The US is pursuing a state-backed strategy to build a reliable supply chain.
In July 2025, the Department of Defence invested$400 millionin the Mountain Pass mine, making the Pentagon its largest shareholder.
Allied partnerships:
Australia: cooperation with the company Lynas, the second largest and the only non-Chinese large-scale producer.
Canada: cooperation on processing projects and exploration of rare earths deposits (reserves).
Minerals Security Partnership: 14 countries and the EU; goal: to secure stable and safe supply chains for critical minerals.
Ukraine mineral agreement
In April 2025, the United States and Ukraine signed a minerals agreement:
The deal creates a joint investmentfund for the reconstruction of Ukraine, which will be partly financed by Ukraine through the revenues from future mineral extractions.
Also, it gives the US preferential mining rights in Ukraine and allows it to supply military and financial aid to Ukraine which would count as contributions to the fund.
However, almost half of Ukraine’s rare earths reserves are located in the regions occupied by Russia.
Europe
Europe is almost 100%dependent on China for its supply of rare earths.
Currently, there are no rare earth mines in Europe.
The EU treats rare earth elements as part of its strategic autonomy agenda.
In 2023, the EU set new targets for 2030:
10% of demand met with mining in Europe
40% of processing to take place in the EU
Rare earths and the environment
Rare earths are important for the ongoing greentransition (to cleaner energy sources).
Permanent magnets are used for the motors of electricvehicles and the generators of wind turbines.
However, rare earth elements come with heavy environmental costs.
Main risks include:
Chemical waste
Soil contamination
Leakage of radioactive byproducts
China’s dominance in the industry is partly explained by its willingness to accept these environmental risks.
Case study: illegal mining in Myanmar
Following the 2021 military coup, Myanmar’s rare earth exports to Chinaincreased by 194%.
Much of the mining is illegal and done by military-backed companies.
Between 2021 and 2024, the country shipped $3.6 billion worth of rare earth minerals, placing Myanmar as China’s main supplier.
With the civil war in Myanmar ongoing, the country is unable and unwilling to stop the rare earths mining or introduce environmental regulations.
In 2015, China tightened some of its laws on ecological protection, which further incentivised outsourcing of mining away from China.
Illicit mining has severely damaged local agriculture in Myanmar, with contaminated soils and expanding deforestation.
Author Simone Chiusa
Editor Anton Kutuzov
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