The Global Race for Rare Earth Minerals

Power in the twenty-first century isn’t only about who has the most oil or the largest army. While these remain critical aspects, increasingly, it’s also about who controls the raw materials that power our world. When one nation dominates the supply of materials essential to modern technology, infrastructure, and industry, it can shape the systems and standards that others must operate within, creating new forms of strategic leverage that complement traditional sources of power.

That nation, today, is China.

On April 4, 2025, China imposed fresh restrictions requiring special export licences for seven rare earth elements and the high-performance magnets built from them, citing national security and non-proliferation concerns. These materials are central to electric vehicles, wind turbines, satellites, semiconductors, and missile guidance systems. In other words, the backbone of the modern economy and its defences.

This move followed a series of earlier bans on gallium, germanium, graphite, and rare earth separation technologies. The timing was no accident. As the global energy and defence race accelerates, Beijing has made it clear: it is now set to capitalise on its material dominance.

The aftershocks were immediate. Indian auto and electronics manufacturers, already dependent on Chinese magnets and components, braced for delays and production losses. The world just got a glimpse of what control looks like and what it means for the future of supply chains. 

And that’s what we explore in this edition:

• The rare earth elements powering our lives
• How China became the Saudi Arabia of rare earths
• Harnessing India’s natural strengths for a new industrial era
• The race to localise: India’s moves for rare earth independence
• Betting on India’s decade of strategic minerals

The rare earth elements powering our lives

In today’s industrial landscape, few resources carry as much leverage as rare earth elements. Rare earth elements (REEs) are a group of 17 chemically similar metals that are relatively abundant in the Earth’s crust. What makes them strategically scarce is not their availability, but the complexity of extracting, separating, and refining them cleanly and cost-effectively. The process is chemically intricate, energy-intensive, and environmentally hazardous, which is precisely why so few countries have built the capacity to do it at scale.

Grouped into light and heavy rare earths, each of these elements serves a precise, irreplaceable function in modern industry. They are embedded indispensably in the technologies that shape everyday life and national capability alike.

Here’s a snapshot of the key rare earth elements and the industries they propel.

In a single smartphone, you’ll find rare earths in the speakers, the vibration motor, the screen, and the glass polish. In an electric vehicle, they power the lightweight permanent magnets that make motors compact and efficient. Wind turbines use them to generate power with minimal friction.

In medicine, REEs show up in MRI contrast agents, portable X-ray systems, and laser scalpels. In defence, they’re at the core of night-vision systems, satellite communications, missile guidance, and stealth technology. Fibre-optic cables that carry the internet. Catalysts that reduce car emissions. Displays that light up our homes and offices.

Today, clean energy applications, including electric vehicles and wind turbines, account for just 17% of global rare earth demand. But by 2050, that share is expected to rise to nearly 1/3rd of the toal demand, according to estimates by the International Energy Agency.

Rare earths possess a special set of properties- they are magnetic, heat resistant and highly reactive. They enable compact designs without compromising performance, and ensure reliability even in high-stress environments.

Despite their widespread use, rare earths present several structural challenges:

• Difficult to replace: Alternatives often involve trade-offs in cost, performance, or efficiency.                              
• Hard to recycle: Rare earths are used in trace amounts and embedded within complex devices, making recovery expensive and technically challenging. Global recycling rates remain below 5%.
• Refining gap: Countries like the United States and Australia mine REEs, but still rely on China for downstream processing and magnet production.

It is a familiar pattern from history: like rubber in World War II or uranium during the Cold War, these materials may be invisible, but they quietly anchor global industrial momentum

How China became the Saudi Arabia of rare earths

“While the Middle East has oil, China dominates Rare Earths’”

– China’s former leader Deng Xiaoping

China now plays the role in rare earths that Saudi Arabia once did in oil: dominant in production, unrivalled in processing, and central to global supply chains.

China’s scale of control is staggering. It –

• Mines ~70% of the world’s rare earth elements
• Refines over 90% of global rare earth supply
• Produces 92% of high-performance rare earth magnets

China’s grip extends far beyond mining. It leads in processing, alloying, and magnetising- the full stack. So when it cuts off access, it in essence, rewrites the rules of competition.

This wasn’t overnight dominance. It was a strategy executed over decades.

In the 1990s, China increased rare earth exports significantly. The goal? Push prices low enough to make Western mining and refining economically unviable. It worked. One by one, global competitors shut down. China became the dominant producer by default.

Then in 2010, it flexed. Following a diplomatic clash with Japan, China cut rare earth exports by 40%, triggering global panic and a World Trade Organization (WTO) dispute. Though it eventually lost the case, the shock made it clear: control over materials could be used as a strategy.

Today, the real choke point lies in midstream mastery — refining, separation technologies, and magnet manufacturing. This is where China’s grip tightens. Countries like the US and Australia may extract rare earths, but they still send them to China for processing. 

Harnessing India’s natural strengths for a new industrial era

India holds nearly 7 million tonnes of REE reserves, the fifth-largest in the world, and yet stands on the sidelines as China tightens its export grip. 

Rich deposits of monazite sands in Odisha, Tamil Nadu, and Kerala, along with expected reserves in Rajasthan, Uttar Pradesh, and Karnataka, offer significant geological promise. But progress is stalled, with mining efforts constrained by the lack of scalable, commercialised processing technology. Mining REEs is tightly regulated, processing remains minimal, and there is no domestic magnet-making industry to absorb the output, even if we scale.

Further, Coastal Regulation Zone (CRZ) restrictions, classification of monazite as radioactive, and sluggish environmental clearances continue to limit what’s even mineable.

Despite holding 6.9 million tonnes in reserves, India mined just 2,900 tonnes of rare earth elements in both 2023 and 2024, a fraction of its geological capacity.

Meanwhile, the dependence on imports continues. In 2023–24, India imported 2,270 tonnes of rare earth minerals, primarily from China, reinforcing the supply chain vulnerability. 

Notably, India was among the earliest to recognise the importance of rare earths. As far back as 1950, Indian Rare Earths Limited (IREL) was established to mine and process these critical minerals, well before they became central to global supply chains. While India made an early start, the sector’s strategic direction has since evolved gradually. Meanwhile, countries like China invested heavily in end-to-end value chain integration, accelerating their leadership in this space. Today, with global attention on supply diversification, India is once again prioritising this sector with renewed ambition.

The race to localise: India’s moves for rare earth independence

India’s rare earth story may be turning a corner.

– In 2023, the government launched the National Critical Minerals Mission (NCMM) to boost exploration and secure the domestic supply of 30 key minerals, including rare earths.

– Over 1,200 exploration projects are currently underway across multiple states, led by the Geological Survey of India (GSI). New findings have already emerged in Rajasthan, Karnataka, and Andhra Pradesh.

– IREL has expanded operations and signed early-stage cooperation agreements with Vietnam, Sri Lanka, and Oman to diversify technology access and resource partnerships.

– In March 2025, the government opened mineral and rare earth exploration to private sector participation for the first time. Thirteen blocks were auctioned under a liberalised regime:

• Licences allow exploration over up to 1,000 sq. km per company
• Includes a 50% cost reimbursement if no viable minerals are found
• Designed to attract junior miners, specialist explorers, and global capital

– Private players are beginning to step in:

• Midwest Advanced Materials will commence production of rare earth magnets at 500 tonnes per annum (tpa) in 2025. Plans to scale up to 5,000 tpa by 2030
• Hindustan Zinc, a Vedanta Group subsidiary, secured India’s first privately auctioned rare earth block in Uttar Pradesh’s Sonbhadra district.

– The upcoming Production Linked Incentive (PLI) scheme for rare earth magnets is expected to:

• Subsidise domestic production
• Help match Chinese import prices
• Build a globally competitive midstream ecosystem

The pressure is real, the shortage immediate. The number of Indian firms waiting on Chinese rare earth magnet licences has nearly doubled in two weeks to 21, including Bosch India, TVS Motor, Sona Comstar, and others. India currently imports magnets worth roughly ₹300 crore annually, and the squeeze is beginning to hit production lines. EV makers are now urging the government to temporarily ease localisation norms, allowing imports of fully built motors to avoid production halts. Crisil warns of potential halts in July, just as India begins a major EV rollout. 

In response, New Delhi is expediting diplomatic channels: it’s seeking direct talks with Beijing, Fast‐track approval for End‑User Certificates, and state‑supported delegations of Indian auto players to obtain magnet supply. Meanwhile, IREL has suspended its rare earth exports to Japan to prioritise domestic availability.

Industry leaders like the Tata Group, Vedanta, and Ola Electric have joined the chorus, calling for integrated local supply chains, rapid tech partnerships, and predictable incentives. As the government finalises PLI support and NCMM clarity, India finally faces a rare-earth inflection point — the question isn’t ambition, but execution.

India has the reserves, the policy push, and the urgency. What it needs now is a follow-through that matches the scale of its ambition.

Betting on India’s decade of strategic minerals

Around the world, investors are repositioning portfolios to align with the next generation of energy, mobility, and materials.

Global rare earth ETFs like REMX have gained attention, while upstream plays in battery metals, clean energy, and defence-linked tech are starting to attract serious thematic capital.

What was once seen as a niche exposure to rare earths, scandium, or high-purity neodymium is now emerging as a source of strategic alpha driven by both demand and geopolitical significance.

For India-focused investors, the window is even more nuanced. 

The government’s PLI scheme for rare earth magnets will soon roll out, incentivising domestic production that could alter long-term supply dependencies. IREL’s renewed expansion, both operational and international, adds a layer of credibility. And for the first time, with the sector now open to private participation, early-stage capital can enter upstream exploration, midstream processing, and magnet manufacturing. The areas that were previously off-limits to private investors.

We’re watching the architecture of a new industrial theme being laid down- one that sits at the intersection of energy transition, trade policy, and tech sovereignty. For investors, this decade may well be India’s entry point into the world of strategic minerals.

The rare earth race is part of a much larger shift — a return to industrial self-reliance as the foundation of national power.

Across the world, governments are rethinking what it takes to stay secure and competitive. Donald Trump’s push for “Make in America”, restrictions on chip exports to China, and billions in subsidies for battery and semiconductor plants all signal a renewed industrial focus. In India, Prime Minister Modi’s emphasis on “Aatmanirbhar Bharat” and strategic manufacturing follows the same logic. Manufacturing is no longer treated as a downstream activity. It sits at the centre of policy, diplomacy, and long-term power. Perhaps, it wouldn’t be overextending to say that in today’s world, manufacturing is an extension of foreign policy. 

It is not enough to mine what we own. The edge lies in what we can make, scale, and export. That’s where the real game begins.