Global competition for rare earths

(Dan Tri) - The global competition for rare earths is becoming one of the most important geopolitical, economic and security challenges of the 21st century.

Editor's note: The world is witnessing a dramatic shift as major powers such as the United States, the EU, Australia and Japan take action to regain autonomy over rare earths. The race is not only to reopen mines or find new sources of supply, but also towards recycling technology, developing alternative materials and building strategic alliances.

The article by Dr. Ha Huy Ngoc , Director of the Center for Research on Local and Territorial Economic Policy and Strategy (Vietnam and World Economic Institute), will provide a comprehensive view of the competition surrounding this essential raw material for high technology.

Rare earths are essential for high technology and especially the transition to green energy, such as electric car batteries, wind turbine engines and advanced electronics.

The rapid effort to keep up with the pace of technological progress has made the issue of stability and security of the rare earth supply chain a strategic priority for many countries.

Important future technologies such as artificial intelligence (AI), quantum technology, renewable green energy, electric vehicles, advanced chip manufacturing and modern warfare all depend on rare earths in various ways.

Panorama of the rare earth market

Rare earth production and supply in the global market is currently largely controlled by China, posing a major challenge to the world.

Proactive policies and investments in the rare earth sector over the decades have helped China assert its leading position in the global market in both rare earth mining and processing, and most importantly, become a leading country in research and industrial application of related “niche” technologies.

The world's heavy dependence on China for rare earth supplies, which accounts for more than 80% of the global market share, is raising 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 special 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 1 "empire" of rare earths

China was quite early involved in the rare earth sector, starting in the 1950s, but it was not until the 1980s that the sector received special attention when Deng Xiaoping, the initiator of China's reform and opening up, pushed for economic reforms to develop 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 mining, related infrastructure and technology, modernizing major mines, such as the Bayan Obo mine, which is one of the world's largest rare earth reserves.

China is currently the world leader in rare earth mining, supplying about 80% of global output. This advantage is even more evident in the mining of heavy rare earth elements, which are difficult to access and require complex processing technology.

In addition to mining, China also plays a key role in processing and refining rare earths. In 2023, the country will produce about 140,000 tons, far exceeding other major suppliers such as the United States and Australia.

The Chinese government has also implemented regulatory measures such as quotas and export regulations, which have significantly affected the supply and price of rare earths in the international market.

Exclusive control

A key factor in strengthening China's position in the rare earth sector is central government control.

Since the 1990s, the Chinese government has considered rare earths a strategic element that needs to be protected.

State protection means that foreign-invested companies are not allowed to participate in rare earth mining and processing. Since 2010, China has been stepping up the development of its rare earth sector and improving its national legal framework.

The government has focused on curbing illegal mining and rare earth trade in China. In addition, export restrictions, quotas and tariffs have been applied to both the rock 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 earths play an important role in the high-tech industry (Illustration: DT).

In addition, 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 introduced strict legal regulations governing rare earths, which have had a major impact on other countries.

In December 2023, the country issued a decision on the "List of technologies banned and restricted from export from China", which clearly stated: Applying restrictions on the export of rare earth mining and refining technologies; applying strict export control measures on rare earth synthesis technology and mining processes....

Next, in June 2024, the State Council of China approved new guidelines regulating the rare earth industry. The guidelines emphasize many contents such as: Rare earth resources are state-owned; the Ministry of Industry and Information Technology is responsible for developing the rare earth industry; only companies approved by the Government are allowed to mine and process rare earth;...

National policies

With China playing a dominant role in the rare earth sector, Western countries have recently implemented a number of decisions and initiatives to diversify their supply chains. These efforts include building strategic reserves, developing alternative technological solutions, investing in mining and refining, enhancing international cooperation in research, and searching for materials that can replace rare earths in a number of application areas.

To reduce dependence on China, the United States is focusing on alternative sources and technologies.

One prominent example of the local industry's recovery is the 2017 resumption of operations at the Mountain Pass mine in California, which was acquired by MP Materials.

It was the only operating rare earth mine in the United States, opened in 1952 and was once the world's leading supplier of rare earths. The mine closed in 2002 due to fierce competition from low-cost mining and processing operations in China.

In addition to this rare earth mine, the US government has invested financial resources to open the first rare earth processing plant in the United States, allowing for the first time to process a portion of the mined output domestically without having to ship it to China.

The US government and the private sector are also investing heavily in research and development of recycling technology.

For example, the Department of Energy-funded Center for Critical Materials Innovation (formerly the Critical Materials Institute, CMI) is leading the development of economically and environmentally sustainable methods of rare earth mining, such as recovering rare earths from e-waste, and finding alternative sources that could reduce the need for imports from China in certain technology areas.

An old coal mine in Wyoming (USA) contains a huge amount of rare earths worth about 37 billion USD (Photo: Wall Street Journal).

In September 2024, the US Department of Defense announced a $4.22 million grant to Rare Earth Salts, a company involved in recovering rare earths like terbium by recycling fluorescent light bulbs.

Given geopolitical risks and the potential for future supply chain disruptions, the United States has also been building up its strategic stockpiles, including its stockpile of rare earths. The National Defense Stockpile (NDS), managed by the Defense Logistics Agency (DLA), has been stockpiling 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 focuses on developing mining and processing capabilities to become a "major player" in the global rare earth market.

Because Australia has abundant resources and a well-developed mining industry.

Australia’s rare earth oxide reserves are estimated at around 3.2 million tonnes, making it an increasingly important player in the global market as a leading exporter, but still nowhere near the scale of China’s industry.

Australia has a number of globally operating companies that are at the forefront of developing the nation's minerals industry.

One of them is rare earth company Lynas, the largest rare earth producer and has mines and processing facilities abroad.

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 critical 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 Critical Minerals Strategy 2023-2030, outlining priority areas to enhance national competitiveness in global markets.

The strategy also includes infrastructure development and increased public-private partnerships to increase the country’s capacity in critical minerals. Lynas Rare Earths, which operates the Mt. Weld mine, is expected to produce 19,000 tonnes of rare earth oxides by 2023.

To meet growing demand, the Australian government has allocated an additional $2 billion to the strategy, bringing the total to $6 billion.

Ukraine is believed to possess abundant rare earth resources (Photo: Getty).

European Union reduces supply dependence from China

Despite technological advances and huge initial efforts in green technology, the EU cannot boast of rare earth reserves or a strong industrial base.

The EU is actively developing strategies to reduce its dependence on China. According to the European Commission, China supplies 100% of the EU’s heavy rare earth elements. The risks associated with supplying the EU with many other important raw materials vary considerably.

The alliance recognized the importance and future significance of rare earths quite early.

In 2008, the EU launched the Raw Materials Initiative (RMI) to ensure sustainable raw material supplies for the EU economy.

The initiative comes as a response to growing concerns about European industry's heavy dependence on raw material imports from third countries such as China.

The RMI introduces comprehensive measures to strengthen the security of raw material supply chains, consolidate intra-EU sources of supply and expand international cooperation.

Together with the Raw Materials Initiative, the European Commission (EC) has drawn up a list of critical raw materials.

The first Critical Raw Materials List, published in 2011, includes 14 items, covering a group of rare earth elements, with particular emphasis on the risks arising from high levels of supply dependence as the majority of global rare earth production comes from China.

Several EU countries such as Sweden, Denmark, Finland and Greece have prospects of 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 outsiders. The Norra Kärr mine has a high content of rare earths and, according to a statement from Leading Edge Materials Corp, the company has applied to the EC to have the Norra Kärr project considered “strategic and able to contribute to Europe’s rare earth supply security for decades to come.”

China dominates rare earths (Photo: AFP).

In addition, new geological discoveries have been made in Sweden's Kiruna region. Meanwhile, in June last year, Norway also announced the discovery of Europe's largest rare earth metal mine.

Japan seeks alternative materials

Unlike resource-rich countries like the United States, Japan does not have large reserves of rare earths.

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 rare earth reserves and is completely dependent on imports.

Japan imports up to 90% of its total rare earth needs from China.

In response, the Japanese government has launched a 100 billion yen financial package and other measures to develop technology and support investment in equipment to reduce the use of rare earths; develop technology to use alternative materials; promote rare earth recycling through supporting investment in recycling facilities, as well as develop more efficient recycling technologies.

The package also includes a portion for mine development and equity acquisitions in rare earth mines in Australia and other countries. The capacity of government institutions to provide loan guarantees and equity investments has been significantly enhanced.

Tokyo is also continuing its efforts to pursue a supply chain diversification strategy. A key element of this strategy is investing in Southeast Asian countries such as Vietnam, where Japan is working with local governments and companies to develop the rare earth industry.

In addition, Japan also supports infrastructure projects in Southeast Asian countries to optimize mineral exploitation and processing technology.

Japan has also signed long-term contracts with other countries such as Australia for the supply of rare earths to maximize the safety, resilience and reliability of the supply chain.

Source: https://dantri.com.vn/khoa-hoc/cuoc-canh-tranh-dat-hiem-tren-toan-cau-20250925151603671.htm