26-05-2025
Decoding China's rare-earth strategy: More resilient than it seems
In 'China's rare-earth controls are not the masterstroke they seem – ToI 27 April 2025' authors argue that Beijing's actions will inadvertently weaken its dominance in global rare earth race. This view, however, underestimates the depth, scale and strategy that China has deployed to control the critical mineral globally over last three decades. China has built her position in REE through decades of investments, technological superiority, trained human resources, supply chain integration and strategic acquisitions. As the world rushes to diversify and reduce dependency we must ask: is it too late and too little?
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China accounts for roughly 60% of the global critical-mineral production and is home to over 85% worldwide refining capacity. It produces 40% of the world's refined copper, 70% of refined cobalt, over 60% of lithium, and 99% of battery-grade graphite. Additionally, China also controls 87% of the global permanent-magnet market, to which REEs are essential. The US Geological Survey has specified 50 critical minerals including REE. Out of these 50, US is 100% import-dependent for 12 critical minerals and more than 50% import dependent on 29 minerals. According to USGS Mineral Commodity Summaries Report 2024, China is the dominant US supplier account for 72% of the annual demand, followed by 11% from Malaysia and 6% from Japan. In 1992, during a visit to one of the country's main rare earth production hubs in Inner Mongolia, Deng Xiaoping, famously said: 'While there is oil in the Middle East, China has rare earths'. This vision carried by focused academic research and a robust innovation environment. China has well-funded five National Rare Earth Laboratories under strategic industrial policies. Additionally, 39 Chinese universities offer dedicated program to train workforce in critical mining and REEs. China University of Mining and Technology ranked number one globally in mining technology. Consequently, China holds the highest number of patents in mining technology.
Also read: China's rare-earth controls are not the masterstroke they seem
Supply chain risk is another very critical factor in the REE geopolitics. China has previously demonstrated her ability to withhold the supply causing more than 5x price surge in the critical minerals when it has temporarily halted the supply to Japan following a maritime dispute in 2010. Post Covid-19 pandemic there have been multiple initiatives to de-risk the supply chain however China's mining scale and global footprint makes it non-viable for other countries to initiate in the mining of critical minerals. Additionally, China is known to use dumping strategy and deflate prices. Canada's Deputy Prime Minister accused China of stifling critical minerals start-ups and disrupting any attempts to create alternative avenues. Recent months have witnessed large mining corporations such as BHP, Tianqi IGO are either shutting their Nickel, Cobalt, Lithium mining or postponing planned expansion owing to oversupply from China and Indonesia.
India, too, must prepare to navigate this challenging landscape. The National Critical Minerals Mission (NCMM) is a timely policy step that enables private sector participation in exploration and mining of key minerals. By fast-tracking mine licensing, incentivising rare-earth recycling, and fostering public-private-academic partnerships, India can reduce its vulnerability. Strategic stockpiling with like-minded countries, capacity-building for refining, and investing in domestic research are critical. India should also leverage its geopolitical positioning to participate in resilient and trusted critical-mineral supply chains with the Quad and other alliances.
Recycling does offer a sustainable and supplemental route for sourcing REEs and critical minerals, but it cannot replace mining. It remains a secondary source with limited scale. Establishing recycling infrastructure demands high investment and long lead times. As per the data from Internation Energy Agency, from 2015–2023, recycled shares of copper and nickel fell by 4%, while cobalt and lithium recycling stayed below 10%.
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Any retaliatory or diversification strategy must be rooted in patience, steady technological advancement, and geopolitical pragmatism. Disengaging from China entirely is neither practical nor immediate. Building alternative capacities and reducing dependency will take sustained effort over many years, requiring coordinated national vision and international partnerships. After the Covid-19 pandemic, India aimed to reduce reliance on China for Active Pharmaceutical Ingredients (APIs). Yet, progress has been slow. According to Pharmaceutical Exports Promotion Council imports of bulk drugs rose 13.06% in the first two months of 2024–25 compared to the previous year, indicating continued and even growing dependency on Chinese supplies.
In conclusion, China's rare-earth dominance is not a fragile or accidental monopoly, it is a product of deep, deliberate, and sustained strategy. With strong government support, cutting-edge processing technologies, world-leading educational institutions, and a proven willingness to deploy market-disruptive measures like price dumping or export bans, China has built a formidable ecosystem. Attempts to counter this dominance must acknowledge the scale of the challenge. The narrative of Beijing's self-defeating strategy overlooks the resilience and adaptability that underpins China's critical minerals playbook one that continues to outpace global responses.
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Views expressed above are the author's own.
