Rare earth elements (REEs) – a group of 17 metals such as neodymium, dysprosium, samarium, and yttrium – are critical ingredients in modern technology and defense systems. They are essential for high-strength permanent magnets, lasers, precision guidance, radar, and many electronic components. For example, REEs are used in the magnets that steer missiles and power the motors of advanced jets and submarines. Global demand for these minerals has surged with the rise of electric vehicles, renewable energy, and advanced weapons systems. Yet their supply chain is highly concentrated: production and processing are dominated by a few countries. In 2023, total world rare-earth oxide production was about 350,000 tons (REO), and China produced roughly 69% of that amount . More strikingly, China controls about 90% of global rare-earth processing capacity. This rare earth supply chain concentration – often called China’s rare earth dominance – has triggered intense geopolitical concern. Many analysts warn that by 2025, securing diversified REE supply chains will be a strategic imperative for advanced economies.
China’s historical lead in REEs comes from both geology and policy. The giant Bayan Obo mine in Inner Mongolia, owned by state firms, is the world’s largest REE deposit, and China’s firms have built most of the refining capacity. Chinese miners produce mostly light REEs like neodymium and praseodymium, which are used in magnets, and they impose quotas to manage output. In fact, China’s industry is so organized that it even became a net importer of some rare earth concentrates in recent years to feed its plants. New regulations (effective October 2024) will require traceability of all mined, smelted, and traded rare earths in China, underscoring Beijing’s control over the supply chain.
Outside China, other producers are smaller but growing. In 2024, the United States was the second-largest mine producer at about 45,000 tons, primarily from the reopened Mountain Pass mine in California. Australia, home to about 4% of global reserves , produced around 13,000 tons in 2024 .
In Southeast Asia and Africa, an emerging boom is under way. Myanmar (Burma) was third-ranked in 2024 at 31,000 tons, though much of its production comes from informal miners tied to armed groups and lacking environmental safeguards. China relies on Myanmar for about 70% of its medium-to-heavy rare earth feedstock. However, armed conflict in Myanmar’s Kachin State has repeatedly disrupted these supplies, as rebel groups have seized mining towns near the China border in late 2024. These developments signal that global production of rare earths is diversifying beyond China, but processing and refining remain lagging outside Asia.
China’s Control of Processing and Exports
Although other countries are mining more, China’s grip is strongest in processing. According to analysts, China mines roughly 60–70% of the world’s REEs but processes nearly 90% of them into usable metals and magnets. This means that even if a rare earth is mined elsewhere, it often has to be shipped to China for separation, purification, or alloying. Benchmark Minerals Intelligence notes that China refines virtually 99.9% of heavy rare earths, the scarce elements like dysprosium that are crucial for extreme-performance magnets. In practical terms, China effectively “owns” the global supply chain: other nations must import from it or rely on its processing facilities.
China’s dominance is reinforced by its state-driven policies. In late 2021, Beijing consolidated its mining companies into a new state-owned “China Rare Earth Group” to align pricing and output. More recently, in April 2025 China imposed export licenses on seven key elements and certain rare-earth magnets . This move – a form of export control – means foreign buyers now need Chinese approval to receive these materials. Chinese officials cited “national security” to justify the licenses. Such measures exemplify how China could weaponize its rare earth leverage: analysts liken it to the 2010 incident when China temporarily halted REE exports to Japan over a diplomatic dispute, and note that today’s restrictions have similarly raised alarms.
Export controls and quotas have global impacts. For example, one report estimates that more than 78% of U.S. military weapons incorporate Chinese-controlled materials. China’s recent clampdown on REE exports underscores this vulnerability. U.S. strategists warn that a shutdown of supplies could “hit the Pentagon hard,” since U.S. defense systems rely on stable rare-earth inputs. Europe and other importers are similarly uneasy.
Geopolitical Implications and Risks
The concentration of rare earth supply under China has major geopolitical implications. Countries dependent on imports see a strategic risk. As one analysis notes, China’s near-monopoly creates a “strategic chokepoint,” forcing industries and militaries to “ask China for permission” to access critical materials. This pattern played out in 2020 when China briefly hinted at restraining rare earth exports during a trade spat, triggering fears in the U.S. about disruptions in F-35 jets, submarines, and missile programs. Although China eventually backed down publicly, the incident underscored the danger of one-country dependency.
China has also signaled it may intensify this leverage. The April 2025 license requirement on key REEs came amid a wider trade dispute: China’s action was widely seen as retaliation against U.S. tariffs, just as its 2010 export ban was retaliation for Japan’s political stance . Such tit-for-tat moves highlight how rare earths are now woven into great-power competition. The risks have prompted governments to study their own exposure. A recent CSIS study observes that while China has 60% of global REE output, the U.S. and allies hold the rest of reserves (Vietnam ~19%, Brazil ~18%, India ~6%, Australia ~4%) . In theory, this means nearly half of the world’s REEs lie outside China. But without non-Chinese processing facilities, raw materials still flow to Chinese mills. Hence countries worry about supply chain concentration as much as mine ownership.
In response to China’s dominance, the concept of “rare earth supply chain 2025” has entered policy discussions. This refers to the roadmap countries are making to achieve resilient supply by mid-decade. It spans mining, refining, recycling, and substitution strategies. For example, the U.S. Defense Department has earmarked hundreds of millions of dollars to rebuild a “mine-to-magnet” supply chain domestically. Similarly, the European Union has launched initiatives to expand mining and processing on home soil. Globally, there is a push for new alliances and stockpiles of critical minerals. The recent formation of the Mineral Security Partnership (MSP) – a U.S.-led group including Japan, EU, Australia, and others – is one effort aimed at coordinating supply diversification and investment.
Rare Earths in Military Technologies
Rare earth elements play an outsized role in military technology. Their unique magnetic and optical properties make possible many advanced systems. Most notably, strong permanent magnets made from neodymium-iron-boron (NdFeB) or samarium-cobalt are central to modern defense equipment. These magnets deliver high magnetic flux while withstanding extreme conditions, which is vital for missiles, drones, and warships. For instance, the U.S. F-35 fighter jet’s electric systems contain a substantial rare-earth permanent magnet load . According to the Pentagon, an F-35 requires over 900 pounds of rare earth elements in its systems. Even larger platforms need more: a Virginia-class submarine uses about 9,200 pounds, and an Arleigh Burke destroyer around 5,200 pounds. These magnets are used in actuators, motors, and generators – converting electrical power into motion – essential for aircraft, guided missiles, torpedoes, and precision munitions.
Beyond magnets, rare earths appear in many other military components. Lasers and electro-optical devices often use REE-doped glass or fibers. For example, development of airborne laser weapons and soldier-carried laser designators relies on crystals infused with neodymium or erbium. Rare earth oxides like cerium and yttrium are used in high-performance infrared windows and night-vision equipment to filter or amplify light. In stealth technology, special coatings and radar-absorbing materials can contain rare earth compounds to tune electromagnetic properties. Rare earth garnets (e.g., yttrium aluminum garnet) are found in some infrared sensors and missile seekers. Even the capacitors and transistors in communication and navigation systems can include tantalum or other REE-associated materials.
Radar and sonar systems also use rare earth-based components. Some phased-array radars incorporate samarium-cobalt magnets to steer microwave beams under high-temperature conditions, and other REEs improve sound transducers in sonar. The GAO notes that U.S. weapon systems use rare earths “in radar, guidance systems, precision-guided munitions, lasers, satellites, and equipment like night vision goggles”. In practice, this means nearly every modern US missile or drone – from Patriot surface-to-air missiles to Tomahawk cruise missiles and Predator UAVs – depends on REE magnets or alloys.
Responses and Diversification Strategies
Faced with this strategic risk, governments are aggressively trying to diversify and secure REE supplies. The United States, Japan, and Europe have all announced policies to rebuild domestic capabilities and partner with allies.
United States: The U.S. reopened the Mountain Pass mine in 2018 under MP Materials, and since then has invested heavily in processing. Under the Defense Production Act and other programs, the Pentagon has committed over $439 million (2020–2023) to build a full “mine-to-magnet” chain. This includes facilities to separate and refine rare earth oxides at Mountain Pass and elsewhere.
European Union: The EU’s approach includes its Critical Raw Materials Act (CRMA), enacted in May 2024, which sets ambitious targets: by 2030, 10% of strategic minerals should be mined in the EU, 40% processed in Europe, and 25% recycled from waste. In April 2025 the EU approved 47 Strategic Projects under the CRMA, covering the full supply chain for critical minerals. These include new mine permits and refineries for lithium, tungsten, and other metals. While the list emphasizes battery materials, it also highlights tungsten and magnesium projects for defense and high-tech manufacturing . Notably, the EU’s goal of 40% processing means building new separation and alloy plants in countries like Poland, Sweden, and Estonia.
Moreover, private initiatives play a role. Venture funds led by tech billionaires have poured money into REE projects in the Free World. Notably, KoBold Metals (backed by Bezos and Gates) raised over $530 million in 2024 to invest in exploration and mining globally, including Africa, with an eye to diversifying the market. Recycling has also gotten attention: U.S. and EU programs are exploring ways to extract neodymium and dysprosium from end-of-life magnets (in EV motors and wind turbines) to create a secondary supply.
Future Trends and Strategic Competition
Looking ahead, rare earths are set to remain at the center of strategic competition. Demand is expected to surge with the green and digital transitions. The IEA projects that demand for magnet REEs could double again by 2050. Even by 2030, one estimate is that global demand could quadruple relative to 2020 levels . Key drivers include electric vehicles, wind turbines, next-generation military hardware, and 5G/6G telecommunications. In this context, any supply shortfall could jam progress on climate and defense goals alike.
The strategic rivalry over rare earths is already evident in trade and diplomacy. In April 2025 China’s export curbs on seven REEs were widely seen as a retaliatory response to U.S. actions (including a new semiconductor-REE tariff swap). Such moves risk a spiral of countermeasures. For example, as of mid-2024, the U.S. was deliberating new penalties on Chinese tech exports in response, which could include further REE restrictions. The interplay echoes Cold War resource battles (like oil), but in a more complex, multipolar market.
In summary, rare earths have transformed from a niche mining issue into a full-fledged geopolitical front. China’s rare earth dominance – especially in processing – forces other powers to diversify aggressively. Mining projects are expanding in the U.S., Europe, Australia, Africa, and elsewhere. Massive government funding and new trade pacts aim to break China’s chokehold. Militaries openly acknowledge they need secure REE lines for jets, ships, missiles, and sensors. By 2025 and beyond, the race for rare earths will continue to shape alliances, conflicts, and industrial policies. Ensuring a resilient rare-earth supply chain is now seen as essential to national security, technological leadership, and the ability to meet climate goals.