As More Countries Race To Mine Rare Earths, Can China’s Dominance Be Broken?

Key Concepts

Rare Earth Elements (REEs): A group of 17 metallic elements crucial for modern technologies.
Rare Earth Magnets: High-performance magnets containing REEs, essential for EVs, electronics, and defense.
Supply Chain Resilience: The ability of a supply chain to withstand disruptions and maintain operations.
Processing Technology: The specialized methods and infrastructure required to refine raw rare earth minerals into usable forms and manufacture magnets.
In-Situ Leaching (ISL): A mining technique involving injecting solutions into the ground to extract minerals, raising environmental concerns if not properly managed.
Geopolitical Tightrope: The delicate balance countries must maintain in their foreign policy and trade relations between competing global powers.
Critical Minerals: Minerals deemed essential for a country's economic or national security, often subject to supply chain risks.
Export Controls: Government-imposed restrictions on the export of certain goods or technologies, used as a geopolitical tool.
Monopoly: Exclusive control over a commodity or service in a particular market.

The Global Rare Earth Crisis and China's Dominance

The video highlights a looming global crisis centered on rare earth elements (REEs), driven by China's near-monopoly. A hypothetical scenario in May 2025 depicts China choking off rare earth magnet exports to the US, halting production of critical items like F-35 fighters, missiles, and automobiles. By October, further restrictions on REEs and processing technology are imposed globally, leading to widespread panic in the US and Europe.

Rare earth elements, defined as 17 specific elements on the periodic table, are indispensable for modern living, found in electric vehicles (EVs), mobile phones, wind turbines, and even fighter jets. China's actions are characterized as "China versus the world," imposing "unacceptable export controls." Despite a temporary one-year pause in restrictions announced on October 30th, the vulnerability of global supply chains remains. The core issue is not just securing raw materials but the critical processing of these metals, which China overwhelmingly controls.

Japan's Pioneering Strategy for Rare Earth Resilience

Japan serves as a key case study, having successfully reduced its dependence on Chinese rare earths from over 90% in 2010 to approximately 50% today. This transformation was triggered by a diplomatic incident on September 7, 2010, when a Chinese fishing boat collided with a Japanese Coast Guard vessel near the disputed Senkaku/Diaoyu Islands. In response, Beijing halted REE exports to Japan, causing immediate panic and severely impacting Japan's automobile sector, particularly hybrid car production.

Japan's comprehensive "resilience package" included:

Financial Commitment: An initial budget of 100 billion Japanese Yen (approximately $1.2 billion USD at the time), with further investments in subsequent years.
Stockpiling: Establishing strategic reserves of rare earth minerals.
Enhanced Recycling: Significant investment in its existing rare earth recycling ecosystem.
Technological Innovation: Developing new methods to reduce or replace REE use. Examples include:
- Nex Core Technologies: Created a metal refining and processing method to prevent high-performance motors from overheating, reducing the need for certain rare earth magnets.
- Proterial: Developed magnets primarily composed of iron oxide.
- Denso: Created magnets using iron and nickel.
- Daido Steel: Developed REE-free magnets for Honda.
- Toshiba and Tohoku University: Collaborated on samarium iron isotropic bonded magnets, another type that reduces REE usage. These innovations, however, faced the hurdle of being "too expensive" and "not commercially viable" compared to Chinese alternatives.
Diversified Overseas Investments: Japan actively sought rare earth deposits outside China, leading to:
- A deal with Mongolia in November 2010 for joint exploitation of rare earth minerals.
- A $250 million USD investment in Australia's Lynas Corporation and its refining facility in Malaysia. By 2023, Lynas supplied 90% of Japan's neodymium and praseodymium needs, a significant increase from virtually none before the Chinese embargo.
- Investments in Kazakhstan and Namibia.
- The Japan Organization for Metals and Energy Security (JOGMEC) invested over $600 million in more than 100 rare earth projects globally between 2004 and 2020, now operating in 15 countries.

A key insight from Japan's experience is that government subsidies and companies' willingness to pay higher prices were essential for non-Chinese rare earth mines to survive, as Chinese rare earths are "much more competitive." Despite these efforts, Japan remains about 50% dependent on China, especially for "particular minerals in rare earths" that are difficult to source elsewhere, underscoring the "impossible" task of achieving 100% autonomy. The lessons for the US and Europe are to "do everything you can," including recycling, investing in other countries, building refineries, stockpiling, and finding alternatives, while also maintaining stable diplomatic relations with China.

Malaysia's Ambitious Rare Earth Development

Malaysia is emerging as a significant player, currently the world's second-largest provider of refined rare earths, contributing an estimated 4% of global supply and 13% of the United States' supply. This position is largely due to the Australian mining firm Lynas's processing plant in Kuantan, which has operated for over a decade and is the only non-Chinese firm to achieve full production.

Malaysia aims to expand its rare earth production, a plan "turbocharged" by President Trump's visit and a critical minerals deal. Government estimates indicate approximately 16.1 million tons of rare earth deposits. A special committee is focused on developing the entire value chain: upstream (mining), midstream (refining), downstream (magnet manufacturing), and R&D. The goal is to establish a major new industrial growth area, diversifying global supply chains for national security interests.

The real value lies in refining and magnet manufacturing. Malaysia has a head start in the chemical industry, crucial for refining. The government projects that super magnet production alone could generate $3 billion USD in revenue by 2030. In November 2025, Prime Minister Anoir announced a $140 million magnet manufacturing facility near the Lynas plant, a partnership with Lynas and South Korea's JS Link.

However, Malaysia faces several challenges:

Complexity: Producing rare earth permanent magnets is a "very long industrial chain" that cannot be developed quickly.
China's Influence: China, the market leader (94% of global demand), has offered to assist Malaysia. However, China's October 2025 rule requiring export licenses for companies using Chinese rare earth technologies (even outside China) could subject Malaysia to Chinese export controls if its magnets or refined REEs utilize Chinese technology.
Geopolitical Tightrope: Malaysia must balance prioritizing US investments (from the Trump deal) with maintaining trade-oriented foreign policy and relations with China.
Environmental Concerns: The Lynas plant has faced protests over low-level radioactive waste and potential air, soil, and water contamination. The In-Situ Leaching (ISL) mining technique, while potentially environmentally sound, can be done "recklessly," risking groundwater contamination if not controlled. The government must balance economic development with environmental protection and public livelihoods.

Other Asia-Pacific Players and Global Efforts

Vietnam: Unveiled a national plan to produce 60,000 tons of rare earth oxides annually but has "stumbled" due to a lack of know-how, which China is unwilling to share. Partnerships with Australian, Korean, and Japanese companies are exploring a "China-free" rare earth supply chain.
Thailand: Signed an MoU with the US in October 2025 to open its rare earth mineral sector to US investments, though this was met with protest.
Southeast Asia's Potential: Experts suggest Southeast Asia could become a major player with China's support, but "without China's support. Don't try."
Australia: A Lynas processing plant opened in November 2024, signaling a massive scale-up in production. In October 2025, Australia and the US signed a deal to jointly invest $3 billion in critical mineral projects over six months, aiming to unearth $53 billion worth of minerals. However, optimism about quick results (e.g., "so much critical mineral and rare earths that you won't know what to do with them" in a year, as suggested by Mr. Trump) is deemed "too optimistic." The primary challenge is not mining, but the "refinery" process, which China dominates. US companies are exploring processing capabilities, but it's "very expensive and it takes a long time."

Myanmar: Rare Earths and Conflict Funding

Myanmar, gripped by civil war since 2021, possesses some of the best geology for heavy rare earths outside China. A 2024 US Geological Survey study identified Myanmar as the world's third-largest rare earth miner, behind China and the US, and ahead of Australia.

Since the 2021 military coup, illegal rare earth mining has reportedly surged, particularly in Kachin state near the China border. Activists claim this mining funds the military's conflict against rebel groups, providing "a lot of big fund" for weapons. Myanmar's lucrative rare earth trade was valued at $1.4 billion in 2023, with most rare earths sold to China.

The environmental damage from this unregulated mining is severe. Photos show workers without protective gear, and toxic wastewater (containing "oxley acid") discharged, contaminating farmland and the Irrawaddy River, which is vital for Myanmar's population. Mining sites are depicted as "blue spots" filled with toxic materials in plastic-lined pits, with concerns about leakage into soil and groundwater due to a "lack of the regulatory body and the lack of compliance." These mines are often owned by Chinese business firms and local entities.

In October 2024, the Kachin Independence Army (KIA/KIO) seized control of rare earth mining sites in Kachin state. While initially halting operations, they later allowed mining to resume to generate much-needed revenue. Despite discussions with India and the United States about selling rare earths, the KIO faces "no bargaining power" and "no choice" but to sell to China due to the ongoing conflict and lack of alternative buyers. An activist from Kachin state expressed a desire for mining to "stop totally" due to the "huge" and "so bad" environmental impacts, lamenting that billions in potential revenue are not contributing to local development.

China's Rise to Rare Earth Dominance

China's rare earth dominance stems from a strategic vision articulated by Deng Xiaoping in 1992: "The Middle East has oil. China has rare earth." This mission was advanced by geologist Wen Jiabao, who later became Premier (2003-2013) and was personally involved in rare earth policy. Beijing heavily invested in state-owned mining firms, building a comprehensive rare earth industry.

This rapid expansion came at a high environmental cost, with forests transformed into mines and toxic wastewater turning farmland into wasteland, as reported in 2012. The United States, once the global leader in rare earth production from the 1950s to 1980s (e.g., Mountain Pass mine), saw its industry decline due to fading demand for certain elements, environmental problems, and the rise of environmental consciousness in the 1980s and 1990s. It became cheaper for Western countries to import from China.

China's competitive edge is attributed to:

Tolerance for Environmental Costs: A willingness to accept long-term environmental damage.
State-Guided Industrial Policy: A comprehensive approach involving original research, education, technology upgrades, access to bank credit, and sheer hard work, similar to its EV sector strategy.
Control of Processing Technologies: As Max (quoted) stated, "whoever controls the processing technologies" is critical, not just the deposits. The US historically exported most of its raw rare earths to China for "final processing high value added processing," only stopping in April 2025 due to trade disputes.
Full Value Chain Capacity: China is the only country with the developed capacity to cover the entire value chain for all 17 rare earth elements.
Manpower: China boasts the largest workforce in rare earths, with thousands of educated engineers, contrasting with "zero" PhDs in the West a few years ago.

Global Response and Future Outlook

China's new export controls, implemented in October 2025, mandate Chinese government approval for trading any product containing more than 0.1% of Chinese-mined or processed minerals. This rule effectively gives China control over significant portions of the global economy and technology supply chain, including semiconductors.

With a global AI data center boom and military-industrial complex demanding rare earths, countries are racing to mine them. However, securing raw supplies is only the "first step"; processing is "just as critical," and China controls the global processing industry. The US plans to identify strategic projects across the entire supply chain (extracting, refining, processing, recycling) and build strategic reserves. The G7 has also announced plans to reduce China's grip on rare earths.

Despite these efforts, the consensus among experts is that the world will "Never" fully wean itself off China's rare earth minerals and magnets. China has built "huge" capacity, particularly in rare earth permanent magnets. While "crude solutions" might emerge for "several products" or applications, replicating China's comprehensive range of "dozens of different products of different purities" is deemed "very difficult" and "not possible."

Conclusion

China's strategic, state-backed development of its rare earth industry, coupled with its willingness to bear environmental costs, has resulted in an unparalleled global monopoly over the entire rare earth value chain, from mining to advanced processing and magnet manufacturing. This dominance presents a critical geopolitical and economic vulnerability for the rest of the world, as evidenced by China's use of export controls as a strategic tool. While nations like Japan have demonstrated success in reducing their dependence through a multi-faceted approach involving stockpiling, recycling, technological innovation, and diversified overseas investments, and emerging players like Malaysia and Australia are rapidly developing their capabilities, fully decoupling from China's rare earth supply chain is considered an "impossible" feat. The immense scale, cost competitiveness, and control over crucial processing technologies that China possesses make it an indispensable, albeit challenging, partner. The ongoing global race to secure alternative supplies and establish independent processing capabilities is fraught with significant hurdles, including high costs, environmental concerns, geopolitical complexities, and the substantial time and expertise required to replicate China's comprehensive ecosystem. This situation underscores the enduring need for sustained international cooperation, strategic investment, and nuanced diplomatic engagement to navigate this critical global dependency.

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