Rare Earth Exchanges

The Geopolitical Implications of Rare Earth Mineral Dependencies and Technological Rivalries

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Highlights

  • China dominates global rare earth mineral processing and manufacturing, controlling up to 73% of critical minerals like lithium.
  • Nations are developing countermeasures through legislation, international partnerships, and domestic mining expansion to reduce the vulnerabilities of the mineral supply chain.
  • The global competition for critical minerals is projected to intensify, with a sixfold increase in demand by 2040, driven by renewable energy and defense technology needs.

Aakif Ali, Faiz Ali Shah, and Hasnain Raza together explore the critical role of rare earth minerals (REMs) in global geopolitics, technological advancement, and military applications. The study, rooted in an analysis of mineral dependencies and rivalries, examines how nations are navigating these challenges to secure their supply chains and maintain technological dominance.

The Pakistan-based authors hypothesize that the rising demand for rare earth minerals—vital for electric vehicles, renewable energy technologies, and advanced defense systems—will intensify geopolitical competition, particularly between the United States and China. The study assesses national strategies and initiatives to mitigate supply chain vulnerabilities, highlighting China’s dominance in rare earth processing and manufacturing and the countermeasures taken by other nations, such as the U.S., European Union (EU), and Australia.

So, what do they find?

Not surprisingly, first and foremost, China’s dominance.  China refines a significant portion of global critical minerals (e.g., 73% of lithium and 59% of cobalt) and controls most lithium-ion battery manufacturing and rare earth processing. This dominance enables China to leverage its mineral industry strategically, including imposing export restrictions on materials like gallium and germanium, as seen in response to U.S. semiconductor sanctions.

What are some emerging countermeasures?

The United States introduced legislation and forged alliances with countries like Australia and Canada to secure alternative sources of critical minerals. For example, a rule in the Department of Defense requires all military contractors to procure non-Chinese magnets by 2027, as Rare Earth Exchanges has reported.

The EU’s Raw Materials Act focuses on sustainable access to these resources, and partnerships like the Minerals Security Partnership (MSP) aim to create resilient and equitable supply chains.  Meanwhile, Australia and Canada are expanding their domestic mining and refining capabilities while fostering bilateral and multilateral partnerships to reduce dependence on China.

Critical minerals are indispensable for advanced defense technologies, such as precision-guided missiles, stealth aircraft, radar systems, and renewable energy technologies. Disruptions in mineral supply chains could undermine national security and economic stability. The push for decarbonization has led to a projected sixfold increase in critical mineral demand by 2040. Sustainable mining and recycling practices are essential to meeting these demands without exacerbating environmental degradation.

Limitations on Paper

The study primarily focuses on geopolitical strategies and lacks a detailed analysis of environmental impacts, technological feasibility, and the economic scalability of alternative mineral supply solutions. Furthermore, while it highlights global initiatives, it provides limited insight into the effectiveness of these measures in reducing China’s market share.

What are the Implications?

The competition for rare earth minerals will shape global power dynamics in the coming decades. Nations must innovate and collaborate to secure sustainable and resilient supply chains.

However, the race to insulate economies from supply chain disruptions could exacerbate tensions, particularly between China and the U.S., while presenting opportunities for emerging players to establish themselves in the critical mineral market. Balancing economic, environmental, and strategic priorities will be vital for ensuring global stability amidst this resource-driven rivalry.

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