Highlights

• China currently dominates 85-95% of global rare earth mineral mining and refining, positioning itself as a critical player in advanced technology and clean energy markets.
• Western nations are seeking to diversify supply chains and develop domestic refining capabilities to reduce dependence on Chinese mineral production.
• Geopolitical strategies are emerging to address the strategic importance of rare earth elements in technologies ranging from electric vehicles to military equipment.

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A recent article in OilPrice.com (opens in a new tab) underscores the growing geopolitical importance of rare earth elements (REEs), describing them as the "new oil" due to their indispensable role in clean energy, advanced technologies, and modern defense systems. These 17 elements, crucial for producing EVs, renewable energy systems, and military-grade precision weaponry, are abundant globally but require significant investment to extract and refine economically. While China dominates both mining and refining, producing 85–95% of the world’s refined rare earth minerals, other nations such as Vietnam, Brazil, and Australia possess notable reserves but lack the infrastructure to challenge China’s market monopoly.

The author,  Mexico City-based Haley Zaremba, highlights the urgent need for Western powers to diversify supply chains and build domestic refining capabilities to reduce dependence on China, which also leads in refining cobalt, nickel, and lithium for EV batteries. Many of the so-called critical minerals.

Despite concerns about China’s market leverage, some experts believe the geopolitical risk may be overstated. Nevertheless, the article predicts intensifying global competition for control of REE supply chains, emphasizing the strategic imperative for Western nations to close the infrastructure gap and ensure balanced trade.

So, what assumptions does Ms. Zaremba make?

First and foremost, China's dominance, while we concur, does not mean that a network of collaborative international approaches that includes competition and cooperation could mitigate risks. Perhaps incoming POTUS Donald Trump is already thinking about this.

The author presumes Western nations will develop effective infrastructure to compete with China without discussing the significant time, cost, or political will required for such initiatives.  Quite frankly, massive public investment will be necessary.

The article assumes continued high demand for rare earths, but it does not consider how technological advances might reduce dependence on these materials or shift demand to alternatives. While in the short run, technological advances may not be imminent at scale, incoming POTUS may very well reduce demand for electric vehicles and other “green” energy technologies as the U.S. will step away from the Paris Agreement, for example, and most certainly will toss electric vehicle requirements.  This could have various ripple effects on broader markets that could reduce demand.

A series of questions are important concerning the topic.  Take the economic viability of some nations’ efforts at becoming REE centers. What are the financial and logistical challenges for countries like Vietnam and Brazil in developing competitive rare earth industries?

How will increased mining and refining impact environmental sustainability in regions with large reserves?  Is it not the case that China was willing to subject significant parts of the land to ecological contamination?

Could international collaborations, such as joint ventures or technology-sharing agreements, reduce reliance on China rather than fostering competition?

What happens if rare earth prices fluctuate significantly or alternative technologies reduce their necessity?

Can Western nations feasibly develop refining infrastructure in time to address current market concerns, and how will they address potential labor and regulatory hurdles?

The article highlights the centrality of rare earths in future energy and technology markets but would benefit from exploring these deeper implications and strategic possibilities for countries outside China, not to mention the potentially very real impact of incoming POTUS Donald Trump on the markets and possible unexpected unfolding dynamics.