Donald Trump recently announced an agreement with China to secure the US supply of rare earths, the latest in a series of statements by the US president on the subject in recent months.
Access to mineral resources, particularly rare earths, is also one of the reasons why Donald Trump is so interested in Greenland. It is also the subject of the agreement signed with Ukraine in exchange for US military aid.
At the heart of the covetousness are rare earths. These refer to a group of 17 metallic elements. Their name comes from an approximate translation of the English term "rare earth elements" (or REE). They are particularly used in the high-tech sector, energy (especially in permanent magnets found in wind turbines), electric vehicles, robotics, and consumer electronics. As a result, they play a crucial role in the energy transition, as we pointed out in a recent study.
Today, this term is often confused with "strategic metals," which includes other metals such as cobalt, lithium, and nickel, which are not rare earths in the strict sense. It is probably in this sense that Donald Trump has taken an interest in Ukraine's "rare earths."
On the international stage, China has long dominated rare earth production, but the market is undergoing a major shake-up, with new countries coming to the fore. Who are these new players, and what are their strengths? Here is an overview.
China, a monopolistic leader
China has the world's largest reserves of rare earths and is the world's largest producer. It has several economically interesting deposits, including the Bayan Obo mine in Inner Mongolia.
The country understood the potential applications of these metals very early on. Former Chinese leader Deng Xiaoping is reported to have said as early as 1987.
"The Middle East has oil, China has rare earths."
At the time, the country was creating its national strategy on rare earths through the development of national mines and the acquisition of processing facilities abroad. Thanks to its lax environmental standards, cheap labor, and abundant rare earth resources, China attracted Western companies, which set up operations there. Within a few years, it had gained a dominant position in the market.
By introducing measures such as export quotas and licenses in 1999 , China has managed to maintain a monopoly on rare earths, from extraction to processing. It occupies a dominant position in every link of the supply chain: it extracts 69% and processes 90% of the rare earths produced.
Through shareholdings and joint ventures, Chinese companies are involved in rare earth projects elsewhere in the world and have a strong presence in the Kachin region of Myanmar.
This concentration of production in China exposes the supply of rare earths to geopolitical risks. This has been demonstrated by the consequences of the 2010 rare earth crisis, the Covid-19 pandemic and, more recently, Russia's invasion of Ukraine.
As a result, Western industries that depend on these metals are reconsidering their reliance on Chinese rare earths. The European Union has also legislated on the issue through its Critical Raw Materials (CRM) Act. The challenge is to diversify sources of supply.
The return of the United States
Until the 1990s, the United States was the world's leading producer of rare earths. Most of the rare earths mined worldwide between 1960 and 1980 came from the Mountain Pass mine in California. However, with the emergence of Chinese players in the 1980s, US rare earth prices were unable to compete with Chinese prices and processing units were relocated to China. The Mountain Pass mine closed in 2002, mainly for environmental reasons.
The Mountain Pass mine in California in 2022, aerial view. Tmy350/Wikimedia, CC BY-NC-SAThe rare earth crisis of 2010 had a profound impact on the market. This event prompted the US to find sources of supply outside China and to reinvest in domestic production. The reopening of Mountain Pass was difficult and led to the bankruptcy of mining operator Molycorp. Mining operations resumed in 2017 under the ownership of MP Materials, with a gradual increase in production capacity.
In 2023, the mine extracted 11% of the world's rare earths. Rare earths were originally processed in China, but MP Materials has recently built an operational processing plant in the United States. The development of a complete supply chain in the United States is continuing with the first trial production of rare earth magnets.
Australia, a serious competitor
Although it has only 6% of the world's rare earth reserves, Australia is the fourth largest producer. The rare earth crisis has played a significant role in this. The Japanese high-tech industry was hit hard by the crisis. To reduce its dependence on Chinese rare earth imports, Japan supported rare earth projects abroad, including the Mount Weld mine in Australia and a refining plant in Malaysia.
Since then, Australia has continued to increase its production. This is evidenced by the expansion of the Mount Weld mine, which has increased the production of certain minerals by 50%. Other projects have been launched, such as the Nolans project and the project to extract rare earths from mining waste in Enneabba. Like the United States, the development of the rare earth industry is supported by public funds as part of a national strategy.
Although the Australian rare earths industry is less mature than its Chinese competitors, the Australian market has managed to position itself as a reliable and more environmentally friendly market. This is an asset that will attract Western industries and should enable it to gain market share in the coming years.
Other countries in the race
In terms of rare earth reserves, Brazil ranks second after China. However, the country currently extracts only small quantities. However, projects are multiplying, mainly in the Goias region. The Pela Emma deposit, operated by Serra Verde, has started producing rare earths and plans to double its production capacity by 2030.
Global rare earth production. Provided by the author
Vietnam also has potential. The country has significant reserves of rare earths, but is struggling to attract foreign investment.
Recently, the Vietnamese rare earth industry has been rocked by allegations of corruption and illegal sales to Chinese players. Vietnam currently has strict rules on rare earth exports. The resale of raw rare earths abroad is illegal in order to encourage the development of the local intermediate industry.
Among those arrested for illegal exports to China is the president of one of Vietnam's largest companies in the sector, Vietnam Rare Earth JSC. The company was in negotiations with Australian companies for the sale of the Dong Pao mine, which is currently dormant. The reopening of the mine is part of a national strategy. Its mining rights are expected to be auctioned off later this year.
The Vietnamese government aims to produce 20,000 to 60,000 tons of rare earths per year by 2030, then 40,000 to 80,000 tons between 2031 and 2050. This plan is based on the opening of at least ten mines in the country. International cooperation is on the horizon: a French delegation recently met with industry players, while the United States has also begun discussions with the authorities under the Biden administration.
Malaysia, for its part, is mainly a destination for foreign investment. In 2012, Australian company Lynas built the first processing facility outside China, enabling the country to become a hub for rare earths mined in Australia and sold on to Asia, Europe, and the US.
Malaysia's new industrial plan for 2030 provides for the development of upstream and downstream mining industries. However, the development of a rare earth industry in Malaysia remains a sensitive issue. The local population suffered greatly from the consequences of poor waste management at a rare earth processing plant in the 1970s, which resulted in loss of life and environmental damage.
The Malaysian government therefore faces a threefold challenge: attracting foreign investment, ensuring that newcomers are fully committed to high environmental standards, and securing a fair share of the mining revenue.
What about India? The country has vast reserves of rare earths, which are produced from mineral sand. Two companies are at the forefront of India's rare earth industry: IREL and KMML. Expansion projects and new mining projects are underway.
Finally, Myanmar is the third largest producer of rare earths, although the extent of its reserves remains unknown. The main mining area is the Kachin region, near the border with China. The nature of the deposit is similar to that found in southern China. There is a high concentration of heavy rare earths, which are rarer and more expensive, making Myanmar a long-standing player in the rare earth market.
The proximity to the border allows China to outsource its production of heavy rare earths to this region. However, much of the mining activity there is illegal. Since the 2021 coup, these activities have been accused of financing the junta.
New challengers and Europe's recycling industry
In this race for rare earths, some southern African countries are aiming to carve out their own place. Several mining projects currently under development are expected to come to fruition between 2025 and 2028. Operated by Western companies, many of these projects are located near the Lobito Corridor, a railway project supported by the United States and the European Union to counter Chinese influence in the region.
The Lobito Corridor. European Commission
Finally, let's not forget Russia and Canada, which have numerous deposits. Some mines are already in operation in Russia, while Canada is expected to begin commercial extraction in the coming years. Since the summer of 2024, Canada has had an operational rare earth processing facility.
In Europe, the only prospect for rare earth extraction is the Per Geijer deposit in Sweden. Production from the mine could meet 18% of European rare earth consumption, but the project is still at the exploration stage.
European countries rely mainly on recycling mining waste and end-of-life products to cover part of their needs, as provided for in the Critical Raw Materials Act (CRM Act).
As for Ukraine, data from the Ukrainian Geological Service indicate the existence of potential deposits, but there are currently no rare earth projects under development.
All these newcomers, whatever their respective strengths, will have to contend with China. Thanks to its monopoly position, China can directly impact the profitability of mining projects launched elsewhere in the world, delaying them—or at the very least hindering them—if it so wishes.
Stéphane Goutte, Professor at UMI SOURCE, Université Paris Saclay, UVSQ, IRD, Université Paris-Saclay, and Lisa Depraiter, PhD student, Université de Versailles Saint-Quentin-en-Yvelines (UVSQ) – Université Paris-Saclay
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