In a world increasingly reliant on technology, rare earths have become a strategic resource of incalculable value. These 17 chemical elements, essential to the manufacture of products ranging from electric vehicles to wind turbines to military weapons, are reshaping the global economy and geopolitics. China, the country with the largest amount of these key elements, recently revealed expanding reserves in the southwestern province of Sichuan, thanks to the discovery of nearly 5 million tonnes additional, which will allow this country to continue to be the undisputed leader in its production and control.
Raquel Jorge Ricart, a researcher at the Royal Elcano Institute, recalled this in a recent analysis: In 1992, the father of the Chinese economic revolution, Deng Xiaoping said: “The Middle East has the oil, but China has the rare earths.”. Rare earths and critical raw materials, in general, have been largely forgotten in the geopolitical competition of recent years, which has focused attention on which country dominates certain technologies (artificial intelligence, semiconductors and many others) and not on what means are needed to access said field, said this expert. China controls rare earths and its new discovery gives it an even greater hegemony over this mineral.
China’s Hegemony in Rare Earths
China has an estimated 44 million tonnes of rare earths, accounting for about 37% of the world’s reserves. Although its share of global production has fallen from 90% in the 2010s to 70% by 2023, it remains the world’s largest producer and exporter. This domination has generated geopolitical tensions, particularly with the United States.which considers China as a key player in the technological and strategic conflict.
The discovery in Sichuan, more precisely in the autonomous prefecture of Liangshan Yi, one of the poorest regions of the countryfurther strengthens China’s position in this market. According to the China Rare Earth Group, the state-owned enterprise that oversees the sector, the extraction of these new reserves will be crucial to “safeguarding the security of China’s rare earth resources.”
Global distribution of rare earth reserves
Although China controls much of the production, other countries also have significant reserves. Vietnam and Brazil come next on the list, with around 18% and 17%. global reserves, respectively. These countries appear as potential players to diversify global supply and mitigate dependence on China.
The Asian “giant” controls about 40% of all rare earths discovered in the world. Russia is also on the list of countries with power in this market with 12 million tons (10% of world reserves) and the United States appears in a discreet position with 2.3 million tons (1% of world reserves), behind India or India. Australia, for example.
A technological and economic battle
The interest in rare earths is not limited to consumer technology. These minerals are essential to the global energy transition, especially in the production of permanent magnets used in wind turbines and electric motors. With increasing global demand, competition to secure these resources is intensifying.
The conflict between the United States and China over control of the rare earth supply chain is a clear example. Washington has taken steps to reduce its dependence on Beijing, encouraging domestic production and exploring collaborations with other countries such as Australia and Canada. However, China’s historical dominance in extraction and processing gives it a significant advantage.
China’s Strategy: Consolidate Control
Faced with growing international competition, China is strengthening its control over the sector. The China Rare Earth Group, created in 2021 after the merger of three state-owned companies, plays a central role in this strategy, managing the extraction, reserves and production of these minerals. In addition, the country limits exports of rare earths, classified by the Ministry of State Security as strategic resources “directly related to national security”.
At the same time, China is also looking to expand its rare earth industry into sectors downstreamimproving the efficiency of resource utilization and technological advantage of their enterprises. “Consolidating resource advantages is crucial, but China’s rare earth industry also needs to develop downstream sectors and improve resource utilization efficiency,” said Pan Helin, an economist and adviser to the Ministry of Industry and Information Technology.
The global impact of Chinese decisions
China’s decisions have an immediate impact on the global marketThis year, the country increased its mining and smelting quotas by 5.9% and 4.2% respectively, to reach 270,000 tonnes and 254,000 tonnes. However, the value of exports in the first eight months of the year fell by 40.2%, despite a 6.4% increase in export volume, reflecting a volatile market sensitive to geopolitical dynamics.
The growing global demand for rare earths, driven by the energy transition and technological innovation, ensures that these minerals will continue to be a point of friction and cooperation in international relations. In this scenario, China, with its immense control over reserves and production, will continue to play a decisive role in shaping the global economic and technological future.
