Editor's Note: The world is witnessing a dramatic shift as major powers such as the United States, the EU, Australia, and Japan are acting simultaneously to regain autonomy in rare earth resources. The race is not just about reopening mines or finding new sources of supply, but also about recycling technology, developing alternative materials, and building strategic alliances.
This article by Dr. Ha Huy Ngoc , Director of the Center for Research on Local and Territorial Economic Policy and Strategy (Vietnam and World Economics Institute), will provide a comprehensive overview of the competition surrounding this essential raw material for high technology.
Rare earth elements are essential for high technology and especially for the transition to green energy, such as electric vehicle batteries, wind turbine engines, and advanced electronics.
The rapid effort to keep pace with technological advancements has made the stability and security of the rare earth supply chain a strategic priority for many countries.
Key future technologies such as artificial intelligence (AI), quantum technology, renewable green energy, electric vehicles, advanced chip manufacturing, and modern warfare all depend on rare earth elements in various ways.
The overall picture of the rare earth market.
The production and supply of rare earth elements on the global market are currently largely controlled by China, posing a significant challenge to the world.
Proactive policies and investments in the rare earth sector over several decades have helped China establish a leading position in the global market for both rare earth mining and processing, and most importantly, become a pioneer in research and industrial application of related "niche" technologies.
The world's heavy reliance on rare earth supplies from China, which accounts for over 80% of the global market, is increasing geopolitical risks. The country's central role in both mining and processing gives it significant influence over supply chains, prices, and shaping international technological and economic trends.
For these reasons, the European Union and other Western countries have recently made particular efforts to reduce their dependence on the Chinese-dominated rare earth supply chain and have taken steps to seek alternative sources, invest in new technologies, and develop strategic stockpiling plans.
The world's number one "empire" in rare earth minerals.
China became involved in the rare earth sector quite early, starting in the 1950s, but it wasn't until the 1980s that the sector received particular attention when Deng Xiaoping, the initiator of China's reform and opening-up policy, promoted economic reforms aimed at developing industry and technology, highlighting the strategic importance of rare earths in both the short and long term.
Since the 1990s, Beijing has invested heavily in rare earth resource extraction, related infrastructure, and technology, modernizing major mines such as the Bayan Obo mine, which is one of the world's largest rare earth reserves.
Currently, China is the leading producer of rare earth elements, supplying approximately 80% of the global output. This advantage is even more evident in the extraction of heavy rare earth elements, which are difficult to access and require complex processing technologies.
In addition to mining, China also plays a key role in the processing and refining of rare earth elements. In 2023, the country produced approximately 140,000 tons, far exceeding other major suppliers such as the United States and Australia.
The Chinese government simultaneously implemented management measures such as export quotas and regulations, thereby significantly impacting the supply and prices of rare earth elements in the international market.
Monopoly control
A key factor in consolidating China's position in the rare earth sector is the control exerted by the central government.
Since the 1990s, the Chinese government has considered rare earth elements a strategic element that needs to be protected.
State protection means that foreign-invested companies are not allowed to participate in the mining and processing of rare earth elements. Since 2010, China has been promoting the development of its rare earth sector and improving its national legal framework.
The government has focused on curbing illegal mining and trading of rare earth minerals in China. In addition, export restrictions, quotas, and tariffs have been imposed on both the minerals and finished products.
China has also begun building strategic rare earth reserves to secure control over the global market. This approach allows China to maintain a competitive advantage and influence the supply and price of rare earths in the global market.
Rare earth elements play a crucial role in the high-tech industry (Illustrative image: DT).
Furthermore, state-owned enterprises are particularly encouraged to invest heavily in research and development to improve mining technologies and increase production efficiency. Government intervention and the ability to provide stable resources have created a technological advantage over potential competitors.
In addition, China has implemented strict legal regulations governing rare earth elements, significantly impacting other countries.
In December 2023, the country issued a decision on the "List of Technologies Prohibited or Restricted from Export from China," which stated: Restrictions on the export of rare earth mining and refining technologies; strict export controls on rare earth synthesis technologies and mining processes…
Next, in June 2024, the Chinese State Council approved new guidelines regulating the rare earth industry. These guidelines emphasize several points, including: rare earth resources are state-owned; the Ministry of Industry and Information Technology is responsible for developing the rare earth industry; only government-approved companies are permitted to mine and process rare earths; and so on.
Countermeasures of various countries
With China playing a dominant role in the rare earth sector, Western nations have recently implemented numerous decisions and initiatives to diversify their supply chains. These efforts include building strategic reserves, developing alternative technological solutions, investing in mining and refining operations, strengthening international cooperation in research, and seeking alternative materials to rare earths in certain application areas.
To reduce its dependence on China, the United States is placing particular emphasis on alternative sources and technologies.
One prominent example of the local industry's recovery is the resumption of operations at the Mountain Pass mine in California in 2017, which was acquired by MP Materials.
This was the only operational rare earth mine in the United States, beginning operations in 1952 and once being the world's leading supplier of rare earths. The mine closed in 2002 due to fierce competition from cheaper mining and processing operations in China.
In addition to this rare earth mine, the U.S. government has invested financial resources to open the first rare earth processing plant in the United States, allowing for the first time that a portion of the mined output can be processed domestically without having to ship it to China.
The U.S. government and the private sector are also investing heavily in research and development of recycling technologies.
For example, the Center for Critical Materials Innovation (formerly the Critical Materials Institute, CMI), funded by the Ministry of Energy, is at the forefront of developing economically and environmentally sustainable methods for extracting rare earth elements, such as recovering rare earths from electronic waste and seeking alternative sources that could reduce the need for imports from China in certain technology sectors.
An old coal mining area in Wyoming (USA) contains a massive amount of rare earth elements worth approximately $37 billion (Photo: Wall Street Journal).
In September 2024, the U.S. Department of Defense announced a $4.22 million grant to Rare Earth Salts, a company involved in recovering rare earth elements such as terbium by recycling fluorescent light bulbs.
Due to geopolitical risks and the potential for future supply chain disruptions, the United States is also increasing its strategic reserves, including rare earth stocks. The National Defense Stockpile (NDS), managed by the Defense Logistics Agency (DLA), has stockpiled critical minerals deemed vital to national security.
Australia invests in mining technology.
As one of the world's leading countries in rare earth resources, Australia's government is focusing on developing its mining and processing capabilities to become a major player in the global rare earth market.
Because Australia has abundant natural resources and a fairly developed mining industry.
Australia's rare earth oxide reserves are estimated at around 3.2 million tonnes. Therefore, Australia is playing an increasingly important role in the global market as one of the leading exporting nations, but it has yet to reach the scale of the Chinese industry.
Australia has a number of companies operating on a global scale, leading the way in developing the nation's mineral industry.
One of them is Lynas, a rare earth company that is the largest producer of rare earths and has mines and processing facilities overseas.
Another company, Iluka Resources, is actively developing processing projects to strengthen its position in the rare earth industry. Strategic Materials Australia is also rapidly expanding its operations, paying particular attention to improving related technologies.
Recognizing the importance of essential materials to economic and national security, the Australian government has initiated a series of policy measures to promote the development of this industry.
In 2023, Australia revised its Key Minerals Strategy 2023-2030, outlining priority areas to enhance national competitiveness in the global market.
The strategy also addresses infrastructure development and enhanced public-private partnerships to increase the nation's capacity in critical mineral resources. Lynas Rare Earths, which operates the Mt. Weld mine, also extracted 19,000 tonnes of rare earth oxides in 2023.
To meet the growing demand, the Australian government has allocated an additional A$2 billion to this strategy, bringing the total to A$6 billion.
Ukraine is believed to possess abundant rare earth resources (Photo: Getty).
The European Union is reducing its dependence on supplies from China.
Despite technological advancements and significant initial efforts in the green technology sector, the EU cannot boast of rare earth reserves or a robust industrial base.
The EU is actively developing strategies to reduce its dependence on China. According to the Council of Europe, China supplies 100% of the EU's heavy rare earth elements. The risks associated with supplying the EU with many other critical raw materials vary considerably.
This alliance recognized the importance and future significance of rare earth elements quite early on.
In 2008, the EU launched the Raw Materials Initiative (RMI) to ensure a sustainable supply of raw materials for the EU economy.
This initiative was launched in response to growing concerns about the European industry's heavy reliance on imports of raw materials from third countries such as China.
RMI has put forward comprehensive measures to enhance the security of the raw material supply chain, strengthen intra-EU supply sources, and expand international cooperation.
Together with the Raw Materials Initiative, the European Commission (EC) has compiled a list of key raw materials.
The first list of Critical Raw Materials, published in 2011, included 14 items and addressed a group of rare earth elements, particularly highlighting the risks arising from the high degree of dependence on supply sources, as the majority of global rare earth production comes from China.
Several EU countries, such as Sweden, Denmark, Finland, and Greece, have promising prospects for abundant rare earth resources.
Greenland is also considered to have large reserves of important raw materials, including uranium and thorium, but local authorities have imposed strict restrictions on both mining and geological exploration.
Sweden could help the EU reduce its dependence on external sources. The Norra Kärr mine has a high content of rare earth elements, and according to a statement by Leading Edge Materials Corp, the company has filed an application with the EC for the Norra Kärr project to be considered "a strategic project that could contribute to Europe's rare earth supply security for decades to come."
China dominates the rare earth market (Photo: AFP).
In addition, new geological discoveries have recently been made in the Kiruna region of Sweden. Meanwhile, last June, Norway announced the discovery of Europe's largest rare earth metal deposit.
Japan seeks alternative materials.
Unlike resource-rich countries like the United States, Japan does not have large reserves of rare earth elements.
Instead, to protect its industries, the country relies on innovation, alternative materials, and strategic international partnerships. Despite its reputation as an innovative and technologically advanced nation, Japan cannot boast of abundant rare earth reserves and is entirely dependent on imports.
Japan imported up to 90% of its total rare earth needs from China.
In response, the Japanese government has introduced a 100 billion yen financial package and other measures aimed at developing technology and supporting investment in equipment to reduce the use of rare earth elements; developing technologies for using alternative materials; promoting rare earth recycling through investment support in recycling facilities, as well as developing more efficient recycling technologies.
This financing package also includes provisions for mine development and the acquisition of stakes in rare earth mines in Australia and other countries. The capacity of government institutions to guarantee loans and invest equity capital has been significantly strengthened.
In addition, Tokyo continues its efforts to pursue a strategy of diversifying its supply chains. A key element of this strategy is investment in Southeast Asian countries such as Vietnam; in which Japan is cooperating with local governments and companies to develop the rare earth industry.
In addition, Japan supports infrastructure projects in Southeast Asian countries to optimize technology for mineral extraction and processing.
Japan has also signed long-term contracts with other countries such as Australia for the supply of rare earth elements to maximize the safety, resilience, and reliability of its supply chain.
Source: https://dantri.com.vn/khoa-hoc/cuoc-canh-tranh-dat-hiem-tren-toan-cau-20250925151603671.htm
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