Updated: Jun 6, 2021

Images credits: SCMP

Ever heard of Neodymium, Scandium or Cerium? These three are part of 17 chemically related elements collectively categorised as Rare Earth Elements (REE). You might not have heard of them, but they are absolutely crucial for our modern-day survival. From our cellphones and other electrical appliances to our cars, from our satellites that hover around our planet and beyond to the high-tech arsenal military poses, all would come to a standstill if it was not for these rare elements. And one country over time has built up a virtual monopoly over such crucial elements of our life, the People’s Republic of China.

In today’s piece, we aim to understand more about the REEs, explore the possible geopolitical implications of this monopoly that China has subtly but strategically acquired, which makes even more sense considering the increasing trade hostilities between China and the US in particular but the world in general and to look for possible solutions at hand.


Consider that name - Rare Earth Elements. The price of any commodity is not the sole reflection of the economic value it represents. Human psychology plays a significant role as well, though it varies from case to case. Rare commodities are usually high priced. The fact that they are rare, which means not everyone can access them, which again transcends status games, which also results in high prices - classic human psychology at work. NFTs have taken the world by a storm; the NFT of the first-ever tweet made by Jack Dorsey recently sold for 2 million dollars. Do NFTs have any actual economic output? No. And even if they had, could it equal the massive monetary price people are willing to pay for them? No. Why the high price then? Because they are rare. Extremely rare. And what is rare commands a high price. Having said that, now let us come back to REEs.

Rare Earth Elements are highly crucial for our modern era, which is based upon countless electrical machines for its day to day functioning. However, their demand is not just because they are rare, because if that were the case, they would have been preserved as showpieces in museums around the world. But that is not where they exist. In fact, they exist all around us. Your phones, PC monitors, Cars, fights, and the list goes on and on.

REEs basically refer to 17 chemically related elements that have become the foundational requirement of almost all of our modern-day electrical inventions. That’s a strong statement. What is it that makes them so crucial? Basic knowledge of engineering tells us that any electrical machine needs a motor to run, and for that, we need magnets. REEs helps us in producing permanent magnets-Rare Earth Permanent Magnets (REPM) that do not need a constant charge to remain a powerful magnet. This explanation is highly simplified for the purpose of comprehension.

Our world is increasingly grasping the reality of possibly exhausting the reserves of oil and natural gas-still the primary source for meeting our energy needs in the future. And hence, the increased intensity in moving towards the available and renewable alternatives. Windmills are one among such sources, and EVs are one of the products moving away from petrol and diesel. However, they won’t be able to function without the REEs. This is just one example of how crucial they are for our present and the future.


Chinese hold around 1/3rd of the total reserves of REEs. Then how have they acquired an almost monopoly? The ores in which these elements are found are pretty abundant. However, the percentage of these elements in the ores is extremely less. The ores can be mined easily. However, the catch lies in refining them to obtain these elements. Now the processes used for the same are highly destructible for the environment and even produce radioactive waste. That is a red flag for countries with strong environmental consciousness. Therefore, not all of them can scale up the refining process for several reasons, intermingling with ‘environmental concerns’. However, China is a different case.

The authoritarian traits of the Chinese Communist Party hardly have any parallel in another nation which allows it to subside environmental concerns for strategic objectives. This is the reason why almost all of the USA's rare earth elements are refined and obtained from their ores inside China’s mainland. And the Chinese, having recognised the strategic importance of this industry, have been investing a lot into it, and now they leverage it for their geopolitical aims. The implications of such dependence became visible around 2010 when China suddenly stopped its exports of rare earth elements to Japan over a sea vessel dispute. This had brought Japan to its knees as the price of these minerals increased around nine-fold. In light of the growing Chinese aggression around the South China Sea in particular but also throughout all of its borders in general, China can use this strategic advantage to choke the world's access to these elements for its own benefits. Monopolies, in general, are not preferred for they provide excessive control and leverage to the monopolist, and a monopoly for such crucial elements and that too in the hands of the People’s Republic of China is a recipe for disaster.


It’s not that the world wasn’t aware of this Chinese monopoly beforehand. However, after the 2010 Sino-Japan incident, significant efforts have been made in reducing this dependence. For example, two of Japan’s companies-Sojitz Corporation and JOGMEC, have invested $250 million in the Australian mining corporation: Lynas. QUAD can be an effective part of the solution. India holds approximately 5% of the world’s total reserves, which is more than Australia and the USA’s total reserves. Despite such large reserves, for several reasons, India mines a tiny proportion of that. QUAD members can join their forces in order to diversify the supply chain. Another possible solution lies in recycling our unused and old electronics. Consider all the phones, batteries, cars, and all such items that have long gone out of use. Rare earth elements can be recycled from them, and they should be for the world only holds a limited quantity.

Independence and self-reliance, along with a reliable supply chain of RRE in times of conflict, will hold that key for a nation’s economic and technological power in the 21st-century economic order.




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