Highlights

• Pax Silica represents a strategic shift linking AI, semiconductors, energy, and critical minerals into a unified U.S. economic security framework targeting China's 85-90% control of rare earth processing.
• While the diagnosis is correct, the initiative remains a declaration without large-scale domestic separation capacity, magnet manufacturing, price stabilization mechanisms, or permitting reform needed for execution.
• Success requires synchronized capital mobilization and industrial scaling across allied nations - moving from strategic alignment to actual throughput in separation plants, magnet production, and semiconductor output.

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If the 20th century ran on oil and steel, the 21st runs on compute — and the minerals that make compute possible. That is the animating premise behind Pax Silica (opens in a new tab), the U.S. State Department’s flagship economic security initiative tying artificial intelligence, semiconductors, energy, and critical minerals into a unified strategic framework.  Are we entering the age of what Rare Earth Exchanges™ refers to as the Great Powers Era 2.0?

The language is ambitious. Reduce “coercive dependencies.” Align export controls. Coordinate investment screening. Secure the full technology stack — from mineral refining and advanced manufacturing to data centers and frontier AI models.

On paper, Pax Silica reads like industrial realism finally catching up with geopolitical reality.

The Diagnosis Is Correct

Pax Silica identifies the structural vulnerability with clarity: China controls roughly 85–90% of global rare earth processing capacity, dominates permanent magnet production, and retains commanding influence over midstream manufacturing inputs essential to AI hardware and electrification.

AI models require compute. Compute requires semiconductors. Semiconductors require specialty materials and rare earth inputs. The chain is only as strong as its most concentrated link.

By emphasizing trusted supply chains, refining capacity, advanced manufacturing, and energy infrastructure, Pax Silica signals a shift in U.S. economic diplomacy. This is no longer abstract trade liberalization. It is supply chain architecture.

The coalition roster — Japan, South Korea, Australia, Israel, Singapore, the UAE, the United Kingdom, among others — reflects deliberate industrial complementarity. Mining, processing, capital, logistics, fabrication, and AI development are being woven into a shared framework.

 That is strategic progress.

The Hard Truth: Declarations Don’t Build Capacity

Here is the uncomfortable reality.

Pax Silica is a declaration, not an industrial plan. It aligns incentives; it does not yet fund capacity at scale.

The United States still lacks:

• Large-scale heavy rare earth separation capacity at scale (although there is a race to deliver)
• Fully integrated domestic magnet manufacturing at meaningful volume
• Durable price floor mechanisms to stabilize private capital—across nations
• Comprehensive permitting reform and government rationalization both in the USA and with partners
• A synchronized federal-state industrial execution strategy, including the all-important talent/ workforce development

Allied nations face similar constraints. Europe debates strategic autonomy while energy costs erode competitiveness. Australia remains primarily a miner, exporting value-added processing offshore. Japan and South Korea depend heavily on Chinese midstream inputs.

Without synchronized tax credits, demand guarantees, stockpiling programs, coordinated capital deployment, and long-term procurement commitments, Pax Silica risks becoming a strategic umbrella over thin industrial foundations.

China’s advantage is not rhetoric. It is throughput.

From Vision to Vertical Integration

The declaration speaks of “strategic stacks” — software, semiconductors, refining, logistics, energy. That framing is correct. The AI economy is vertically integrated from mine to model.

But vertical integration requires synchronized scaling. Rare-earth separation plants take years to obtain permits and build. Magnet factories require an assured oxide supply. Semiconductor fabs require stable energy density and materials flow. Each node must expand in parallel.

Alignment without execution creates fragility.

If Pax Silica evolves into coordinated capital mobilization and harmonized industrial incentives, it could redefine economic statecraft for the AI era. If it remains aspirational language, China’s midstream dominance will persist beneath the surface of allied declarations.

Rare Earth Exchanges’ View

Pax Silica reflects our Great Powers Era 2.0 thesis: economic security blocs are replacing traditional post-World War 2 military alliances as the organizing principle of global power. Industrial capacity — not ideology — is the currency of influence.

But influence for our purposes is measured in separation plants, magnet tonnage, gigawatts of energy, and semiconductor output.

The alliance has diagnosed the vulnerability.

Now it must finance, permit, build, and scale the cure.