Highlights
- China’s tight control over rare earth elements poses a significant threat to global technological and defense capabilities, necessitating a coordinated international response.
- Western nations must develop an integrated industrial policy involving government support, talent development, and strategic mineral stockpiling.
- Breaking China’s rare earth monopoly demands collaborative efforts across allies, focusing on technology, processing capabilities, and secure supply chains.
President Trump may soon find himself boarding Air Force One for Beijing, not out of diplomatic goodwill, but necessity. The rare earth element (REE) crisis is no longer theoretical; it is a real and pressing issue. With China tightening export restrictions and global markets in flux, the U.S. and its allies are waking up to a hard truth: access to a few mines or magnet plants won’t win this war. Not even close. What’s required is a sweeping, coordinated industrial policy—not just American, but global, rooted in the trusted framework of the Five Eyes, NATO partners, and extended to critical swing states like Brazil, Indonesia, and India. This policy must be end-to-end: from the first rock crushed in a Canadian mine to the final neodymium magnet installed in a British or American missile guidance system.
Why Markets Alone Will Fail
The free market won’t solve this. Not when China wields state-subsidized dominance at every step of the chain—from mine to refinery, to component, to finished product. Western REE projects face high capital expenditures, uncertain demand, and intense pricing pressure from Chinese incumbents. No startup can compete when Beijing can drop prices below cost for years. A nationalistic “America First” approach also falls far short. This isn’t a race won by isolation, but by allied coordination.
In some ways, the West must emulate China’s approach: one that is integrated, disciplined, and strategic. That means combining industrial policy with geopolitical alliances that function like supply chain treaties.
What the Policy Must Include
To break China’s rare earth stranglehold, allied nations must coordinate purchasing power. NATO and the Five Eyes must establish unified procurement targets for rare earth-based defense systems, electric vehicle (EV) motors, and clean energy infrastructure. Vague commitments won’t cut it—Western producers need hard, enforceable offtake contracts to build with confidence and scale with speed.
Markets alone won’t bridge the pricing gap. Until supply chains stabilize, governments must step in with targeted subsidies for refining, alloying, and magnet production. Europe did it with gas post-Ukraine. Now it’s time to do the same with rare earths—temporary, strategic insulation to grow an industry that can stand on its own.
None of this works without people. The West needs to invest in the next generation of metallurgists, geochemists, and advanced materials engineers. Universities must expand mineral processing programs, and governments should fund hands-on apprenticeships. Just as urgently, we need to recruit talent from within China—scientists and engineers who want to leave Xi Jinping’s tightening regime but still possess the expertise in advanced processing. Rare Earth Exchanges (REEx) has already pointed out that American REE financing will depend on London, Toronto, and Perth as much as it does on Wall Street.
This isn’t just about rocks—it’s about precision at every stage of what can be an environmentally damaging process. China dominates magnet production not because it has more ore, but because it owns the technology and machines to shape rare earths into high-tolerance, high-performance components. And it was willing to sacrifice ecosystems to the altar of rare earth dominance. The U.S., EU, UK, and Japan must jointly fund IP and equipment development—not another mine, but the foundries, presses, and proprietary chemistries transforming dust into dominance. Majo’s ongoing investment in recycling disruption, a key component of a circular economy, is essential for our collective future.
Finally, build stockpiles. Not symbolic reserves, but robust, distributed caches across allied nations. And invest in the logistics—rail, ports, and processing hubs—much as China has been doing, that ensure secure and flexible transport across continents. Treat rare earths, and select critical minerals like oil in the 1970s: a national security asset too crucial to leave to market whim or foreign control.
Time to Get Busy
President Trump’s 232 action and executive orders are a start—but they are tactical responses, not strategic doctrine. A new industrial policy must be built—not for profit alone, but for resilience, security, and permanence. China’s model is clear. The question is whether the West can stop pretending that markets alone will be sufficient and finally get serious about building the backbone of the 21st-century economy together.
There is one caveat worth mentioning: if China were to suddenly open its rare earth sector to genuine reform, inviting actual multinational investment, dismantling state ownership, and allowing market transparency, it would reset the entire equation. But let’s be honest: what are the odds of that happening? Would you bet the farm on Xi Jinping relinquishing strategic control of the rare-earth supply chain? Neither would we.
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