Earths

Russia has reserves of 15 rare-earth metals totalling 28.7 million tonnes, according to the Natural Resources Ministry.

Russian President Vladimir Putin has ordered his cabinet to draw up a roadmap for the extraction of rare-earth minerals by December 1, as global interest in the metals heightens due to their use in modern technologies and a desire to reduce reliance on the Chinese-dominated market.

In a list of tasks for ministers published on the Kremlin website, Putin on Tuesday also ordered the cabinet to take measures to develop transport links at Russia’s borders with China and North Korea.

Rare earths – used in smartphones, electric vehicles and weapons systems – have taken on vital strategic importance in international trade.

In April, United States President Donald Trump signed a deal with Ukrainian President Volodymyr Zelenskyy that will give the US preferential access to new Ukrainian minerals deals and fund investment in the country’s reconstruction.

Russia says it is also interested in partnering with the US on rare-earth projects.

In March, Putin’s investment envoy – Kirill Dmitriev – claimed that Russia and the US had started talks on rare-earth metals projects in Russia, and that some US companies had expressed an interest in them. However, prospects between the US and Russia have been held up by a lack of progress towards ending Russia’s war in Ukraine.

China, the dominant producer of rare earths, has hit back at US tariffs this year by placing restrictions on rare earths exports. Its almost total global control has focused Washington’s attention on developing its own supplies.

Putin’s order – a summary of action points from a Far Eastern Economic Forum he attended in Vladivostok in September – did not go into detail about Russia’s rare earths plan.

The US Geological Survey estimates Russia’s reserves of rare earth metals at 3.8 million tonnes, but Moscow has far higher estimates.

According to the Natural Resources Ministry, Russia has reserves of 15 rare-earth metals totalling 28.7 million tonnes, as of January 2023.

But even accounting for this possible margin of error, Russia still only accounts for a tiny fraction of global stockpiles.

Among other points, Putin also instructed the government to develop “multimodal transport and logistics centres” on the Chinese and North Korean borders.

Putin said the locations should include two existing railway bridges linking Russia and China and a planned new bridge to North Korea, which he said must be commissioned in 2026.

Both of Russia’s far eastern neighbours have deepened economic ties with Moscow since Western countries imposed sanctions on it over its war in Ukraine.

Tensions between China and the US have escalated amid Donald Trump’s tariff threats and new restrictions on exports.

The recent agreement between the United States and Australia to invest $3 billion in critical minerals and rare earths projects represents a significant step in the Western effort to reduce dependency on China for strategically vital resources.
While the deal has been heralded by Washington as a turning point in global supply diversification, a closer examination suggests that China’s entrenched dominance in rare earth mining, refining, and magnet manufacturing will remain largely unchallenged in the foreseeable future.

This analysis situates the agreement within the broader geopolitical and economic context of resource security, outlines its potential and limitations, and assesses its implications for the evolving balance of power in the Indo-Pacific region.

Rare Earths and Strategic Dependence

Rare earth elements (REEs) are indispensable for modern technology spanning clean energy, defence systems, electric vehicles, and semiconductors. Despite their name, REEs are relatively abundant in the Earth’s crust; their scarcity lies in the technically complex, costly, and environmentally damaging refining process.

Over the past three decades, China has systematically consolidated control over this value chain, developing low-cost refining and magnet production capabilities that now underpin 90% of global processing capacity, 69% of mining, and 98% of magnet manufacturing (Goldman Sachs, 2024).

This dominance has translated into a form of strategic leverage. Beijing has repeatedly demonstrated its ability to weaponize resource supply chains, most recently through export curbs on gallium, graphite, and rare earth magnets, heightening Western concerns about supply security and industrial resilience.

The United States and its allies, including Japan, Australia, and the European Union, have consequently prioritized critical mineral diversification as a matter of both economic sovereignty and national security.

Key Issues:

Technological Dependence:
Western economies lack refining and magnet manufacturing infrastructure comparable to China’s mature ecosystem, which benefits from decades of state investment and technological standardization.

Environmental and Regulatory Constraints:
High environmental standards, community opposition, and lengthy approval timelines in the U.S. and Australia increase project costs and delay production, deterring private investment.

Market Distortion by State Subsidies:
Chinese producers benefit from state-backed financing, subsidized energy, and vertically integrated industrial networks that suppress global prices, making it difficult for Western firms to compete without government intervention.

Investor and Consumer Behavior:
Global manufacturers continue to prioritize low-cost Chinese supply, perpetuating dependency despite policy rhetoric about diversification.

Geopolitical Fragmentation:
Efforts to “de-risk” supply chains are hindered by divergent national strategies among Western allies, with varying levels of commitment to resource security versus environmental and economic priorities.

The U.S.-Australia Critical Minerals Pact

On October 20, 2025, President Donald Trump announced a joint U.S.-Australia agreement committing $3 billion to the exploration, mining, and processing of critical minerals.
The pact includes provisions for a price floor a mechanism designed to ensure profitability for Western miners operating in markets distorted by Chinese state subsidies and environmental cost advantages.

According to the White House, U.S. investments will “unlock deposits worth over $53 billion” in Australian reserves. The U.S. Export-Import Bank (EXIM) has issued seven Letters of Interest totaling $2.2 billion to Australian mining firms, including Arafura Rare Earths, developer of the Nolans project in Western Australia.

While these measures indicate a serious financial commitment, they also highlight the industrial asymmetry between emerging Western projects and China’s mature, vertically integrated supply chains.

Economic Feasibility and Industry Timelines

Industry experts have expressed caution regarding the feasibility of rapid supply diversification.
Barrenjoey analyst Dan Morgan noted that the “time frame for various projects to be ready even by 2027 would be heroic,” reflecting the inherent capital intensity and regulatory delays in rare earth development.

Similarly, Dylan Kelly of Terra Capital observed that the current pricing of NdPr oxide the most traded rare earth compound “does not reflect a market dynamic that can sustain a significant fall in prices,” implying that a price floor mechanism may be essential for commercial viability.

Such perspectives underline the structural constraint that industrial policy cannot compress geological and technological timelines. New rare earth projects require multi-year investments in exploration, environmental clearance, and processing technology transfer.

Strategic and Geopolitical Dimensions

The U.S.-Australia pact is emblematic of a broader strategic realignment in the Indo-Pacific, wherein critical minerals are increasingly framed not merely as commodities but as strategic enablers of power projection.
For Washington, the deal aligns with its economic security agenda to “de-risk” supply chains and reduce China’s capacity to use resource dependencies as geopolitical tools.

For Canberra, it represents both an economic opportunity and a strategic burden. Australia possesses abundant mineral reserves but faces pressure to align its export policies with U.S. strategic interests, potentially straining its trade relations with China still its largest trading partner.

At a deeper level, the agreement signals the emergence of a critical minerals bloc, mirroring patterns seen in energy geopolitics. Yet, the absence of comparable refining infrastructure, skilled labor pools, and environmental cost advantages continues to limit Western competitiveness.

Market Reactions and Corporate Beneficiaries

The deal has already produced identifiable commercial winners.
Arafura Rare Earths and Syrah Resources have reported increased investor interest following the announcement, reflecting market confidence in Western government-backed financing.
Arafura’s CFO, Peter Sherrington, emphasized that the U.S.-Australia initiative “de-risks raising money from an equity perspective,” while its CEO projected full project funding by early 2026.

However, as Syrah CEO Shaun Verner noted, unless global consumers “cure their addiction to lowest-cost supply from China,” even well-financed Western projects will struggle to secure stable demand. This underscores a behavioral dimension of market dependency, wherein private-sector procurement patterns perpetuate Chinese dominance despite political rhetoric of diversification.

Implications for Global Resource Governance

In the short term, the U.S.-Australia agreement is unlikely to materially alter the global rare earth landscape.
China’s entrenched advantages in scale, technology, and regulatory flexibility will ensure continued dominance through the decade.
Nevertheless, the pact marks an important symbolic and structural step toward building alternative supply chains, particularly if accompanied by coordinated policies on processing technology, environmental standards, and market access.

In the medium to long term, such agreements could catalyze a Western-led industrial ecosystem, reducing strategic vulnerability and fostering innovation in cleaner extraction methods. However, success will depend on sustained political will, technological breakthroughs, and a willingness to absorb short-term economic inefficiencies for long-term security gains.

Analysis: Strategic Patience Over Political Rhetoric

The U.S.-Australia rare earths pact represents a strategically coherent but operationally constrained response to China’s resource hegemony. It reflects the increasing securitization of economic policy in an era of great-power competition.

Yet, as this analysis indicates, the pathway to rare earth independence will be long, capital-intensive, and geopolitically fraught.
While the agreement sends a strong signal of Western resolve, the transformation of intent into industrial capability will take years, not electoral cycles.

Until then, China’s dominance will persist not simply because of its mineral reserves, but due to its unparalleled integration of industrial policy, technological expertise, and geopolitical strategy.

With information from Reuters.

Resource competition has intensified between the two great powers, the US and China, due to trade and tariff wars. Recently, both the countries have made major policy shifts in the strategically significant rare earth sector.

China discreetly issued 2025 rare earth mining and smelting quotas to its state-owned enterprises, exhibiting deepening securitization of this sector. The Ministry of Industry and Information Technology (MIIT) previously used to make the announcement public on their website.

The Pentagon became the largest shareholder in MP Materials after buying $400 million worth of stocks. It indicates expanding involvement of the US government in the domestic rare earth industry since MP Materials operates the sole mining facility in the US. This move faces severe backlash, with critics comparing it with China’s approach to market intervention.

Consequently, China has intensified its efforts to maintain overarching dominance over the global rare earth market, and the US strives to claw back its control over strategically important raw materials.

Quick guide to rare earth complexities

Rare earth elements (REEs) are a group of seventeen metallic elements. Their requirement in high-tech applications in medicine, the military, and green technologies is indispensable. The REEs are not so rare, as the name suggests. Yet the real limitation lies in locating them in clusters for economic viability. All the more difficult is smelting, separating, and processing these elements.

China is the net importer of REEs, mining 70%, with the rest being extracted by Myanmar, Australia, and the United States. However, China enjoys a near-monopoly in processing 90% of the rare earths globally.

Over the years, China has built self-sustaining rare earth supply chains domestically. That implies managing upstream extraction to midstream processing and, to a greater extent, even downstream manufacturing.

Just as access to oil shaped global geopolitics during the last century, access to rare earths is shaping current geopolitics in this great power competition. And China is weaponizing its preeminence over REE supply chains by tightening its control to offset the US.

China’s control over rare earths came with a huge brunt.

China discovered the strategic value of REEs in the formative years of building the country’s economic base. China has been investing heavily in the R&D since the discovery of rare earth deposits in Bayan Obo, Inner Mongolia, in 1927. Today, it holds the rank of largest known deposit of REEs and constitutes over 90% of China’s entire reserves.

Deng Xiaoping’s signature policy of 1978 is credited for kick-starting the opening up of the Chinese economy and integrating China into the global market. As a cherry on top for Chinese authorities came the “environmental decade” in the 1970s in the United States, marked by dozens of environmental legislations.

Rare earth extraction and processing have severe environmental repercussions. Certainly, US private firms were in search of a scapegoat to outsource environmental costs and exploit cheap labor.

Chinese authorities were willing to face the brunt of ecological damage for speedy economic growth. It turned out that the short-term economic interests overshadowed the long-term strategic interests of America. 

What exacerbated the matter was illegal and unregulated mining of rare earths. The parallel economy flourished as global consumption for rare earth multiplied year on year. Chinese authorities have taken cognizance but struggle to put a stop to these activities.

China has doubled down on its efforts to curb unlicensed extraction and harden the compliance systems facing immense pressure from Trump’s tariff war.

Chinese market manipulation tricks came in handy.

By the 1990s, bifurcating prices of rare earths for the Chinese domestic market and international market had compelled many US businesses to shut down.

China carried out price manipulation in two tiers. First, it made sure to service its domestic needs by selling at cheaper rates than the products that were being exported. Second, pricing it underneath the other global firms in the international market but higher than the domestic price levels.

In the beginning, this created incentive for international companies to establish their manufacturing units in China. But eventually almost all firms went bankrupt, losing their competitive edge against Chinese SOEs.

In addition, China has been consolidating its rare earth assets to raise its global competitiveness and pricing power. In Dec 2021, three mega SOEs were merged to form a megafirm, China Rare Earth Group. Today, only two mega conglomerates are operating: China Rare Earth Group and China Northern Rare Earth Group. In fact, export quotas are entrusted to only these two mega firms.

Export quotas introduced in 1999 have expanded and tightened over the years. Though year-wise mining and smelting quotas have increased, the annual growth rates see a downturn. This time not disclosing the quotas publicly for ‘security reasons’ will exacerbate uncertainties in the international market. It seems like a calculated strategy of Chinese authorities to maintain their stronghold over the global market of rare earths but making sure to provide enough to maintain dominance.

Some scholars do articulate China’s policies to clamp down on its rare earth industry from a different lens, essentially, to address domestic interests. The Chinese authoritarian state is caught up in securing control and increasing production efficiency.

Trump responding vigorously to counterbalance Chinese dominance

The Pentagon becoming the largest stakeholder of MP Materials to cushion a strategic sector is nothing unusual. The US government and its agencies have a history of getting involved in sectors of national and economic significance. This underscores the fact that great powers have historically used market distortions as a tool to uphold their supremacy.

Establishing a cutting-edge supply chain with like-minded states would take over a decade and cost well over a trillion dollars in that period. Americans have to catch up on the long road ahead that the Chinese took decades to build. Therefore, Trump initiated the first-of-their-kind policy measures to hasten up the catching-up process. These policy initiatives are aimed at enhancing collaboration for clean energy technologies, building resilient supply chains, and reducing dependencies.

On April 30, 2025, the US and Ukraine signed a long-awaited minerals deal. Trump’s ambition to gain control over Greenland, a strategically located island in the Arctic, to the extent of using military force wasn’t just about national security. Rather driven by desire to control rich untapped resources, including rare earth minerals, copper, gold, uranium, iron, oil, etc.

Trump’s efforts will take years to bear fruit. Prior to that, the US must build an investment-friendly environment. A report by consultancy S&P Global found that on average it takes nearly 29 years to build a new mine for the critical minerals in the US, the second-longest in the world. The process to obtain a mining permit is lengthy and confusing, which harms efforts to counterbalance China’s near-dominant positioning.

world of weaponized interdependence

Henry Farrell and Abraham Newman argue cold war animosity was replaced by a new world of networks that accentuated harmonious relationships. They suggest countries are more entwined than ever, but rather than easing hostilities, interdependence is used by states against their adversaries.

Great power competition is being increasingly impacted by what they called “weaponized interdependence.” China’s dominance over the supply lines of rare earths gives it the edge to fight this battle for long.

June 9 (UPI) — Delegates from the United States and China are set to meet Monday in London after a phone call between the nations’ leaders seemingly led to a cooling of tensions related to their otherwise heated recent trade dispute.

“We are a nation that champions free trade and have always been clear that a trade war is in nobody’s interests, so we welcome these talks,” said a British government spokesperson.

The U.K. has provided the space for the countries to chat but hasn’t publicly disclosed its location.

American attendees are slated to include U.S. Commerce Secretary Howard Lutnick, U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, while Chinese Vice Premier He Lifeng will lead his country’s delegation. It is expected the discussion will put a fair amount of focus on the rare earth minerals situation.

The Trump administration had expected China to back down on export restrictions it had imposed in April on such minerals after talks held in May. China imposed those restrictions in response to tariffs levied by Trump on Chinese goods.

The resulting trade disruption has led to a 2.9% decrease on exports to the United States from April to May, the decrease from May 2024 is 3.4% and the cumulative year-on-year decrease from January to May is at 4.9%, according to Chinese customs data.

However President Donald Trump and Chinese President Xi Jinping spoke on the phone last week, and the conversation was reportedly so friendly it not only led to Monday’s meeting but each invited the other to make a personal visit.

American and Chinese representatives had met last month in Geneva and reportedly reached an agreement to suspend most of the tariffs that had been reciprocally imposed, but both countries have since been accused of agreement violations by the other.