Exploring the Geopolitics of Rare Earth Minerals

The metals that power F-35 fighters, wind turbines, and electric vehicles all flow through one country. China doesn't just mine rare earths; it controls the refining and magnet-making that turn raw ore into strategic leverage. On December 4, Wikistrat brought in critical minerals expert Dr. Marina (Yue) Zhang to assess the fallout: How did Beijing corner this market? Can the West break free? And what happens when supply chains become weapons?

Webinar Recording:

Dr. Marina (Yue) Zhang is an Associate Professor at the Australia-China Relations Institute, University of Technology Sydney, where she focuses on how technology, industrial policy, and geopolitics reshape global power, with a particular interest in critical minerals and rare earth supply chains,  including the strategic role of rare earths in the energy transition and in US-China competition.

Key Insights

1. China built an ecosystem, not a simple resource monopoly

   China didn't corner rare earths overnight. Starting in the 1970s, it discovered rich deposits in Inner Mongolia, trained chemists in separation techniques, and invested decades in refining and magnet-making capacity. The result is an integrated midstream ecosystem that turns ore, domestic and imported, into value-added products for the Chinese industry and global buyers.

   
   

2. Beijing treats minerals as a security issue, not just a commodity

   Unlike the US and EU, which maintain separate "critical minerals" lists, China groups a much broader set of resources under a strategic label, including coal and oil. This reflects chronic anxiety about energy imports and supply disruption. Rare earths were folded into that security framing, which justified sustained investment and tolerance for early environmental damage.

   
   

3. Rare earths are abundant, but processing capacity isn’t

   Light rare earths exist across Mongolia, Africa, Australia, and the US. The bottleneck is separating chemically similar elements through acid-intensive refining, then manufacturing magnets. China built the plants, workforce, and logistics to do this at scale, and absorbs byproducts into its wider industrial system, something smaller producers can't match.

   
   

4. China dominates the middle of the supply chain, not just the mines

   China imports significant volumes of critical minerals, including some heavy rare earths, cobalt, and nickel, then adds value in processing and manufacturing. Meanwhile, its factories consume around 70% of global rare earth demand in renewables, EVs, and electronics. That dual role lets Beijing influence prices and undercut new entrants while still depending on others for upstream inputs.

   
   

5. China can weaponize rare earths, but probably won't go nuclear

   Beijing has already used minerals as leverage: the 2010 export restriction toward Japan, and recent controls on germanium and gallium. Yet Dr. Zhang sees no evidence of plans to completely cut off rare earth exports, especially for clean energy. China still issues licenses to key partners like Japan and South Korea, and has held back its strongest card, heavy rare earths for high-end magnets. The pattern suggests calibrated retaliation, not total cutoff.

   
   

6. Replicating China’s ecosystem is possible, but slow and expensive

   Other countries can technically build processing and magnet capacity with state backing, capital, and five to ten years of patience. The chemistry dates to the 1980s; the barrier isn't scientific. The real challenge is coordinating suppliers across jurisdictions, managing local protests over pollution, and competing with Chinese producers who can lower prices and spread costs across a massive domestic market.

   
   

7. Stockpiling and reshoring have hard limits

   Strategic reserves of rare earths can buffer short-term shocks, but they carry risks if China responds by cutting prices. Countries that bought at a premium may lock their industries into higher input costs. Building duplicate "China-free" supply chains for narrow defense needs is feasible, but attempting the same for broader energy transition demand risks delaying batteries, turbines, and EVs.

   
   

8. Innovation can reduce dependence, not eliminate it soon

   Governments and firms across China, Japan, South Korea, Europe, and the US are investing in alternative magnet chemistries, recycling, and substitution. China itself leads in patents for recycling and rare-earth-efficient technologies. These advances have trimmed specific vulnerabilities, and battery chemistry has shifted away from cobalt, but no near-term breakthrough removes the need for rare earth magnets in aviation and high-performance motors.

   
   

9. Industrial churn in China strengthens survivors instead of triggering collapse

   Subsidies and provincial rivalry have produced hundreds of Chinese EV and clean-tech firms, many of which will fail. Dr. Zhang argues this doesn't signal systemic collapse; assets, workers, and know-how get absorbed by stronger companies. In rare earths, Beijing has already consolidated hundreds of miners into a handful of large groups and manages output through production quotas, reducing the risk of uncontrolled oversupply.

   
   

10. Interdependence cuts both ways in a fragmenting world

    Global supply chains for advanced tech remain deeply intertwined. China dominates midstream mineral processing but relies on foreign tools and IP in areas like semiconductor lithography. Western economies worry about Chinese leverage, yet full decoupling would raise costs, fuel inflation, and slow climate goals. The same interdependence that makes rare earths look like a vulnerability also constrains how far either side will escalate.

    
    

11. What the Next Five Years Could Look Like

    - Best Case Scenario: China’s share of key stages drops toward the 60% threshold that reassures policymakers, allied projects come online, and Beijing continues supplying global industry without major disruption.

    - Worst Case Scenario: Rare earth supply chains harden into rival blocs, raising costs on all sides and slowing the clean energy transition.

    - Black Swan Scenario: A regional crisis, such as a mishandled Taiwan flashpoint, triggers sweeping export controls and forces a rapid, painful market reset.