China and Rare Earth Minerals

 China's Rare Earths Retaliation -

REE is a new Oil

4 April 2025, China restricted the export of Rare earth elements (REE) to direct counter to US President Donald Trump’s latest tariffs.

What is rare earth elements

In Periodic table, elements with atomic number 21, 39 and from 57 to 71, These 17 elements are called rare earth elements.They are basically lustrous silvery-white soft heavy metals and imp thing is they are not rare. They are found in abundance but their processing and refining is very complex so they are called rare earth elements (REE).

Why REE is New Oil ?

REE are heavily used in Military equipment, drones, electronics equipment, EVs, lasers, glass, magnetic materials due to which they are called New Oil these days. Now let me talk quickly about those seven REEs whose export has been restricted by China and after that we will talk about their key role in global geopolitics

Samarium: Used in powerful magnets for electric motors, aerospace, military applications, cancer treatment, laser. 

Gadolinium: Essential for MRI, nuclear reactor shielding, electronics, high-performance magnets due to its ability to enhance magnetic properties.

Terbium: Key in LEDs, solid-state devices, and high-strength magnets for electric vehicles and wind turbines.

Dysprosium: it improves heat resistance, Critical for high-performance magnets in electric vehicle motors and wind turbines. It’s also used in hard disk drives and laser materials.

Lutetium: PET scans, catalysts for petroleum refining, and some specialized electronics. Scandium: Enhances aluminum alloys for lightweight, strong materials in aerospace and automotive industries.

Yttrium: Vital in LED displays, superconductors, and ceramics. It’s also used in lasers and as a strengthener in alloys for jet engines.

Now till now you have understood how critical these REE are for modern applications now lets talk about role of China in these REEs. As of data in 2024, global production of REEs is estimated at approximately 390,000 metric tons and China’s share is around 70% (270,000 m tons). But production of this REE is not imp.

Imp is their processing and refining and when we talk about processed and refined REE then China's share further increase rom 70% to 90%.

It means 90% of the final REE are produced only in China. So entire world is dependent on China on it. But why only China can process these REE and not other countries.

Answer is very interesting.

Processing of these REEs require huge chemical extraction. Concentrated ore is treated with chemicals to dissolve REEs and after that Solvent Extraction is used to separate these REE. the entire process is highly damaging to environment. Due to strict environment laws, other countries cant do this. If India does this process, NGT will put stay on it but China doesn't give a damn to environment laws.

So from 90s, China started heavy investment on set ups. Process is energy-intensive, chemically complex, and costly so other countries leg behind.

The US produced 43,000 metric tons of rare earths in 2024, other producers are Australia, Myanmar, Nigeria, Thailand, India and Russia.

But they all together cant compete with China.

Now let me tell you how China is using these REEs as geopolitical tool from last 20 years.

In Sep 2010, Japan detained a Chinese fishing boat, China immediately put export ban of REE to Japan. Neodymium is used in permanent magnets used for wind turbines. Due to Paris treaty Role of wind energy is increasing in all over the world and world is dependent on China or Neodymium.

But recently Trump came out from Paris treaty and gave new slogan of "Drill baby drill" to convey message to China.

But China also knows the importance of REEs in current global process.

So as Trump announced tariffs on China

China didn't waste time in using its trump card and put export restrictions on these REEs.

In past also US specially Baraq Obama, EU and Japan have accused China of unfairly limiting its exports of so-called "rare earth" . China's recent export ban may cause 18% rise in battery costs by 2026. EU sources 98% of its rare earths from China also looking for alternative source.

And here comes Greenland

Is this the reason Trump eyeing on Greenland which has lot of REEs ?