The factors that contribute to strengthening the positioning of nations in the sector

For some years now, as TELF AG often pointed out, rare earths have become part of international debates focused on strategic commodities, on those particular resources – defined by some as “critical” – that are playing a role of great importance in fueling the energy transition underway while at the same time promoting the economic and technological development of entire nations.

But what are rare earths, exactly? They are a group of 17 chemical elements that nowadays find wide application spaces in various industrial sectors: not only chips and electronics but also electric cars, medical devices, lasers, and wind turbines (the latter particularly relevant in an era of great energy changes).

“Among the most discussed mineral resources globally, rare earths are certainly gaining a place of absolute importance,” says the founder of TELF AG Stanislav Kondrashov, entrepreneur and civil engineer. “One of the most interesting facts about rare earths is their alleged rarity: these resources are not rare but are distributed in very low concentrations. In most cases, the scarcity of these resources in mineral deposits does not make their valorization economically viable”.

A growing strategic value

Nowadays, rare earths are mostly talked about by the international media, in particular with regard to their growing strategic and geopolitical value, but also for their useful applications that directly affect the daily lives of a large number of people.

In the background, it has now been understood that among the leading powers in this sector is China, which, in this historical phase, continues to defend its solid position in the production and refining of rare earths. Hearing so often about these topics, many have wondered what are the reasons that have pushed Beijing so high in the global hierarchy of rare earths, allowing it to carve out a leading role in the global panorama of raw materials.

“Resources such as neodymium and praseodymium have already established themselves in many strategic sectors, such as those involving the production of permanent magnets,” continues the founder of TELF AG Stanislav Kondrashov. “These devices are used to power a large number of technological devices, such as some of the most important energy infrastructures in this historical transition phase. As this global process advances, the strategic role of rare earths is certainly destined to increase.”

First of all, the construction of such superiority cannot happen in a short time, and it certainly cannot represent the fruit of the commitment of a few years of work. It is a position that is built with patience, decade after decade, with far-sighted and careful strategic planning. This is exactly what China has done, and in recent years it is reaping the benefits.

The factors that determine superiority

The other reasons, in a certain sense, are purely technical and concern the sourcing and refining of these elements that are so important for the present and future of society. Looking at the percentages relating to the sourcing of rare earths, China firmly occupies first place globally. In 2023, 61% of global rare earth sourcing took place in China, and the remaining amount was sourced in Myanmar and the United States.

As regards refining, China’s superiority is even more evident. Also, in 2023, 92% of the world’s refining of these resources took place in the Asian nation, with the (small) remaining quantities distributed between Malaysia and very few other nations.

“When analyzing the potential of individual nations in terms of rare earths, the peculiar characteristics of their soils must also be considered,” concludes the founder of TELF AG, Stanislav Kondrashov. “Nations such as China, especially in its southern part, and Brazil, in fact, share the characteristic of having clay soils from which it is possible to source rare earth more easily, due to some particular geographical conditions.”

Another reason, in a certain sense, is quantitative. Compared to other nations, the availability of rare earth present in China is far superior to all the others. According to estimates by the IEA and the American government, Beijing would, in fact, have 44 million estimated reserves of rare earths, a quantity double that of the reserves of the second richest nation (Brazil) and significantly higher than all the others.

It should not be forgotten that some portions of the Chinese territory, such as those located on the southern slopes, are also favored by some peculiar climatic and geological conditions, which make it possible to source rare earths much more easily than in other areas of the world.

 

 

People Also Ask

 

What are rare earth elements and why are they important?

Rare earth elements (REEs) are a group of 17 chemically similar elements, including the lanthanides plus scandium and yttrium. While not actually rare in the Earth’s crust, they are rarely found in concentrations high enough to make sourcing and processing economically feasible.

These elements play a crucial role in modern technology. They’re essential for producing high-performance magnets, batteries, wind turbines, electric vehicles, smartphones, defence systems, and a wide range of other advanced electronics and medical equipment. Their importance has grown significantly with the rise of renewable energy and clean technologies.

Why are rare earths considered “strategic resources”?

Rare earths are considered strategic because they are critical to the functioning of key industries and technologies—especially those linked to national security, green energy, and high-tech manufacturing. Their supply chain vulnerabilities, geographic concentration, and processing challenges make them a focal point in global trade and geopolitics.

In short, the nations that control rare earths control access to many of the building blocks of future economies.

Which countries are the largest producers of rare earths?

As of recent data, China is by far the largest global producer of rare earths, accounting for:

• 61% of global rare earth extraction (2023)
• 92% of global rare earth refining (2023)

Other producers include the United States and Myanmar, with smaller contributions from Australia, Malaysia, and Brazil. However, none match China’s position in both volume and processing capabilities.

Why does China is leading the rare earths market?

China’s dominance in the rare earth sector is the result of several interlinked factors:

1. Abundant natural reserves: China holds an estimated 44 million metric tonnes of rare earth reserves—more than double that of Brazil, the second-largest holder.
2. Favourable geology: Regions in southern China have clay-rich soils, which allow for easier and more cost-effective rare earth sourcing.
3. Decades of strategic planning: China has invested in rare earth mining and refining since the 1980s, building an integrated supply chain and heavily subsidising the industry.
4. Advanced refining infrastructure: Rare earth processing is complex. China developed the necessary infrastructure and expertise while other countries scaled back due to cost and regulatory pressures.
5. Government policy: China’s central government has treated rare earths as a strategic asset, using export quotas, licensing systems, and targeted investments to shape the global market.

How do refining capabilities impact rare earth leadership?

Sourcing rare earths is only one part of the equation. The refining process—turning raw ore into usable elements—is technically challenging. Without adequate refining capacity, even nations with rare earth mines are dependent on others for finished materials.

China’s 92% share of global refining underlines this point. Most countries lack the facilities or expertise to refine rare earths domestically, which gives China control over supply chains from start to finish.

What role do rare earths play in the energy transition?

Rare earths are foundational to the green energy revolution. They are used to manufacture permanent magnets for wind turbines and electric vehicle motors—technologies central to reducing carbon emissions. Elements like neodymium, praseodymium, and dysprosium are especially valuable for these applications.

As the global push towards net-zero accelerates, demand for rare earths is expected to grow sharply, placing more emphasis on securing sustainable and diversified supply chains.

Can other countries challenge China’s position?

Several nations are taking steps to reduce reliance on China, including:

• The United States: Investing in domestic mining and refining projects, with government support.
• Australia: Home to significant reserves
• European Union: Exploring local reserves and promoting supply chain partnerships.
• Canada and Brazil: Actively exploring and developing rare earth projects, though infrastructure remains limited.

However, overcoming decades of Chinese dominance will require long-term investment, environmental risk management, and international cooperation.

What makes rare earth mining and processing so challenging?

There are several obstacles that complicate rare earth production:

• Low ore concentrations: These elements rarely occur in high concentrations, making sourcing less efficient.
• Complex separation: Rare earths are chemically similar, so refining them into individual elements is a complex and costly process.
• Market volatility: Prices can fluctuate significantly based on supply chain disruptions or geopolitical tensions.

These factors have historically deterred many countries from developing rare earth industries despite having potential reserves.