The scarcity of rare earth elements is impacting the planet politically and environmentally
According to the International Energy Agency, demand for rare earth elements is expected to surge by three to seven times current levels by 2040. This escalation is driven by the increasing reliance on REEs for high-tech applications, from smartphones and electric vehicles to wind turbines and advanced defense technologies such as missiles and radar systems. However, this growing reliance on REEs highlights a significant strategic vulnerability for the United States, which remains heavily dependent on imports from China.
- 1 day ago
December 3, 2024
Praseodymium (Pr) is #59 on the Periodic Table of Elements. Elemental praseodymium is a silvery-gray metal. It is one of the "rare earth elements." | Photo courtesy of Wikimedia
As technology rapidly advances, rare earth elements (REEs), a group of 17 metals, have become as indispensable as oil was in the 20th Century. From defense systems and consumer electronics to renewable energy, rare earth elements are becoming the beating heart of an increasingly digitized world. However, China’s near-total dominance over these resources creates complexities with far-reaching consequences for global innovation and geopolitical power.
As the then-Chinese leader Deng Xiaoping said in 1987, “The Middle East has oil, China has rare earths,” a statement that remains strikingly relevant today. China accounts for a staggering 61 percent of global rare earth element production and refines 89 percent of the world’s supply of neodymium and praseodymium. This concentration of power in China’s hands represents a significant risk, not just for economic reasons, but also for securing technological and national security interests.
In 2010, during a territorial dispute with Japan, China restricted REE exports to its neighbor. The two-month export ban sent shockwaves through Japan’s high-tech industries, highlighting the fragility of supply chains dependent on a single source. Similarly, amid the U.S.-China trade war, Beijing openly considered restricting REE exports as a countermeasure to American tariffs, signaling its readiness to weaponize its near-monopoly in the global market.
China’s new rare earth regulations, which took effect on October 1, 2024, further centralized control over resources vital for military advancements. This regulation follows a broader pattern of restrictions that emerged over the past year, including the export limits on germanium and gallium, two vital elements for chip production. On September 15, 2024, China also restricted access to key materials such as antimony, which are essential in semiconductors and military weaponry.
China’s seeming monopoly on rare earth elements deepens U.S. dependence
Citing national security concerns, these moves reflect China’s efforts to safeguard its economic and technological interests in an already tense geopolitical climate. By controlling access to these crucial materials, China will undoubtedly leverage its position as a dominant supplier while asserting its influence in the global arena.
Notably, Beijing labeled rare earth metals as the state’s property and warned “no organization or person may encroach on or destroy rare-earth resources.” This growing opacity reflects a shift toward a more protectionist trade stance. As China consolidates control over these critical materials, it increases the risks for nations reliance on them, especially those in the defense and high-tech sectors.
According to the International Energy Agency, demand for rare earth elements is expected to surge by three to seven times current levels by 2040. This escalation is driven by the increasing reliance on REEs for high-tech applications, from smartphones and electric vehicles to wind turbines and advanced defense technologies such as missiles and radar systems. However, this growing reliance on REEs highlights a significant strategic vulnerability for the United States, which remains heavily dependent on imports from China.
From 2019 to 2022, the U.S. imported 72 percent of rare earth minerals from China. This dependence underscores a major strategic weakness for American industries, particularly since the U.S. currently has only one operational rare earth mine—the Mountain Pass mine in California—which is inadequate to fulfill the rising domestic demand.
Undeniably, China’s rare earth elements are crucial for producing advanced weapon systems, including the F-35 fighter jet, one of the U.S. military’s most advanced aircraft. However, their importance goes well beyond defense uses. REEs are also vital for renewable energy solutions crucial to combating climate change.
Democratic nations seek to force China into loosening restrictions, diversify supply chain
In 2012, the U.S., Japan, and the European Union (EU) jointly filed a case for the first time against China at the World Trade Organization (WTO) over rare earth export restrictions. The WTO ruled that China’s practices violated trade commitments, forcing China to remove export duties and replace them with a resources tax. This ruling, however, did little to resolve the broader geopolitical rivalry between China and the West, a tension that would only intensify in the years to come.
In response to China’s market dominance, Western nations have taken various steps to diversify supply chains and reduce dependency on China. The Biden administration has prioritized boosting domestic REE mining and refining while promoting stricter environmental and social standards, as seen in initiatives like the National Defense Authorization Act. Efforts to build partnerships with allies such as Europe and Australia are central to this strategy however, critics argue that these initiatives are costly and will take years to produce results.
Similarly, the EU has adopted the Critical Raw Materials Act, aiming to decrease its dependence on Chinese REEs by securing alternative sources within Europe and through collaborations with countries like Australia, Canada, and Brazil. The EU’s strategy also emphasizes recycling REEs from electronic waste, aligning with its broader green transition goals. Despite these efforts, the measures remain fragmented and insufficient to effectively challenge China’s current grip on the market.
Facing escalating trade wars and destabilized global economies, nations must consider global cooperation
Looking ahead, as Donald Trump enters office in January 2025, there could be an even stronger effort to reduce dependency on China for REEs. During his first term, Trump imposed tariffs on Chinese goods and signed an executive order to boost domestic REE production. A second term would likely intensify these efforts, with subsidies for U.S. mining and streamlined regulations.
However, such measures face significant environmental and community resistance, complicating their implementation. Even if successful, domestic production alone cannot meet the soaring demand for REEs, particularly in high-tech and defense industries. In addition, Trump’s reliance on tariffs as a weapon could trigger Chinese retaliation, escalating trade wars that destabilize the global economy.
Strengthening alliances with REE-rich nations might further strain relations with Beijing, risking broader geopolitical fallout. Meanwhile, an exclusive focus on domestic mining risks overlooking the potential of alternative technologies and recycling innovations that could reduce reliance on REEs. Undoubtedly, the global tug-of-war over rare earth elements underscores a bitter truth: whoever controls the supply chains, controls the future.
While Western nations scramble to catch up, China’s grip on the REE market remains a game-changing card, reshaping geopolitics and technology alike. Diversifying sources and investing in alternative technologies are essential, but without bold, coordinated action, these strategies may prove too little, too late. Now more than ever, it is time for global cooperation to level the playing field and ensure that core resources flow through many hands and not just one.
