A worrying part of the recent global trade war is China’s readiness to deny access to essential minerals as a weapon. China’s threat shouldn’t come as a surprise. This is not the first time China has threatened to reduce export of or deny access to essential minerals (which includes a category of minerals known as rare earths). Back in 2021, the Editorial Board at the Wall Street Journal wrote, “Looks like it’s time for another panic about rare-earth elements. New fears are surfacing that Beijing could use its dominance of the production of these vital minerals to throttle the global economy.”[1] The board went on to explain, “Rare earths, which are metals toward the bottom of the periodic table, are crucial to many emerging technologies. Their magnetic properties make them indispensable for smartphones, wind turbines, electric vehicles, nuclear submarines and other things. Some 80% of global output of processed rare earths are produced in China.” The Trump administration is certainly aware of China’s dominance of essential minerals which is why it has turned its attention to obtaining minerals in places like Greenland, Ukraine, and on the ocean floor. In the initial installment of this two-part article, I want to discuss the search for essential minerals on land. In Part Two, I will discuss the search for essential minerals under the sea.

The Short-term Challenge

China’s rise to dominance in the essential minerals market was deliberate. Back in 1992, one of China’s more enlightened leaders, Deng Xiaoping, insisted rare earths were going to be as important to China as oil was to the Middle East.[2] Despite international concerns about China’s dominant position, journalist Jon Emont reports China is winning the essential minerals competition. He explains, “For the past few years, the West has been trying to break China’s grip on minerals that are critical for defense and green technologies. Despite their efforts, Chinese companies are becoming more dominant, not less. They are expanding operations, supercharging supply, and causing prices to drop. Their challengers can’t compete.”[3] China is a master at destroying competition.

It may surprise people to learn that essential minerals, including rare earths, are not all that rare. Emont explains, “In truth, the U.S. already has abundant supplies of rare earths.”[4] In addition to U.S. sources, essential minerals can also be found other places outside of China, such as Myanmar and Australia. Back in 2023, Sweden announced it had found the largest rare earths deposit in European history.[5] Essential minerals expert Gracelin Baskaran notes, “Africa’s full potential in rare earths is largely untapped given low levels of exploration.”[6] And, as I noted earlier, the Trump administration is looking at both Greenland and Ukraine for minerals. The point is, there are plenty of sources of essential minerals outside of China.

Here's the rub. Emont explains, “[America and the rest of the world] relies on China to refine them. That is because the U.S. has lost much of its capacity to process minerals, while China has become the world’s dominant refiner of rare earths, cobalt, copper and many other metals.” Journalist Zeyi Yang observes, “If China succeeds in strictly enforcing its export control policies, it might provide just enough incentive for the US government and private companies to finally reshore the mineral refining industry. If that happens, Ian Lange, an associate professor of economics and business at the Colorado School of Mines, says, it could take about two years for a new critical mineral operation to open in the US.”[7] In other words, the best path forward is strengthening domestic processing of essential minerals. Trump has signed an executive order to streamline permitting and boost government financing for new domestic mineral projects and processing facilities. Nevertheless, there are no quick fixes. Emont notes, “Today, the sheer scale of China’s refining industry makes it difficult for others to compete. According to industry estimates, the cost of building a refinery plant in China is a third of the cost in the U.S.”

Long-term Prospects

One of the topics most often discussed when the issue of rare earths is raised is magnets. Journalist Keith Bradsher explains that rare-earth magnets are “essential for assembling everything from cars and drones to robots and missiles.”[8] Seaver Wang, director of the climate and energy team at the Breakthrough Institute, adds, “The heavy rare earth elements are added as sort of a spice, a doping agent, to maintain the magnetism of the magnet at high temperatures. It also improves corrosion resistance and the longevity of the magnet.”[9] The list of products in which rare-earth magnets are used is long; therefore, the economic impact of a magnet shortage would be great. And Emont explains, “China has dominated every step in the process of making rare-earth magnets. It is the only nation capable of producing the magnets from start to finish at scale.”[10]

Although there have been some bipartisan efforts in Congress to help establish rare-earth magnet production in the U.S., the effort has had little effect. As a result, the short-term prospects of replicating that production process domestically are not very good. Even the long-term prospects are questionable. Pini Althaus, a mining executive and Founding Partner at Cove Capital, insists, “Until the United States becomes a domestic producer, we must become a leader in mineral processing, which requires investments in domestic processing infrastructure. We can address our lagging capabilities by modernizing existing facilities, building processing hubs, offering tax incentives and grants to attract private investment, expanding federal research-and-development funding to develop efficient and sustainable processing technologies, promoting recycling and circular economy initiatives to recover critical minerals from e-waste, and establishing a National Critical Minerals Processing Innovation Center to drive technological advancements and workforce training.”[11]

An email from the Wall Street Journal’s Mark R. Long, observed, “China’s exports of rare-earth magnets plummeted after it imposed controls on the overseas sale of the crucial high-tech and industrial input, aggravating tensions with the U.S. Total export volumes of the magnets fell 74% in May from a year earlier, the biggest percentage drop on record. Exports of rare earths to the U.S. dropped 93% in May from a year earlier to about 46,000 kilograms.”[12]

Concluding Thoughts

As I wrote in a previous article, “No country, including the United States, will prosper in the years ahead if its critical mineral supply chain is not secure. Currently, only China can confidently claim to have a secure supply chain.”[13] The IEA’s Global Critical Minerals Outlook 2024 report concludes, “Long-term security of supply is typically a question of adequate investment, but in the case of critical minerals it is not only the adequacy of supply that matters but also the diversity. It can be very challenging for new entrants to gain a foothold in markets with well-established incumbents.” And the most well-established incumbent is China. That doesn’t mean countries shouldn’t do everything in their power to secure their essential mineral supply chains. The Wall Street Journal Editorial Board notes, “China’s share of global production, while still high, is already on the wane. … Market signals have stimulated significant rare-earth investment and innovation in the West over the past decade. They remain the West’s best defense against Chinese mineral mercantilism now.”

In the long-term, innovation may also help reduce the world’s reliance on the Chinese essential minerals supply chain. Keith Fritz, director of client solutions at QuesTek Innovations, LLC, explains, “Materials science is one overlooked way to optimize sustainability, particularly for manufacturers in high-performance industries such as aerospace, automotive, medical devices and luxury goods. These applications often use alloys that include rare earth elements (REEs), which can be environmentally harmful to mine and process. Rare earth elements aren’t just included in alloys because they sound exotic — they often enable necessary material properties in a component. Reducing or eliminating rare earth elements dramatically reduces the environmental impact of a product and typically reduces materials costs, too. Digital transformation of materials engineering has created new opportunities to develop materials without REEs.”[14] What is clear, in the short-term, is that China holds the upper hand.

Footnotes
[1] Editorial Board, “Rare Truths About China’s Rare Earths,” The Wall Street Journal, 3 March 2021.

[2] Patti Waldmeir and Peter Smith, “China predicts rare earths shortage,” Financial Times, 3 September 2009.

[3] Jon Emont, “China Is Winning the Minerals War,” The Wall Street Journal, 21 May 2024.

[4] Jon Emont, “How China Beat Out the U.S. to Become the Top Player in Rare-Earths Refining,” The Wall Street Journal, 24 March 2025.

[5] Loz Blain, “Largest rare earths deposit in European history found in Sweden,” New Atlas, 12 January 2023.

[6] Gracelin Baskaran, “Could Africa replace China as the world’s source of rare earth elements?” The Brookings Institution, 29 December 2022.

[7] Zeyi Yang, “Bad News for China: Rare Earth Elements Aren’t That Rare,” Wired, 23 April 2025.

[8] Keith Bradsher, “China Halts Critical Exports as Trade War Intensifies,” The New York Times, 13 April 2025.

[9] Yang, op. cit.

[10] Jon Emont, “The Road to China-Free Supply Chains Is Long. Warning: Legless Lizards Ahead.” The Wall Street Journal, 15 December 2023.

[11] Pini Althaus, “National View: US must build an independent critical-minerals supply chain,” Duluth News Tribune, 1 March 2025.

[12] Mark R. Long, “Iran Threatens Crucial Strait; China's Rare-Earths Exports Plunge; Tariffs Roil Pharma Supply Chain,” Logistics Report email, 23 June 2025.

[13] Stephen DeAngelis, “Future Prosperity Depends on Access to Critical Minerals,” Enterra Insights, 30 July 2024.

[14] Keith Fritz, “Rare Earth Elements Are Increasingly Replaceable,” IndustryWeek, 2 October 2023.