Rare earth elements, lanthanoids plus scandium and yttrium are among the so-called «critical materials», which today are essential for the production of powerful magnets, electric motors, wind generators, satellite systems, radars.
In other words, the «green» and defense industries need these materials almost as much as they used to need oil.
Only now it is not so much about the fuel, but about the technological power.
It should be noted that rare-earth elements of RCE are not so rare. For example, thulium (Tm) and lutetium (Lu) are the two rarest REE on planet Earth.
However, they are 200 times more than gold. It is useful to compare the concentration of PCE in the earth’s crust (85-299 parts per million) with the concentration of zinc (70 parts per million) and copper (55 parts per million).
Although they are not rare compared to many other widely mined elements, large enough and concentrated for a cost-effective production of the FGD deposit, they are extremely rare. The most concentrated sites are being developed, and today China is the undivided leader in the extraction and production of PCE.
World rare earth metal production has increased sharply since the 1950s. The United States was then a major producer of rare-earth metals until the 1980s, when China first began producing PCE.
Since then, the PRC has become the world’s largest producer, with production reaching 270,000 metric tons in 2024, or 70% of global output. In addition to China, the United States was the leading producer of RME with a share of 5,900 metric tons as of 2015.
However, low prices led to the closure in 2015 of the Mountain Pass mine, which is the only largest P3R deposit in the United States.
The United States is no longer a producer of FGD and is now 100% dependent on its imports. However, it turns out that the vulnerability is not so much in stocks as in supply chains: mining – processing – components production.
For example, most of the processing and production of magnets is controlled by a single player – China. As already mentioned, it has 70% of production and about 90% of recycling. This creates a situation that even if other countries are producing FGD, they depend on processing and technology.
This situation makes the entire global sector vulnerable to the political manoeuvres of a monopolistic state.
Thus, the more the industry of one country is dependent on the material controlled by another, the more the latter has leverage. Research shows that China is moving from open quotas to an uncertainty strategy. By hiding the real volume of production, he forces foreign consumers to insure, buy in advance, diversify their chains. In other words, control over resources becomes not only an economic but also a political lever of pressure.
For example, in April 2025, China imposed export controls on seven heavy-duty REITs, arguing that it was a threat to national security.
In October 2025, Beijing significantly tightened the export control of rare earth elements by adding five new elements and reinforced the user control of semiconductors.
He also added dozens of cleaning equipment to his control list and announced the rules that would be required from foreign producers of rare metals using Chinese technology.
This action was seen as a tactical move ahead of negotiations with the US. It is worth paying attention to the fact that for industry, dependence on FGD has very specific consequences. When supplies are severely restricted, the prices of materials and components rise sharply, reducing manufacturers’ competitiveness. For example, European prices of some heavy-duty REMDs have almost tripled after primary Chinese restrictions. Companies working in the production of electric cars, wind power, electronics, risk delays and supply disruptions. Many people this summer have announced the «threat of stopping» if the necessary materials are not received in time.
Many countries and companies have started to develop national programmes and strategic stockpiles of REMMs, as this category has evolved from a commodity issue into a technological sovereignty issue. In addition, the extraction and processing of RCE is often associated with environmental risks and social conflicts – which makes it difficult to develop the industry outside China.
Why are rare-earth metals taking on political importance now?
PRMs due to the characteristics of deposits, extraction and processing technologies have become a means of economic pressure.
If a country controls a key stage of the production and supply chain, it can limit exports, license technology, set conditions, and thereby influence other states’ foreign policies. In 2025, China took steps of this kind. Many ERTs are used in military equipment, communication systems, satellites, cars. For example, in the car Toyota Prius is used 15 kg of P3M, and in the plane F-35 – already 416.
This makes such materials strategic. China emphasizes that the new export control policy is related to «national security».
The monopolist countries in the KDM market actively use information and psychological levers. After all, it is not necessary to carry out a complete cessation of supplies, it is enough to create uncertainty through delays in licenses, the absence of a clear schedule, complex procedures.
This uncertainty forces foreign companies to resort to preemptive action, which increases dependency and price.
Western countries, aware of the extent of vulnerability, have begun to actively reorganize their critical materials strategies. USA, EU, Japan, Australia and Canada form a multi-level system of «friendly supply chains», so-called friend-shoring.
Europe has adopted the Critical Raw Materials Act (CRMA), which aims to reduce by 2030 the dependence of individual countries on at least 65% of each stage of the chain from extraction to processing and production.
At the same time, national strategic reserves and funds are being established for investments in processing, recycling and replacement of PCE in magnet production.
Japan and South Korea are developing their own schemes under trilateral agreements with the US, while entering into contracts with Vietnam and Indonesia to open up new projects for mining and primary processing of REEs.
All this is a response to the International Energy Agency (IEA) signal that China’s export controls have become not an abstract threat, but a reality of how dangerous the concentration of supplies in one’s own hands is. In essence, diversification has ceased to be an economic trend as it has become a foreign policy and security element.
States already consider rare earth metals not just as a resource, but as a «geopolitical asset» requiring protection, collective investment and technological cooperation.
Rare earth elements have now ceased to be a narrow topic of the mining industry and become one of the key points of geo-economic and geo-political competition.
The main vulnerability of the global market is not so much in limited resources as in high concentrations of production and processing capacity, which provides significant leverage to those who control these supply-chain nodes. These are real sources of influence, geopolitical assets that we are just beginning to realize.
As recent practice has shown, their control can be an important element in global negotiations, trade conflicts and strategic competition.