Forget oil, the real battle is for rare earth minerals - so why are we letting China win?

• Dr Helena Ivanov will join Martin Standford on LBC News this morning from 9.30 and you can listen live on Global Player.

While most ordinary citizens rarely consider rare earth elements (REEs), their daily lives rely on them. These minerals are essential to everyday technologies such as mobile phones and electric vehicles. Moreover, REEs are critical to defence technologies, playing a key role in the production of fighter jets.

Demand for these vital minerals is expected to rise significantly in the coming years. Some experts predict that the need for lithium alone could increase by as much as 4,000% as the world shifts towards greener technologies – an energy transition that depends heavily on rare earth elements. As a result, they are fundamental to modern life in Western liberal democracies.

Yet, this modern way of life could easily be disrupted and brought to a halt due to a strategic miscalculation made years ago, which allowed China to gain near-monopoly control over these vital minerals. Specifically, China currently accounts for “nearly 90% of global refined output.”

Moreover, China has repeatedly demonstrated a willingness to wield this dominance as a means of political leverage. Concerns over China’s dominance in this market have been growing since 2010, when Beijing halted rare earth exports to Japan over territorial disputes.

These fears have only deepened amid China’s increasingly assertive geopolitical stance and are likely to escalate further, particularly as China, in February 2025, “began public consultation on new regulations designed to protect its domestic rare earth industry […] and touched issues including quotas for mining, smelting and separating as well as monitoring and enforcement.”

All of this served as a serious wake-up call for Western liberal democracies with many Western countries, including the UK, adopting Critical Minerals Strategies to reduce dependence. In addition, Australia, Canada, New Zealand, and the US have all taken steps to ramp up domestic production of REEs.

As the latest Henry Jackson Society report highlights, breaking free from Beijing’s supply chain dominance is only half the battle. To secure long-term economic resilience, the West must also expand its share of the global critical minerals market – one that remains heavily dominated by China.

According to AIDDATA research, China has strategically utilised the Belt and Road Initiative (BRI) to finance “mine acquisitions, the development and expansion of mineral extraction infrastructure, and the day-to-day operational needs of mine owners and operators,” granting it access to REEs in “165 low-income countries and middle-income countries.”

The same research reveals that between 2000 and 2021, Chinese financial institutions provided a total of $57 billion to 19 core BRI countries in a concerted effort to gain control over their rare earth markets. This further highlights an urgent need for action if the West is to expand its global influence in the REE market.

Mongolia offers a compelling case in point. Despite its wealth of resources, the country currently exports the majority of its critical minerals to China, leaving it in a vulnerable geopolitical position. However, as a recent Henry Jackson Society (HJS) report argues, this situation is not set in stone, as Mongolia remains open to Western investment. Capitalising on these opportunities requires the West to forge stronger partnerships with resource-rich nations and outpace China in mineral extraction and processing.

The HJS report outlines four crucial steps the West must urgently take. First, it must strengthen alliances and prioritise REE trade with trusted partners. Second, it needs to expand domestic mining and refining capacity. Third, it should offer developing nations fairer and more advantageous investment deals to counter Chinese influence.

Finally, Western liberal democracies must integrate REEs into broader security and trade strategies. Without a proactive approach, the West risks not only lagging behind but also falling further behind in a market that will shape the geopolitical landscape of the 21st century.

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Dr Helena Ivanov is an associate research fellow at the Henry Jackson Society.

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