Photo by Bhautik Patel on Unsplash
Despite their name, rare earth elements are relatively abundant. However, economically viable deposits exist in just a few countries, making it difficult to source large quantities for manufacturing. Extraction is also expensive, so only a limited number of mining companies have the resources needed to launch full-scale operations.
Rare earth elements are critical for the technology, defense, and energy industries, as they're used to manufacture a variety of products. They also play important roles in health care, oil refining, and mining industries.
Learn more about rare earth elements, including what they are, where they're produced, and how the country-level control of these substances can affect geopolitical relations and economic development.
Rare earth elements (REEs) are a group of 17 metallic substances buried in the Earth's crust. This group includes all 15 lanthanides, plus scandium and yttrium. These elements have atomic numbers ranging from 57 to 71.
REEs are sometimes broken into light and heavy groups. Light ones have lower atomic numbers, and they're more abundant in the Earth's crust. Heavy REEs are less abundant and more challenging to extract, which is why they are more valuable and used for specialized applications.
Rare earth elements are essential for making these products:
Photo by Valentin Antonucci
While China and the United States lead global production of REEs, several other countries also have sizeable deposits. Mining occurs in multiple regions, but China continues to dominate the refining stage — accounting for an estimated 99% of global refining capacity as of 2023.
Refining, the process of separating rare earth elements from other mined materials, is a critical and resource-intensive step that determines the global supply chain. Below is a brief overview of REE production and reserves in seven major producing countries, based on the latest data from the U.S. Geological Survey's Mineral Commodity Summary.
Control over rare earth elements gives countries significant economic, technological, and geopolitical power. Nations with large deposits can use this advantage to gain leverage in trade disputes and other political matters. For example, China uses export controls to ensure domestic companies have enough REEs to meet their production goals before other countries can import what they need.
REEs are also critical for national defense and technology development. Countries with large reserves have more options when it comes to producing missiles, military vehicles, and other defense equipment. Rare earth metals are found in almost every electronic item on the market, so they can also make or break a country's economy.
The global supply chain is also relatively fragile. Few countries have economically viable deposits, so even minor issues can result in reduced supply for months or even years. For example, a refining facility in Vietnam had to shut down due to tax problems, leading to reduced global refining capabilities.
Finally, China controls much of the refining activity, making it difficult for companies in other countries to estimate annual supply. If China implements additional restrictions or shuts down some of its state-owned enterprises, the global supply of purified REEs could dwindle.
Global demand for rare earths continues to rise, driven by the growing need for advanced technology, clean energy, and electric vehicles. To meet this demand, nations with viable deposits should focus on adding mining and refining capacity.
Circular solutions focus on reusing and recycling rare-earth elements along with reducing their consumption whenever possible. This minimizes waste and reduces demand for new rare-earth materials. Strategic alliances and trade agreements are also essential, especially for countries with lower reserves or limited production capabilities.
The environmental impact of mining rare earth elements will always be a concern. For example, refining can cause heavy metals to build up in the water supply, increasing the risk of health problems. Production and refining also require large amounts of water.
Mining and refining companies can't completely eliminate these problems, but buyers can help by focusing on ethical sourcing — choosing suppliers that reduce water use, limit pollution, and uphold environmental standards.
