Rare Earth Magnets are Pulling the World Apart

There is now a scramble amongst the world powers for once little-known metals called rare earths that are crucial for today’s technology, including military technology. China leads global production of rare earth elements and now the US and the rest of the world are trying to catch up. But what are rare earth elements?

Rare Earth Elements: What are they and what are they good for?

The 17 rare earth elements (REEs) are metals with similar chemical properties. More precisely, they are 15 lanthanides — lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium — to which scandium and yttrium are added due to sharing similar properties. It took a long time to isolate them all precisely because how similar they are.

REEs are necessary for the production of many technological goods. They have useful optical properties. If you’re reading this on a screen, the green light from your screen is generated using terbium, while the red light is produced by a combination of europium and yttrium. Another example is erbium. The infrared light erbium produces can send signals down optical fibres for kilometres, which is why most of the optical fibre applications around the world use signal amplifiers made with it. Fibre-optic cables are the backbone of modern telecommunication; they could even help navigate Arctic sea routes.⁽¹⁾ They will no doubt be targets in a future war.⁽²⁾

The magnetic properties of REEs are perhaps the most important. REEs can be used to produce rare earth magnets, powerful permanent magnets (wherein the magnetic field is generated by the internal structure of the material itself) essential to the miniaturisation of technology. The first magnets using the rare earths neodymium and scandium were developed in 1982 and have revolutionised technology since. The tiny motors that power computer hard drives and the miniature speakers on mobile phones and laptops depend on rare earth magnets. Neodymium magnets, the most widely used type of rare earth magnets, are used for MRI scanners and microwave ovens. Rare earth magnets are needed for wind turbines and electric car motors. Electric cars without permanent magnets require bigger batteries and wind turbines without them require more maintenance out at sea. The wind turbine otherwise needs a lot of gears and is thus more prone to breaking down.

REEs also have important military applications. For example, terbium is used for naval sonar systems, light aluminium-scandium alloys are used for aerospace components, yttrium is used in jet engines, and ytterbium is used in decoy flares. The US Department of Defense is behind the US’ current effort to diversify its sources of supply.

All this should make it clear why there is an imperialist tug-of-war to get hold of rare earth minerals, with China clearly in the lead. For context, in 2020, China produced 80% of neodymium magnets in the world.

China’s Monopoly

A rare earth mineral contains one or more REEs as major metal constituents. Contrary to what their name indicates, rare earths are relatively abundant in the Earth’s crust. However, they do not exist in highly concentrated seams, but are spread out in small amounts over large areas, making them ‘rare’. Currently their extraction is only commercially viable with concentrations of about 2% per ton of waste rock. Although rare earths are found across the world, no country has exploited them like China. Deng Xiaoping reportedly declared that “the Middle East has oil, China has rare earths”. Since the 1990s, China has become dominant in the production of rare earth oxides (REOs), from which REEs can be separated. China accounted for almost 70% of rare earth mining production in 2024, up from 58% in 2021.⁽³⁾ The Bayan Obo mine in north-east China was responsible for 50% of global production in 2023.

China has a third of the world’s estimated rare earth reserves. Brazil, Russia, India, Australia, Myanmar, Malaysia, Canada, Kazakhstan, Nigeria, Madagascar, and Greenland also have deposits. Greenland’s reserves partly explain China’s attempts to get their foot in the door there, as well as Trump’s recently expressed threat that the US would get Greenland “one way or the other”⁽⁴⁾ North Korea is also thought to have huge reserves.

However, while rare earth deposits exist elsewhere than China, it is largely unprofitable to mine them. This is largely because of China’s monopoly, but this of course does not explain how this monopoly came into place and is therefore an insufficient answer. Part of the reason is that landlordism does not pose an obstacle to capital being invested in mining as it can in other countries. The capitalist does not need to worry about part of the profit going to the private land owner in the form of ground-rent. Indeed, in China the state owns all mineral resources, regardless of land ownership. To be clear, there is nothing socialist about this, even if this were a full nationalisation of the land. The capitalist mode of production is characterised by the separation of the labourers from the conditions of labour, that is to say from the means of production and land. As Marx pointed out, this separation of the labourers from the land remains “completely fulfilled if it becomes State property”.⁽⁵⁾ This is why Lenin viewed the nationalisation of land as a mere “bourgeois-democratic measure”.⁽⁶⁾ The Chinese state, then, took advantage of this and did all it could to develop rare earth mining by allocating land as it pleased, all while supplying cheap energy and subsidising the opening of new mines. The domestic market was protected from foreign competition, with extraction restricted to Chinese companies.

China developed this branch of production with little regard for the dangerous working conditions or environmental impact. Rare earths are often found with radioactive elements like thorium and uranium, and separating them out requires a lot of toxic chemicals and hundreds of cubic metres of water which become contaminated with these chemicals. Separating REEs from each other is also difficult given their similar properties. In fact, the main trouble with REEs is not so much mining them than the fact that REEs must be separated from the oxides, refined, and forged into alloys in a highly specialised multi-stage process, before they can be used to produce rare earth magnets. China has established a controlling position at each step of this process, through its state subsidised long-term industrial strategy. The main reason China is ahead of its competitors is therefore not so much because of its large reserves, although this is undoubtedly a big factor, but because of its monopoly on the processing of REEs. As we noted earlier, rare earth elements are not rare, but it is rare to find them in pure form. The truly ‘rare’ part, therefore, is the infrastructure to process them. In 2023, China processed 87% of REEs (in comparison, the EU processed 2%) and refined 91%. 94% of rare earth magnets are made in China.⁽⁷⁾ Processing, storage, and transport are too expensive to compete with China.

Previously, rare earths production, including the entire processing chain, was dominated by the US. Between 1965 and 1995, the Mountain Pass mine in California supplied most of the world’s rare earth materials. In 1995, the Chinese company Zhong Ke San Huan acquired Magnequench, the US company that controlled all of the processing, and five years later transferred its Indiana production facilities to Tianjin, east of Beijing. After a toxic waste spill, Mountain Pass was closed in 2002 and wasn’t reopened due to competition from Chinese suppliers. As the US withdrew from rare earths production, China’s output rose from 80,000 tonnes in 2002 to 120,000 tonnes in 2006. This excludes clandestine production thought to account for 20 to 40% of the total. As a comparison, the US ceased production in 2003 and other countries did not exceed 1,000 tonnes a year.⁽⁸⁾

The Rush to Catch Up

Since then, China’s competitors have tried to catch up — or catch back up. This is proving difficult. Non-Chinese production of REOs increased by nearly four times to 90,000 tonnes from 2015 to 2022. But meanwhile in China production of rare earths has doubled from 105,000 tonnes to 210,000 tonnes in 2022. China is seeking to thwart its competition and keep its monopoly by securing rare earth deposits outside its borders and protecting the intellectual property around processing and refinement. ⁽⁹⁾ Moreover, China’s reserves, though estimated at 44 million tonnes, are ultimately finite. The rise in global demand for rare earths is also pushing China to find deposits beyond its borders. Indeed, since the early 2010s, the Chinese state has tried to keep official production between 100,000 and 120,000 tonnes per year and to consolidate the industry, until then very fragmented, around major enterprises with the aim of reducing clandestine extraction.

As a result, China became a net importer of unrefined rare earths in 2018. The raw or little-refined ores come from Myanmar, Vietnam, Africa, and Australia — the latter via Malaysia where Australian rare earth companies such as the Lynas Corporation have set up refining operations. Malaysia itself produces 8% of rare earths worldwide as of 2024. Malaysia seems to understand the importance of processing and refining over mere extraction and said in 2023 that it would explore a ban on exports of rare earths to develop refining within the country. China has worked with several African governments to secure rare earths, among other strategic commodities, in a context where French and American presence on the continent is receding.⁽¹⁰⁾

In order to secure these new imports, the Chinese giant Shenghe Resources Holding signed a contract in 2015 for REOs with Tantalus Rare Earths, a German mining company operating in Madagascar. And in 2016 Shenghe became the major shareholder in the Australian company Greenland Minerals (now Energy Transition Minerals), signing an agreement to secure the entire output of REOs from Greenland’s Kvanefjeld mine (the Chinese state being Shenghe’s largest shareholder). However, in 2021 Greenland halted this project, no doubt due to US pressure.⁽¹¹⁾

The US is not alone in making things difficult for China. Myanmar’s share of global rare earth production rose from 0.2% to 14% from 2015 to 2023. China obtains about 40% of its rare earths from Kachin State, in Northern Myanmar. But in October 2024, the Kachin Independence Army took control of the region’s mining operation, halting shipments of inputs needed for rare earth mining and the export of the minerals back to China.⁽¹²⁾

As for Australia, it supplies 3% of the world’s rare earth mining production as of 2024. Lynas owns Australia’s Mount Weld mine and has been supported by the Japanese government since 2010. That year, after the Japanese navy intercepted a Chinese trawler off the disputed Senkaku/Diaoyu islands, China halted shipments of rare earths to Japan, though without acknowledging this publicly. That year, China reduced its export quotas to 30,000 tonnes per year. Since 2005, China has put in place export quotas on rare earths. This incident spurred China’s competitors to reduce their dependency on China. On top of this incident, as previously explained, China had reserved rare earths mining to Chinese companies, which violates WTO regulations (China joined the WTO in 2001). The US, along with the EU and Japan, brought the case to the WTO, which ruled against China in 2014, resulting in a lift on export quotas in 2015, but by then China had already established its advantage. American and Japanese processing companies had set up operations in China to avoid shortages and having to pay higher prices, and had formed partnerships with Chinese companies, including in highly specialised activities such as magnet production. This resulted in a technology transfer to Chinese companies.

In 2023, China implemented curbs on shipments of germanium and gallium (neither of which are rare earths but are still strategic resources), which are needed for chips and military communications. In December 2024, China announced it was also restricting exports of non-rare earth strategic metals such as antimony (used in car batteries, solar panels, smartphones, nuclear weapons, armour-piercing ammunition, infrared sensors, night-vision goggles, and precision optics) in response to growing US trade restrictions and tariffs on Chinese products such as semiconductors. “The US, in contrast, has not mined any marketable antimony since 1997”.⁽¹³⁾ In February 2025, China also announced restrictions on exports of tungsten, indium, bismuth, tellurium, and molybdenum (none of them rare earths), used for military and green energy applications. ⁽¹⁴⁾ However, by restricting exports, and thus world supply, China risks favouring its competitors in the long-term since the rise in world prices could make it more viable to open new mines elsewhere. Such a rise in the price of these raw materials, a part of constant capital, means a fall in the general rate of profit. Hence the intensified hunt for these raw materials throughout the world.

However, this is where the distinction between REEs and other strategic minerals is critical. Because while China may be restricting exports of strategic resources, China has also been ramping up its rare earths production. In 2020, China did not cut its rare earths production quotas but increased them by 10%. In 2024, China’s rare earth exports increased by 6%, resulting in falling prices.⁽¹⁵⁾ China has apparently been selling below cost.⁽¹⁶⁾

We must finally note a lowering of prices and selling at a loss to stifle the competitor. The trust here declares that “it does not wish to make profit on the enterprise itself, that the struggle is conducted only to defeat the competitor, and therefore without any relation to self-cost. The lower limit is formed, not by the production costs, but by the cartel’s capital power and by the strength of its credit; the question thus reduces itself to how long its members will be able to stand a struggle which, for the time being, offers them no gain.” In the home market this method is used to stamp out the final resistance of the opponent; in the foreign market it appears only as an increase of dumping.⁽¹⁷⁾

By increasing supply, China has lowered prices, with the aim of forestalling the US’ new extraction projects. Trump’s new volley of tariffs has made China change tactics in the trade war and retaliate by restricting exports of rare earths, however.⁽¹⁸⁾ To reduce its dependency on China, the US reopened the Mountain Pass mine in 2018, which is currently the only rare earth mining and processing facility in the country. The US still has to export its ore to China for refining and processing, after which it is re-exported as magnets to the US and other countries, though in 2024 the US restricted its rare earth exports to China as part of the trade war. The owners of the mine recommissioned a separation plant in 2023, which would give the US the ability to process rare earths on home soil. As of 2024, the US produces 11% of rare earths worldwide. The US is looking to expand its rare earths reserves, as seen recently in its desire to acquire Greenland — Trump had already explicitly cited anxiety about rare earths as the reason for wanting to purchase Greenland back in 2019 (the US had also previously proposed to buy Greenland in 1867, 1910, and 1946) — and to strong-arm Ukraine into giving up mining rights, and notably rare earth mining, despite the fact that Ukraine has no operational rare earth mines.⁽¹⁹⁾ In fact, while Ukraine has substantial reserves or deposits of lithium, graphite, manganese, titanium, gallium, and nickel, half of its rare earth deposits are currently under Russian control and there are doubts about how viable it would be to extract and process the rest.⁽²⁰⁾ Regardless, the deal is about more than rare earths. The EU is also interested in Ukraine’s resources, and the EU leaders’ current indignation at Trump is truthfully indignation that they might not get their share of the spoils.

Within the EU itself, a huge deposit of rare earths was discovered in Sweden in 2023.⁽²¹⁾ The site also currently houses the largest underground iron ore mine in the world. But this deposit would still not be enough. And would not circumvent the fact that the EU is dependant on China for processing. The EU currently only has one facility for separating rare earths for magnet production, located in Estonia and operated by Canada’s Neo Performance Materials. Belgian chemicals group Solvay is planning to expand its site in La Rochelle, France, to do the same. In a similar story to the American one above, the refinery at La Rochelle (then owned by Rhône-Poulenc) was once responsible for 50% of REE purification in the 1980s. Its rare earth activities were delocalised to China, with pollution being cited as the justification. According to the European Commission, in 2021, 98% of the rare earths used in the EU were imported from China. 100% of the EU’s heavy rare earth elements supply comes from China. The EU has recently unveiled plans to cut its dependence on China but it remains to be seen if it can make a dent in that figure.⁽²²⁾ This means that for now the EU’s push for green energy depends on China.

Rare Earth Elements and the Environment

In 2023, the EU produced 58% of wind turbines and 23% of electric vehicles. But while the EU may be leading the world in wind turbine production, this depends on rare earth elements from China such as praseodymium, neodymium, and dysprosium. The EU has pushed for recycling REEs but this is difficult as they are often glued to other components within complex products such as smartphones. As of 2023, REE recycling only satisfies 1% of EU demand. By contrast, 55% of EU copper demand is satisfied by recycling. This means that the push for renewable energy in the EU and elsewhere depends on the mining of REEs in China, at the expense of both the environment and workers’ health.

Rare earths extraction in Inner Mongolia, where most rare earths extraction takes place in China, has resulted in lakes of toxic effluent, cases of sulphuric acid poisoning, and ‘cancer villages’. Contamination of waters and soil has resulted in infertility and malformations. There has been some local mobilisation against the pollution, for example in Guangxi (the other region of China where large amounts of rare earths extraction takes place), but these have had little success. As we stated in 2020:

Many of the solutions favoured by the Green lobby involve environmental destruction and pollution themselves. Mining large quantities of rare earth metals, cobalt and lithium, required for green energy, cause appalling pollution. China, where 70% of rare earths are mined, has poisoned vast areas of land. Mining lithium, for car batteries, in the Atacama desert in Chile has already destroyed salt water lakes and robbed the freshwater aquifer. The fact that capitalism requires continual growth and each nation state is in competition to gain a competitive advantage over its rivals means the environment must always remain an “externality.” What capitalists can never admit is that the cause of the entire suite of environmental problems is global capitalism itself. Hence all solutions which leave capitalism in place are futile.⁽²³⁾

The race for renewable energy is just another reason for the scramble for these precious metals. As imperialist competition shifts from mainly trade and economic one-upmanship to military preparations, the quest to secure control of rare earths is becoming a key part of the game. From China, to Serbia, to Greenland, to Africa, and an increasing number of exploitable areas, local inhabitants have no say and often no idea why the land they live on is suddenly full of surveyors searching for profitable reserves. Meanwhile, for the workers of the world there are no profits to be had: only the sharpening evidence that unless they themselves engage in a collective fight for a new world community which takes account of the natural world then capitalism will ensure most of us have no future.

Erwan
Communist Workers’ Organisation
4 April 2025