Highlights

• China controls most rare earth element production, creating a strategic vulnerability for Western economies in technology and defense sectors.
• Major global powers are engaged in a geoeconomic arms race to secure rare earth element supply chains and manufacturing capabilities.
• By 2030, demand for critical rare earth elements will dramatically increase, making their control pivotal to determining global economic and technological leadership.

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A recent paper by Saidova Feruza Kamolovna and Ozodbek Ilhomov warns that rare earth elements (REEs) are no longer just industrial inputs—they are instruments of geopolitical leverage shaping the future of global power. Published in a sweeping economic geography analysis, Rare Earth Elements and Global Power: The Economic Geography and Geopolitical Stakes of Strategic Resources (opens in a new tab), the study highlights how REEs underpin critical 21st-century technologies—from EVs and wind turbines to defense systems and smartphones. As demand surges toward 2030, access to these materials has become a strategic imperative for nations vying for technological dominance and supply chain resilience.

Concentration Breeds Vulnerability

The authors expose a dangerous imbalance: REE production is highly concentrated, with China controlling most mining and nearly all downstream processing capacity. This concentration, they argue, gives Beijing substantial influence over global markets and political decision-making—especially in times of diplomatic tension or trade conflict.

Meanwhile, Western nations remain largely reactive. “Despite recent policy initiatives in the U.S., EU, and Japan,” the authors write, “the West remains strategically dependent on a single nation for materials that determine national competitiveness and military readiness.”

Scramble for Strategic Autonomy

The study outlines the strategic responses of major global players:

• United States: Efforts focus on domestic mining, defense stockpiles, and legislation such as the Defense Production Act and CHIPS Act to revive critical mineral infrastructure. But progress is slow and fragmented, however, with Donald Trump’s election, new executive orders are meant to accelerate activity.
• European Union: The Critical Raw Materials Act promises diversification, but the bloc lacks a unified strategy or midstream capacity.
• Japan: Long committed to diversification after past REE shocks, Japan has built partnerships in Southeast Asia and Africa, but remains reliant on Chinese refiners.
• China: Continues to tighten control through export quotas, investment in overseas mines, and dominance in REPM (rare earth permanent magnet) manufacturing.

A Geoeconomic Arms Race

Saidova and Ilhomov warn that without major investment in refining, magnet production, and recycling, Western economies may find themselves outmaneuvered, not just economically, but militarily. “The control of REEs is fast becoming a geoeconomic arms race,” the paper states. “Whoever controls rare earth supply chains will shape the trajectory of the global economy and security order.”

Implications for Industry and Policy

With demand for key elements like neodymium, dysprosium, and terbium expected to multiply by 2030, the authors urge a holistic approach: mine-to-magnet industrial strategy, transparent trade mechanisms, and coordinated public-private investment.

The study concludes bluntly: “Rare earths are no longer just about clean energy. They are about who rules the next technological age.” REEx agrees.