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Universidade Autónoma de Lisboa

e-ISSN: 1647-7251

Vol. 15, Nº. 1 (May 2024 – October 2024)

249

RARE EARTH GEOPOLITICS: GLOBAL DYNAMICS

AND STRATEGIC BALANCE OF POWER

TIAGO TECELÃO MARTINS

ttecelao24@gmail.com

Graduate in Sociology and Master in International Studies, ISCTE-IUL (Portugal). Interested in

Sino-Russian relations in the Arctic and the dynamics of this geopolitical region.

Abstract

This article examines the multifaceted landscape of Rare Earth Elements (REEs), crucial

components in traditional industries like glass and metallurgy, as well as pivotal in the growing

green and digital economies. The transition toward a greener economy heavily relies on REEs

for batteries, wind turbines, and solar panels. The global REE supply chain, dominated by

China with nearly 95% of the world's reserves, introduces complexities and geopolitical

considerations, and prompting nations like the United States and countries in the European

Union to seek alternatives and reduce dependence on China's dominant control. The United

States, once a key player in rare earth mining, now heavily relies on Chinese imports, posing

national security concerns. This article examines the challenges and opportunities in the global

rare earth elements market, addressing environmental controversies, geopolitical tensions,

and the race for a secure supply chain. As nations handle the complexities of this critical

industry, the pursuit of sustainable and geopolitically secure rare earth supplies emerges as

a vital global concern.

Keywords

Rare Earth Elements (REEs); Geopolitics; Environmental Sustainability; Global Supply

Chain; US-China Trade War.

Resumo

Este artigo analisa a paisagem multifacetada dos Elementos Terras Raras (ETRs),

componentes cruciais em indústrias tradicionais como vidro e metalurgia, bem como

essenciais na crescente economia verde e digital. A transição para uma economia mais verde

depende fortemente dos ETRs para baterias, turbinas eólicas e painéis solares. A cadeia de

abastecimento global de ETRs, dominada pela China com quase 95% das reservas mundiais,

introduz complexidades e considerações geopolíticas, levando nações como os Estados Unidos

e países da União Europeia a buscar alternativas e reduzir a dependência do domínio da China

sobre este mercado. Os Estados Unidos, outrora uma potência chave na mineração de terras

raras, agora dependem fortemente de importações chinesas, levantando preocupações com

a segurança nacional. Este artigo examina os desafios e oportunidades no mercado global de

elementos terras raras, abordando controvérsias ambientais, tensões geopolíticas e a corrida

por uma cadeia de abastecimento segura. À medida que as nações lidam com as

complexidades desta indústria crítica, a busca por materiais de terras raras sustentáveis e

geopoliticamente seguros emerge como uma preocupação global vital.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 15, Nº. 1 (May 2024 – October 2024), pp. 249-265

Rare Earth Geopolitics: Global Dynamics and Strategic Balance of Power

Tiago Tecelão Martins

250

Palavras-chave

Elementos de Terras Raras (ETR); Geopolítica; Sustentabilidade Ambiental; Cadeias de

Logística Globais; Guerras Comerciais EUA-China.

How to cite this article

Martins, Tiago Tecelão (2024). Rare Earth Geopolitics: Global Dynamics and Strategic Balance of

Power. Janus.net, e-journal of international relations. VOL 15, Nº.1, May-October, pp. 249-265.

DOI https://doi.org/10.26619/1647-7251.15.1.14

Article received on December 3, 2023, and accepted for publication on March 13, 2024.

JANUS.NET, e-journal of International Relations

e-ISSN: 1647-7251

Vol. 15, Nº. 1 (May 2024 – October 2024), pp. 249-265

Rare Earth Geopolitics: Global Dynamics and Strategic Balance of Power

Tiago Tecelão Martins

251

RARE EARTH GEOPOLITICS: GLOBAL DYNAMICS

AND STRATEGIC BALANCE OF POWER

TIAGO TECELÃO MARTINS

Introduction

Rare Earth Elements (REEs) are a group of 17 (15 with commercial properties) soft

heavy-metals, that include such important elements like Thulium and Cerium. Those are

vital components in a wide range of modern technologies, and are found in everyday

items like cell phones, computer processors, medical tools, industrial products such as

MRI contrast agents and even high-powered magnets used in windmill generators (Van

Gosen et al, 2014). They also play a significant role in the glass industry, where they are

used for polishing and “providing color and special optical properties” (Chapman, 2017,

p. 52). Lanthanum, one specific REE, makes up nearly 50% of digital camera lenses,

including those in cell phones (Chapman, 2017). CD-ROM and DVD drives are other

crucial applications for these metals. While the label "rare" suggests scarcity, these

elements and the minerals housing them are plentiful in the Earth's crust, but the

discovery of deposits sizable enough for economic exploitation remains an uncommon

geological event.

Extraction and purification of rare earth metals play a pivotal role in achieving a Zero

Carbon transition by facilitating the advancement of battery technology, windmill

efficiency, and solar panel production (Serpell, Chu and Paren, 2021). It's no coincidence

that Bill Gates, a major player in the green transition, is investing around $1 billion in AI

mining of rare earth metals, made through KoBold Metals, a mining company based in

Berkeley (Sheikh, 2023).

Also, the transition from traditional vehicles to electric ones seem to be dependent on

the future of mining of rare earth metals. In reality, the President of Defense Metals

Corporation, actually told the press that: “Our way of life depends on advanced materials

— from the car we drive to the buildings that house us” (Silverstein, 2022). General

Motors is rapidly moving from sourcing their rare earth materials, especially neodymium,

from China, to an increase in mining their own rare earth metals domestically .

Nevertheless, this process poses environmental struggles, like in In Inner Mongolia, a

key Chinese hub for rare earth ore extraction, that has been accused of detrimental

practices such as injecting acid into the ground and using various chemicals having

occasioned significant environmental repercussions. This has resulted in the release of

toxic gases, the creation of acidic wastewater, and the generation of radioactive waste,

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e-ISSN: 1647-7251

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with the impact on surrounding farms and villages being devastating, prompting

thousands of people to relocate (Penke, 2021 and Bontron, 2012).

Rare Earths were not widely recognized by scholars or policymakers until China

established a virtual monopoly across all stages of the Rare Earth Elements value chains.

This shift from simple industrial components to materials with strategic and economic

significance, acquired worldwide attention, leading to a reevaluation of their importance

in discussions about economic direction and resource competition. The increasing

demand for REE raw materials outside China, has raised concerns about the near-

monopolistic supply situation (Andersson, Zeuthen and Kalvig, 2018), and as a result

both the European Union and the United States have designated REEs as Critical Raw

Materials, highlighting their strategic importance (Andersson, Zeuthen and Kalvig, 2018,

p. 5). Despite efforts in the EU and other Western countries to develop alternative REE

supplies, these political strategies have faced challenges and proven (in general)

unsuccessful, and this is changing the western strategy. In fact, U.S. Department of

Interior, even identifies “35 critical minerals essential for national and economic security”

(Cohen and Grant, 2021).

From Commerce to Conflict: REE’s and the China-US Power Play Initial

Landscape: from United States Monopoly to Beijing’s Ascent

Situated in a remote part of the California desert, approximately 85 kilometers southwest

of Las Vegas, Mountain Pass operates as an open pit mine crucial for the extraction and

production of Rare Earth Elements, and was discovered in 1949, coming under the

ownership of the Molybdenum Corporation of America, initiating small-scale production

in 1952 (Burron, 2023). Recognized as a historic source, Mountain Pass once held the

distinction of being the predominant global supplier of REEs and it was one more evidence

of American power on a global scale at the time. It reached its peak period of production

“between the mid-1960s through the 1980s” (Chapman, 2017, p. 74). Even though the

United States was the undefeated dominant position as the world's primary rare earths

producer until the 1980s (Seaman, 2019, p. 13), the 1970’s were already giving hints of

a gradual decline with the rise of environmental protection movements and regulations,

especially in the United States, resulting in a significant increase in “regulatory and

pricing pressure on producers” (Seaman, 2019, p. 13), especially in western countries.

This situation led some companies operating in this “environmentally hazardous

industries to seek alternative resource supplies” (Seaman, 2019, p. 13) or contemplating

the relocation of production.

Contrastingly, while the United States experienced a rapid growth in the production of

rare earth elements during the 1950s and 60s, establishing control over most of the

supply chain through the discovery of Mountain Pass, the state of China underwent a

comparatively slower process. The first developments of processing Rare Earth minerals

in China were done during the late 1950’s, but “it was not until the mid-1970s that China

became able to make quality RE products and emerged as a very important producer,

consumer, and exporter” (Shen, Moomy and Eggert, 2020, p. 130). This was actually

coincidental with the emergence of environmental movements in the United States,

which, in turn, resulted in the relocation of production, as stated above. Also, in 1975,

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the Chinese central government-initiated regulation of the rare earth industry by

establishing the National Rare Earth Development and Application Leading Group (Shen,

Moomy and Eggert, 2020, p. 130).

The “liberalization of global trade and investment”, along with China's own economic

openness, allowed international companies to set up operations in China, and gave

Chinese firms some technological know-how in the rare earth sector from overseas

(Seaman, 2019, p. 13). Furthermore, under the guidance of the Ministry of Land

Resources and Planning, China expanded its mining operations between 1978 and 1989

(Pelaudeix, 2015, p. 135). The liberalization and the resource-based strategy of the

Chinese government was bearing fruits during the 1980’s, with Japan and the USA

increasing the import of Rare Earth products from China. Japan alone doubled its import

of primary RE chlorides and oxides from 1000 to 2000 tons, and by the year of 1985, it

is reported that China’s “capacity for producing mixed RE chlorides and oxides was

approximately 10,000 tons” (Shen, Moomy and Eggert, 2020, p. 130).

This economic move is seen by some analysts and experts in the field as a failed strategy

from the USA, and Ryan Castilloux, founder of Adamas Intelligence’s, an organization for

the research of strategic metals and minerals, acknowledged that “China (…) in the ’80s,

flooded the market with low-priced rare earths elements and led to the going out of

business of all the other mines globally” (Seligman, 2022). Castilloux continued saying

that Beijing’s low costs were driven by “government subsidies, low worker wages and

poor environmental standards” (Seligman, 2022) that outsmarted the US Rare Earth

industry. Thus, it is possible to see how the 1980s ignited the start of the competition

between both superpowers that continue until today in this field.

Deng Xiaoping's Vision and China's Rise to Rare Earth Supremacy in the

1990s

In the 1980s, competition intensified due to liberalization and China's strategic moves.

However, the 1990s marked China's strong emergence as a major player in rare earth

production, making the Yellow Dragon a leading force during that decade and “producing

around 85-95% of the world’s supply” (Lavengood, 2022, p. 95). During the last three

decades, China employed its abundant rare earth resources to drive “technological

innovation and economic development, in a wide range of sectors, from space, defense,

and energy” (Seaman, 2019, p. 13). The leadership of Deng Xiaoping and his economic

and political plan outlined in 1992 came to be crucial for the REE industry of China, when

he stated that his government goal would be to achieve world leadership in the REE

industry, and affirmed in 1992 that the “Middle East has oil, China has rare earth”

(Pelaudeix, 2015, p. 135). After this direction of policy was stated by the Chinese

government, the late 90’s confirmed and illustrated this new guideline, when for example,

General Motors' magnet-producing subsidiary, Magnequench, was acquired by Chinese

State-Owned Enterprises (Mancheri and Marukawa, 201, p. 93), causing some attention

from the United States, with Chinese companies securing around 62 percent majority

stake at the company (Mancheri and Marukawa, 2018, p. 93). Mr. Zhang Hong, the son-

in-law of Deng Xiaoping assumed leadership roles in Magnequench (Mancheri and

Marukawa, 2018, p. 95) and the relocation of Magnequench to China in the early 2000s,

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following the acquisition, marked a pivotal moment in Sino-U.S. economic relations on

REEs issues.

Simultaneously, Japan closed numerous rare-earth processing facilities, transferring both

plants and technology to China, and making it more dependent on “Chinese rare earth

processors for mischmetal or RE oxides to use as metal hydrides in energy storage” over

the years (Mancheri and Marukawa, 2018, p. 113). Therefore, it is possible to understand

that China’s dominance of the rare-earths market is a relatively new phenomenon, and

its dominance over the supply chains allied with environmental issues (a toxic waste spill)

led to the cessation of production in the USA’s Mountain Pass in 2002 (Chapman, 2017,

p. 74), and to the subsequent downfall of the US rare earth production. It is true that

under new ownership in 2008, Molycorp resumed production, but these owners have

experienced repeated financial problems since then.

Rare Earths Diplomacy: China's Export Restrictions and Global Response

Before 2010, scholars paid little attention to the concentration of China's rare earth

production. However, in that mentioned year, China's dominance, accounting for “95%

of the world's rare earth oxides” (Seaman, 2019, p. 7), led Beijing to enforce strict

measures that included the imposition of export quotas, taxes (ranging from 10% to

25%), and price controls, causing significant repercussions across global industries like

information and communication technology, energy, and defense (Seaman, 2019, p. 7-

14). In July 2010, China's Ministry of Commerce announced a dramatic “725% reduction

in Rare Earth Oxide (REE) exports for the second half of the year” (Chapman, 2017, p.

61) and in December 2010, Beijing declared an additional cut, setting REE export quotas

for the first half of 2011 at 14,508 tons, reflecting an 11% reduction (Chapman, 2017,

p. 61).

In September 2010, a notable incident unfolded, marked by a clash between a Chinese

fisherman and the Japanese Coast Guard (Seaman, 2019, p. 23). Reports emerged of

China halting rare earth shipments to Japan, creating an effective embargo, and

increasing concerns about China potentially leveraging its rare earth supply as a

diplomatic tool. Faced with this uncertainty, “consumers of rare earths frantically sought

solutions and (…) began exploring some of the most far-flung corners of the globe - from

the depths of the Pacific Ocean to the jungles of the Amazon, to war-torn Afghanistan”

(Seaman, 2019: 7), in order to explore alternatives to the Chinese supply chain.

Nevertheless, upon closer examination, these disruptions emerged, not influenced by

Beijing’s central authorities, but by the hands of local government officials, and port

workers, responsible for halting rare earth shipments to Japan, in order to sell for a

higher price due to the tendencies in prices. Seaman (2019, p. 23-24) even highlights

the potential influence of the black market in this incident, emphasizing its significant

power within China's Rare Earth Industry. In reality, officials at different levels of the

Chinese central government, including the Ministry of Commerce and the Prime Minister,

firmly refuted any suggestion of implementing an embargo on Japan.

Following this rare earths crisis between China and Japan, there was a significant surge

in the prices of these elements in 2011 and 2012. Primarily driven by speculative

activities, prices rose by up to 500 percent (Seaman, 2019, p. 3), marking the beginning

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of heightened awareness in the West regarding Chinese dominance in this field, leading

to the initiation of over 200 new projects outside of China in the subsequent years. The

surge in prices served as a catalyst for a new moment in the “collaboration between the

EU, the US, and Japan to find ways in which to innovate” (Kalantzakos, 2020, p. 4),

addressing their substantial dependence on these elements, and resulting in the most

significant increase in non-Chinese rare earth minerals, rising from 16.5 million in 2010

to 87.3 million in 2015 (Seaman, 2019, p. 16). Production started in mines (sometimes

re-started) in Australia, Vietnam, Brazil and even the United States, and the focus was

to diversify, innovate and recycle in order to end dependence on Chinese rare earth

minerals. In fact, during 2012, the United States reactivated Mountain Pass after a few

years of dormancy, even though initially, this reactivation was gradual and slow.

Currently, this mine in California accounts for 15 percent of the world's production of rare

earths and is used to supply magnets for "America's most advanced commercial and

military technology, from electric vehicles to Virginia-class attack submarines”

(Seligman, 2022). The new company that owns Mountain Pass, MP Materials, despite

some ups and downs in terms of stock closures, has recently been on Zacks.com's list of

the most searched stocks (Zacks Equity Research, 2023) and has been instrumental in

the efforts of the public and private sectors to increase the production of Rare Earth

Elements from its mine. In November 2022, MP Materials announced the second phase

of its production with the construction of a new facility in Fort Worth, Texas. The goal of

this new facility is to "convert the refined minerals from Mountain Pass into metals, alloys,

and magnets" (Seligman, 2022). The company's Chairman, James Litinsky, himself

mentions that "there has to be an American champion in this space" (Seligman, 2022),

sending a message to China that the competition cannot come to a halt.

In 2009, China tried to acquire a majority stake (51 percent) in Lynas, Australia's primary

rare earth mining corporation (Kalantzakos, 2020, p. 4). However, the Australian

government rejected the proposal, stressing the importance of keeping non-Chinese-

controlled rare earth resources accessible, and in 2011, this strategy was taken further,

when Japan stepped in to support Lynas, providing “a total of USD 250 million in loans

and equity in order to receive 8,500 tons of rare earth products over a period of ten

years” (Kalantzakos, 2020, p. 5). In 2012, “EU, Japan, and the US collectively filed

complaints with the World Trade Organisation (WTO)” (Kalantzakos, 2020, p. 4),

regarding Chinese export restrictions on rare earths and other elements like tungsten,

and in June of that year, the “U.S. formally requested the establishment of a Dispute

Settlement Board (DSB) process” (Chapman, 2017, p. 62). This meant that WTO was

called to solve this trade dispute between the Chinese export quotas and restrictions,

and the other several countries (lead by the US) complaining that this was China’s way

of leveraging and weaponizing international negotiations in its own favor. For America,

this was detrimental to “American workers and manufacturers across established and

emerging industrial sectors” (Chapman, 2017, p. 62), and something had to be done.

After two years of negotiations and processes, the final decision was that Chinese

practices “were inconsistent with its WTO accession commitments”, and that they

violated article 11 “of the General Agreement on Tariffs and Trade (GATT), which

prohibits trade restrictions besides duties, taxes, and other charges” (Chapman, 2017,

p. 62). The rare earths dispute between China and Japan underscored the potential

weaponization of these resources, intensifying global competition for them. Since then,

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scholars, international organizations and policymakers have shown a growing interest in

these disputes. A Google Scholar search for "Rare Earth Geopolitics" reveals a notable

increase in results over specific time periods: from 2010-2012, there are 9,230 results;

during the dispute from 2012-2014, this number rises to 11,600 results. Subsequently,

in the aftermath of the crisis from 2014-2016, the number further increases to 13,800

results, indicating the escalating relevance and attention to this critical geopolitical issue.

As a consequence of this decision by the WTO, China took the measure in 2015 of

abolishing export duties on Rare Earth Elements, and the China's Ministry of Finance and

State Administration of Taxation introduced a resources tax in their place. Nonetheless,

the disputes between various "Western" countries and China, concerning the embargo

and export duties, marked the emergence of another industry where Sino-American

relations were being forged amid a foundation of mutual mistrust. In fact, this

competition is giving way to new pathways and geographies involved in this conflict. The

rise of China’s investment in the Arctic is not confined to oil, gas and shipping, but also

encompasses the production of rare earths, and in January 2018 the publication of

China’s Arctic Strategy (State Council Information Office of the People’s Republic of

China, 2018) paved the way for China’s increasing importance in the region.

With Greenland trying to maneuver their way into a more independent position towards

Denmark’s control, their strategy has been one of flirting with both China and the West

in terms of deals for the prospection and export of their resources. China has directed

substantial investment towards Greenland, and has ambitious plans to construct or

expand airports in the region, like Nuuk, Ilulissat, and Qaqortoq (Kuo, 2019). This has

been very important for Greenland’s strategy of replacing Danish subsidies and diversify

its economy. Another two projects where collaboration between China and Greenland is

prospering, is at the Citronen Fjord zinc project in Northern Greenland and the Kvanefjeld

Rare Earth Elements (REE) and uranium project. Greenland Minerals Ltd. (GML) owns the

Kvanefjeld project, with a significant shareholder base from Western countries and an

11% investment from China's Shenghe Resources Holding (Andersson, Zeuthen, and

Kalvig, 2018).

Beyond Party Politics: The 'Rare' Harmony of Rare Earths Policy during

Trump and Biden Administrations

Recognizing the potential pitfalls of excessive dependence on Chinese REEs, former

President Donald Trump took action by issuing Executive Orders 13817 and 13953

(Executive Office of the President, 2020). These directives emphasized the need to

prioritize domestic extraction of minerals, refining processes, and the assurance of secure

supply chains. Donald Trump stated:

Our dependence on one country, the People's Republic of China (China), for

multiple critical minerals is particularly concerning. The United States now

imports 80 percent of its rare earth elements directly from China, with

portions of the remainder indirectly sourced from China through other

countries. In the 1980s, the United States produced more of these elements

than any other country in the world, but China used aggressive economic

practices to strategically flood the global market for rare earth elements and

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displace its competitors. Since gaining this advantage, China has exploited its

position in the rare earth elements market by coercing industries that rely on

these elements to locate their facilities, intellectual property, and technology

in China. For instance, multiple companies were forced to add factory capacity

in China after it suspended exports of processed rare earth elements to Japan

in 2010, threatening that country's industrial and defense sectors and

disrupting rare earth elements prices worldwide - Executive Office of the

President, 2020.

Donald Trump's statements resonate with the rhetoric put forth by prominent industry

analysts, as well as by members of the Pentagon and other American security agencies

who increasingly raise concerns about the need to act regarding the Chinese monopoly

in the production and acquisition of rare earths. The fact that the “United States had not

mined any rare earths domestically in 2017” (Kalantzakos, 2020, p. 4), relying instead

on importing 80 percent of REEs from China was a big cause of concern during the Trump

Administration. In reality, from 2017 to 2018, the estimated value of rare-earth

compounds and metals imported by the United States increased from 137 million dollars

to 160 million dollars (Kalantzakos, 2020, p. 5).

With this in mind, as part of the increasingly higher trade war between China and USA,

especially during Trump’s years, his administration listed REEs in the "summer 2018 list

of products" from China that might face tariffs. However, this decision was rapidly

overturned. First and foremost, the American dependence on Chinese rare earths could

lead to an economic and diplomatic catastrophe from which the U.S. would have difficulty

recovering, and the significance of these elements in the everyday economic aspects of

the U.S. prevented this trade war from progressing much beyond the initial threats.

Secondly, having already observed that Donald Trump was aware of the incident between

China and Japan in 2010, it would be expected that he also would not want to face the

same consequences from the WTO if China retaliated with similar complaints to the

organization in the event of the U.S. proceeding with restrictions on Chinese rare earths.

However, the year 2019 brought to light the same disputes as those in 2018, when

“Donald Trump announced he was increasing tariffs on $200bn of Chinese goods from

10% to 25%” (Makortoff, 2019). Chinese retaliation was fast, with tariffs imposed on

about $60 billion worth of a wide range of products imported from the U.S. One of the

editors of the state-owned newspaper "Global Times," Hu Xijin, tweeted: “Based on what

I know, China is seriously considering restricting rare-earth exports to the US. China may

also take other countermeasures in the future” (Makortoff, 2019). Near the end of 2019,

the United States signed a formal agreement with Australia on critical minerals production

as a way of delivering “opportunity and security to both nations” (U.S. Department of

the Interior, 2019), in an obvious move to counter Chinese rare earth monopoly, and

reinforce the diplomatic network known as QUAD in another critical industry.

The U.S. Department of Defense allocated $30 million to Lynas, the above mentioned

Australian rare earth company, in July 2020, supporting the establishment of rare earth

refinement facilities in Texas in collaboration with Blue Line Corp. aiming to process

imported rare earths domestically (Cohen and Grant, 2021). Also, Canada plays a crucial

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role in supplying 13 critical minerals to the U.S., with joint efforts to enhance production

discussed in confidential meetings in March 2021, already with the Biden Administration.

Both countries, as members of the Energy Resource Governance Initiative (ERGI), are

likely to continue collaborating on critical mineral sourcing. And the U.S. is also expanding

its critical mineral sources in Mexico, in mining projects led by companies like Southern

Copper and Asarco (Cohen and Grant, 2021).

The Biden administration is actively pursuing efforts to strengthen the U.S. rare-earth

sector, evident in their commitment to invest in rare-earth separation processes, and in

16 billion dollars awarded for “putting hundreds of thousands [of people] to work in union

jobs plugging oil and gas wells and restoring and reclaiming abandoned mines” (Swasey,

2021) under the newly approved $2 trillion infrastructure plan. President Biden's

Executive Order 14017 kickstarted a 100-day review of critical mineral supply chains,

and in order to combat the climate crisis, “announced an investment in the expansion of

the largest rare earth element mining and processing company outside of China” (White

House, 2021). The US Government strategy to counter Chinese power and domination

over the REEs market is based on deregulation and investment in public and private

partnership in order to achieve a stable domestic supply.

Additionally, it is also necessary to look at projects not directly related to Washington but

that demonstrate a willingness from its allies to create an alternative to Beijing. For

American allies, being a source of production and export of critical materials is a priority,

and for Americans, it is necessary to diversify, that is, import their sources of rare earths

from allies, reducing dependence on Beijing. As such, the UK launched a mega-project

in Angola in 2021, in collaboration with the company Pensana, in order to "build the

world's first sustainable rare earth separation facility" (Mining Technology, 2021) with an

investment of around 125 million dollars. The goal is to produce approximately 12,500

annualized tons of rare earth oxides and to represent about 5% of the world demand for

rare earths in the future.

In September 2022, another episode highlighted significant American concerns about

Chinese dominance in this industrial field. The delivery of an F-35 jet was halted for a

month following orders from the Pentagon due to issues related to the lack of notification

that its rare materials were sourced from China. Some military contracts now include

clauses requiring materials from China to undergo thorough inspection and scrutiny

(Hudson, 2022). In fact, the majority of F-35s contain materials from China, but the goal

is to reduce that number. Ms. Halimah Najieb-Locke, the Deputy Assistant Secretary of

Defense for Industrial Base Resilience at the U.S. Department of Defense, stated that

"there are choke points that we can’t control. If we don’t prioritize onshoring this, then

we are going to have weak points that don’t enable us to really defend ourselves”

(Hudson, 2022). Ms. Halimah Najieb-Locke's statement, emphasizing the need to

prioritize onshoring, reinforces the broader objective of strengthening domestic

capabilities. This commitment aligns with the broader narrative of Washington's efforts

to foster self-reliance and minimize vulnerabilities associated with relying on China for

crucial resources. General Motors, for example, trying to lead the Electric Vehicle’s

market have made a deal with Mountain Pass, in order to “to produce enough magnets

for up to 500,000 electric motors annually” (Eisenstein, 2021).

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And if in 2018 China made their way into Greenland and Arctic Rare Earth Elements, the

US approved during this year (2023), a resolution to begin a preliminary process for a

potential investment of US$3 million to US$5 million in Ucore Rare Metals Inc.'s rare

earths separation facility in Alaska (O'Rourke, 2021). The Alaska Strategic Metals

Complex is designed to process mixed rare earth concentrates from U.S.-allied suppliers

into high-purity REE oxides, in order to get to the full potential of the Arctic in terms of

mineral resources, since it is still underexplored (O'Rourke, 2021).

Indeed, both the Trump and Biden administrations have pursued a strikingly similar

course of action in revitalizing the American rare earths industry, driven by shared

motivations. While the Trump administration opted for more drastic measures, including

tariff hikes on Chinese products, the Biden administration has been cautious to avoid

potential economic and diplomatic repercussions with China, a significant economic

power in this domain. Nevertheless, the bipartisan political determination to reduce

dependence on the Chinese market transcends party lines and is a consistent theme

across two seemingly ideologically divergent administrations. It is possible to affirm it as

a “rare” bipartisan harmony in a “rare” earth environment.

Challenges and Opportunities: Balancing Environmental Responsibility

and Industrial Demand in a Divided World

Although the rare and critical materials industry represents a small portion of the

economy when evaluated individually (valued at roughly 9 billion dollars), it fuels various

industries, and its importance is crucial for the global economy (Seaman, 2019, p. 9).

Currently, China completely dominates the production of these materials, especially in

the case of heavy rare earths like dysprosium. These materials contribute to essentially

two categories: firstly, they are essential for traditional heavy industries such as glass,

metallurgy, and catalysts. On the other hand, about 40 percent of their contribution goes

directly to the emerging industries of the digital revolution and the green energy

transition. Currently, 23 percent of today's wind turbines utilize rare earth magnets, but

this figure is expected to increase to 72 percent by 2030 (Wind Europe, 2018).

Despite this, there are already pressures to replace rare earths with other components,

as expressed by billionaire Elon Musk, who is pushing for a total substitution of rare earth

dependence for the green economy and is actively seeking alternatives (Orf, 2023).

However, caution is necessary, as the European Commission, in its "Substitution Index"

of critical raw materials in 2017, revealed the extreme difficulty of replacing these rare

earths with other components. In fact, “heavy rare earths scored 0.96 on a scale of 0 to

1, with 1 being the least substitutable” (Seaman, 2019, p. 21).

It is important, however, to understand the challenges of the Rare Earth Elements

industry and not fall into the trap of oversimplifying the phenomenon. Even after several

regulatory measures, unlike major industries like oil and gas, China's rare earth industry

historically lacked centralization (Seaman, 2019, p. 25-26). Despite the strategic

importance of this industry for China, the latest image acquired from this scenario in

China shows that an estimated 25,000-50,000 tons of rare earth oxides were illegally

produced, with 60 percent involving "heavy" rare earths (Seaman, 2019, p. 25-26). This

challenges the notion of a highly bureaucratized state where crime would be difficult to

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take place. Additionally, there are practical obstacles to the exploitation of these

resources due to their high prices, which hinder the financing of these industries.

With this scenario in mind, China is making increasing efforts to centralize and enhance

the planning of rare earth production. In this regard, China developed the China’s

National Plan for Mineral Resources (2016-2020) with the goal of "protecting national

economic security, defense security, and strategic emerging industries" (State Council,

2016, p. 14, as cited in Andersson, Zeuthen, and Kalvig, 2018). This plan includes five-

year plans for both Zinc and Rare Earth Elements, encouraging the six major companies,

referred to as the "Big Six," to consolidate their positions and engage in overseas

activities, promoting collaboration with countries possessing advanced mining industries.

Despite encouraging international engagement to demonstrate advanced technologies,

the plan paradoxically recognizes the necessity for enhancing China's Rare Earth Element

sector to attain world-class status. This seeming contradiction notes the sector's

diversity, with smaller producers either ceasing operations or amalgamating into larger

entities referred to as the "Big Six" (Andersson, Zeuthen, and Kalvig, 2018).

Furthermore, the plan promotes the establishment of REE separation plants in resource-

rich countries, indicating a transition towards global leadership instead of relying solely

on dominance through processing within China. In other words, China is trying to go

global.

China is the predominant force in the rare earths sector, accounting for 62% of raw

material production in 2019. In contrast, the United States contributed 12.2% to global

production (Cohen and Grant, 2021). Additionally, China holds a substantial majority of

global reserves, boasting 36.7%, while the United States has a significantly smaller share

at 1.1% (Cohen and Grant, 2021). Therefore, Kazakhstan, Tajikistan, Kyrgyzstan, and

Mongolia prioritize increasing mining production, with a primary focus on exporting to

China and Russia. Despite this existing connection, the United States has sougth

investments and strategic partnerships with Kazakhstan. Kazakhstan stands out not only

as one of the world's major uranium producers (Cohen and Grant, 2021) but also due to

its escalating emphasis on rare earths production. This is exemplified by a significant

agreement signed in June 2023, totaling around $1.7 billion with Germany (Kazakh

Invest, 2023), and a major aspect of this agreement involves the collaboration between

Kazenergopower LLP and Siemens AG to manufacture medium-voltage distribution

devices for Kazakhstan's energy sector using Siemens technology. This collaboration

includes the establishment of a Siemens equipment production base in Kazakhstan, with

an associated project cost of approximately $22 million (Kazakh Invest, 2023).

When this scenario is examined, it becomes evident that the United States appears to

have undergone a kind of Schumpeterian creative destruction from the 1990s until the

Trump Administration took office. Despite external influences, such as pressure from low

prices and Chinese overproduction of rare materials, the push by environmentalists to

close the mine in California would have been highly unlikely to succeed in China. Although

the Chinese also faced significant environmental disasters and issues with the toxicity of

extracting these resources from their mines (Standaert, 2019 & Liu and McGregor, 2016),

the Chinese national ethos, characterized by greater collectivism and unity around a

common goal (Jiashan, 2019 & Bai, 2022), as opposed to Western liberalism, leads to a

more calculated assessment of risks and benefits in their policies.

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Thus, it is possible to observe how the growing social and political division in the United

States also leads to a collapse of its industries and internal deindustrialization. The

deindustrialization of the United States and the West, in general, is a macroeconomic

phenomenon more prominently expressed in the relocation of Western industries to

countries considered part of the Global South. What Giovanni Arrighi considers the

second phase of capital overaccumulation cycles, resulting from the greater emphasis by

the hegemonic power (in this case, the United States) on the financial and speculative

sector (Arrighi, 2006). This translates into the abandonment of industry and the so-called

physical economy.

However, the influence of environmental movements in the American heavy industry,

while having less impact than deindustrialization due to the financialization of the

economy, demonstrates how the growing division in American society has also been a

key element in its significant loss in the resource race against China. In fact, for China

to consider environmental factors, it is most of the times necessary some external

pressures and the intervention of non-governmental organizations. In the West, this

concern is more ingrained in the daily lives of its citizens, leading society itself to call for

environmental justice and giving rise to tensions between responsible economic growth

and the effects of heavy industry on the environment.

In this scenario, it is evident that the United States needs to expedite the production

process and international agreements to remedy the damage done to the industry during

years of mining closures on its territory. Therefore, it is crucial to pay close attention to

Mountain Pass, which, after a long hiatus for the reasons mentioned above, has become

operational again with significant American investment. It is currently the crucial bet for

the United States in the rare earths sector, and much hope has been placed in its

reopening by the leading experts in the sector.

Conclusions

In conclusion, the global dynamics of Rare Earth Elements exemplify a complex interplay

between environmental concerns, geopolitical rivalries, and economic shifts. China's

historic dominance, holding nearly 95% of the world's reserves and a significant share of

production, underscores its strategic position. The evolving landscape, from Washington-

based production to a Beijing monopoly, highlights the consequences on global supply

chains and the construction of mines worldwide.

The importance of REEs extends beyond traditional industries to crucial sectors like the

digital revolution and green energy transition. However, concerns about the

environmental impact of extraction processes and China's quasi-monopolistic control

have prompted a quest for alternatives. Efforts to replace REEs face challenges due to

their irreplaceability, especially heavy rare earths.

China's approach, despite environmental challenges and illegal production, reflects a

strategic shift towards centralization and planning. The "Big Six" companies and

international collaborations signal China's ambition for global leadership in the REE

sector. In contrast, the United States, once a dominant player, faces the repercussions

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of deindustrialization and a fragmented approach. The revival of Mountain Pass in

California becomes a focal point, symbolizing American efforts to regain prominence.

The historical rivalry between the U.S. and China, marked by strategic moves in the

1980s, continues to shape the REE landscape. China's market strategies, driven by

subsidies, low wages, and lax environmental standards, outpaced the U.S., contributing

to the latter's decline in the industry. The current scenario emphasizes the urgency for

the U.S. to expedite production processes, form strategic partnerships, and secure a

stable supply chain, represented by the pivotal role of Mountain Pass. The global quest

for sustainable and geopolitically secure REE supplies remains a pressing concern,

influencing economic strategies, international collaborations, and the balance of power

in this critical industry.

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