The battle for critical minerals: Breaking China’s rare earth grip

THE pandemic, the Russia—Ukraine conflict, and escalating trade tensions with China have exposed significant vulnerabilities in US supply chains, particularly in the supply of rare earth elements, where reliance on Chinese supply remains considerable.

- By Naveen Silva

The US-China trade war, which began in 2017-18, marked a major escalation in the strategic rivalry between the two nations and set off a wave of mutual de-risking. In response, Governments have increasingly scrutinised their economic and security frameworks to identify vulnerabilities and dependencies, and have taken corrective action where risks are considered unacceptable. The outbreak of the pandemic exposed significant weaknesses in supply chains across both critical and basic industries, a situation that was further exacerbated by the onset of the Russia—Ukraine war.

Unlike in previous decades, the US now seeks to anchor its supply chains within trusted partner countries to safeguard strategic relationships. Within this context, securing a stable supply of rare earth elements has become a central pillar of US policy.

Dominance

China continues to dominate the rare earth supply chain, accounting for roughly 65% of global mining capacity and a whopping 91% share of refining these minerals into oxides. It also leads in magnet manufacturing, producing about 94% of the world’s sintered magnets and 80% of bonded magnets, the highest-value applications of rare earth oxides. These magnets are critical inputs across a wide spectrum of industries, including consumer electronics, hard drives, medical devices, wind turbines, electric vehicles, and advanced defence and aerospace systems.