Rare earth magnets are tiny and invisible to the eye in their final form, yet they power the modern world. From electric vehicles and robotics to fighter jets and smartphones, these elements’ unmatched magnetic strength has made them indispensable to clean energy and defence supply chains.
As China tightens its grip on rare earth exports, Indian automakers are scrambling to insulate themselves from supply shocks. Companies like Tata Motors and Mahindra & Mahindra are exploring local sourcing options and forming joint ventures with rare earth processors in Australia and Africa. Maruti Suzuki has reduced its production targets for electric vehicles due to shortage of rare earth minerals.
According to Statista, China’s rare earth reserves reached 44 million metric tonnes of rare earth oxide equivalent (REO) in 2024 — the largest in the world. But reserves alone do not build empires. What China has done, unlike any other nation, is establish a near-unbreakable grip over mining, refining, and global distribution.
The Silent Strategy Behind A Global Stronghold
China’s dominance is no accident. It is the result of a long-term, state-directed plan. The roots go back to the late 1980s, when Chinese leader Deng Xiaoping famously declared, “The Middle East has oil, China has rare earths.” Over the following two decades, China aggressively scaled up production and processing capacities.
By 2023, China controlled 61% of global rare earth mining and 92% of refining capacity, according to the International Energy Agency (IEA). Meanwhile, the US Geological Survey (USGS) notes that 70% of the US rare earth imports between 2019 and 2022 came from China.
China deployed heavy subsidies, relaxed environmental regulations, and aggressive price undercutting to secure this control. Meanwhile, in the United States, the once-prominent Mountain Pass mine began to fade into irrelevance. By the late 1990s, a toxic waste spill had shut it down entirely. While the West debated costs and regulations, China ramped up production to meet the growing demand of an increasingly electrified and digitised world.
History Repeats
In 2010, China flexed its rare earth dominance by halting exports to Japan amid a territorial dispute — sending shockwaves through Japan’s auto industry. Though the ban lasted just two months, it triggered a global price surge and exposed the world’s reliance on a single supplier. The episode became a turning point for Japan, prompting it to urgently diversify supply chains and reduce dependence on Chinese minerals — a lesson that now echoes louder than ever.
The US has explored projects in Greenland and Ukraine, both rich in rare earths. However, as noted by S&P Global, political instability, environmental concerns, and a lack of refining infrastructure present major roadblocks for Washington to reduce reliance on Chinese supply chains. India, with significant reserves in Andhra Pradesh and Odisha, has partnered with Japan and Australia to build alternative supply chains. But scaling capacity — particularly in refining — remains a long-term challenge.
The Environmental Cost Of The Empire
China’s dominance has come at a steep environmental and human cost. According to reports, pollution from rare earth mining has rendered farmland barren and water sources undrinkable. In Lingbeizhen, a village in southern Jiangxi province, residents live near exposed leaching ponds and wastewater pools — and face disproportionately high cancer rates.
Reports note the existence of such “cancer villages” across major rare earth mining zones. While Beijing has taken steps to shut down thousands of illegal mines and consolidate the sector under six state-backed firms, critics argue that enforcement remains uneven, and legacy contamination is far from resolved.
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