Enrique Dans
It is a high-stakes confrontation. After China imposed its export controls, President Donald Trump threatened to impose a 100% extra tariff, sparking a market rout. Washington backtracked, signaling readiness to negotiate, and the markets calmed, at least temporarily.
But the root problem remains: China dominates the supply of 17 key minerals, which have unique magnetic, optical, and electronic properties essential for producing high-powered magnets, batteries, wind turbines, semiconductors, lasers, optical devices, and sensitive military systems. According to recent estimates, China retains about 44 million tons of rare earth oxides equivalent, more than Brazil (21 million), India (6.9 million), or Australia (5.7 million) combined.
Although the name invites one to think of something scarce, critical minerals are not so scarce: many are present in moderate concentrations, but they almost never appear in pure or concentrated veins. They are often mixed with other minerals that make them difficult to extract and separate.
We are not finding more rare earth deposits simply because we did not search for them hard enough. Now that their strategic importance is well known, that is changing. New deposits are periodically announced in other countries. In 2024, China extracted about 270,000 tons of rare earth oxide equivalent, while the US produced only about 45,000 tons.
What’s most problematic is China’s control of almost 90% of global processing and refining capacity, stages where mineral oxides are converted into useful pure substances.
How did China attain this dominance? The answer is not only geological, but strategic and political, the result of a long-term strategy. Beijing began investing in the entire rare earth supply chain back in the 1980s: mining, chemical separation, magnet manufacturing, recycling, and alloy technology. That vertical integration lowered costs, putting it far ahead of its competitors. China also applied regulations, subsidies, and industrial protection to boost Chinese national champions.
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