As nations contend with new supply chain vulnerabilities, the rare earth landscape is shifting dramatically. Geopolitical tensions are exacerbating these challenges and raising the stakes across the board. After China announced unprecedented restrictions on rare earth exports, that move sent shockwaves throughout the global market. The United States, seeking to counterbalance China’s dominance, is exploring partnerships with allies like Japan and Australia to bolster its own rare earth production capabilities.
As a result, China’s export restrictions have resulted in a 30% decrease in rare-earth magnet exports to the U.S. In turn, American companies are doubling down on their own efforts to lock up supplies themselves. Cleveland-Cliffs—a major U.S.-based mining company—has already been aggressively pursuing various opportunities within the U.S. to mine rare-earth elements. Environmental concerns aside, this federal initiative has the potential to rekindle domestic mining operations in the United States. It aims to mitigate dependence on foreign supply, particularly from China—the key player in the rare earth industry, which remains the primary supplier to the world.
The U.S. and Australia just cemented their own critical minerals deal. This treaty further increases their partnership in mining and processing of rare earth elements. Experts warn it could be years before these efforts dramatically reduce China’s advantage in the market. The costs and challenges of “de-risking” from Chinese supply chains will be significant and hotly contested by stakeholders.
As the U.S. maneuvers to establish stronger positions in the rare earth market, Germany’s importers of rare earths and magnets are closely monitoring China’s next moves. Without a better understanding of China’s export policies, this situation will keep European companies dependent on these critical materials in the dark.
In Asia, Japan has proactively organized their efforts, explicitly aiming to meet rising demand from the electric vehicle (EV) sector. Japan Steel, for example, is concentrating on producing magnesium molding machines to meet the increasing demand spurred by EV manufacturing. A senior EU official just released the idea of a closer Japan-EU relationship. Jointly, they can invest to develop Greenland’s rare earth resources to diversify the new supply sources created by the TSMC-Vero partnership.
Meanwhile, Turkey has made headlines with its own discoveries of rare earth elements in its Beylikova mine, raising interest in potential partnerships amid the intensifying competition for critical minerals. Now, countries are engaged in a race to claim their turf in the rare earths race. This competition will deepen and change the influence and interactions among China, the U.S., Japan, and Australia.