© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
The China-US trade war has had an enduring sticking point: rare earth minerals.
Last Thursday, China ramped up the clampdown on its rare earth exports, prompting US President Donald Trump to threaten economic retaliation by way of 100% tariffs. Trump also suggested that he could cancel a scheduled meetup with Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation Leaders’ Meeting in South Korea later this month, although he toned down his rhetoric just hours later.
What are rare earths? Why are they such a big deal?
Valuable but not-so-rare
Rare earths are a subset of the critical minerals grouping that includes 17 metallic elements nestled lower down in the periodic table, from lanthanum (atomic number 57) to lutetium (71), as well as plus scandium (21) and yttrium (39).
These elements are characterised by their high density, high melting point, high conductivity and high thermal conductance. They are classified as heavy or light, based on atomic weight.
Rare earths form crucial inputs, although often in trace volumes, across a range of products, from weapons platforms and electronics, including flat screen TVs and smartphones, to wind turbines, robotics, electric vehicles, MRI scanners and cancer treatment devices.
The term “rare” earths, however, is a bit of a misnomer: with the exception of the highly unstable promethium, these elements are found in relatively high concentrations across Earth’s crust. Cerium is, in fact, the 25th most abundant element in the planet’s crust, more abundant than gold, silver, tungsten, and many other elements which do not enjoy the “rare” tag.
There are two main reasons why the tag “rare” is used.
One, although moderately abundant, these elements are not found in large concentrations. This makes them difficult and costly to extract, and thus, challenging to exploit economically.
Two, according to the International Energy Agency, more than 60% of mined rare earth production currently comes from only one country: China. Moreover, Beijing controls more than 90% of the global output of rare earths in the processing stage.
Beijing’s trade ‘weapon’
Starting in 1987, when Deng Xiaoping, considered to be the “architect of modern China”, compared China’s rare earth reserves in Inner Mongolia to West Asia’s oil reserves, the country has built up near-total control of the minerals as part of its wider industrial policy.
China’s repeated curbs on rare earth minerals, especially the heavy ones like terbium (65) and dysprosium (66), which are more scarce than their lighter counterparts, are part of its stated policy to weaponise trade.
Trump’s tariff threats have further prompted Beijing to use rare earths as leverage in its trade war with the US, especially to gain escalation dominance ahead of the upcoming talks.
It is not that rare earths cannot be found outside China: Brazil has large reserves, so does Australia, and even India. The problem is that most of these countries are not doing all that much in the way of mining. This is driven by both economic viability issues, as well as concerns over the pollution that rare earth mining, an extremely dirty process, causes.
This has meant that most of the mining of rare earths happens in China, as does the capital- and technology-intensive processing. China has played the long game here, and decades after it decided to get into this business, the move is yielding dividends as a strong trade leverage.
Indispensable today
This leverage stems from the fact that rare earths, especially as a part of alloys, are indispensable in modern society. Their material properties make alloys stronger and more heat-resistant, and more importantly, magnets more powerful.
Neodymium (60), when added to boron (5) and iron (6), basically creates an alloy that is the best-known magnet in the world. This is now one of the most important application areas, given that magnets are used in everything, from consumer goods to defence equipment, electric motors to ships and warplanes, power windows in cars to even deploy airbags. While they may not be visible, magnets are all around us, and as a result, so are rare earths.
Rare earth materials are also used in a wide range of critical products enabling many emerging green energy technologies and high-tech applications, from missile and drone guidance systems to electric and hybrid cars to the latest generation of efficient wind power turbines.
Cerium finds application in polishing of glass items like lenses and display screens of cathode-ray tubes, liquid-crystal displays (LCDs) & plasma-display panels, and in petrol and diesel fuels as an additive. Mixed salts of the cerium group of elements, other than fluorides, are used in medicine, non-irritating antiseptic dressings, waterproofing agents and fungicides in textile manufacture.
Cerium, lanthanum and neodymium are used as glass additives in optical lenses and display screens, as catalysts in automobiles to reduce sulphur dioxide emission, in multilayer capacitors and along with yttrium in magnesium, aluminium and hydrogen storage alloys.
Mischmetal, which is an alloy of cerium with small amounts of other rare-earth metals is used in lighter flints, for desulphurisation in steel and foundry, and with lanthanum alloys, in batteries and hydrogen storage systems meant for electronics and hybrid cars.
Lanthanum finds application in X-ray films as phosphors; yttrium in advanced ceramics like nitrides, Y-stabilised ceramics, etc., and gadolinium in magnet alloys.
Neodymium, samarium, dysprosium, praseodymium and terbium have applications as high-intensity magnets in electronics, electric motors and audio equipment. Lanthanum, erbium and ytterbium have applications in fibre optics and lasers. Scandium is also used in aluminium alloys for sporting goods.
China’s fresh curbs
In its most recent move, China has added five rare earth elements — holmium, erbium, thulium, europium, and ytterbium — as well as related magnets and materials, to its existing control list, requiring export licenses. That takes the total amount of restricted rare earths to 12. Seven — samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium — were restricted earlier in April.
Beijing has also added dozens of pieces of refining technologies to its control list, while announcing rules that will require compliance from foreign rare earth producers who use Chinese materials, the country’s Ministry of Commerce said. The new curbs will take effect on November 8, just before a 90-day trade truce with Washington expires.
“Depending on what China says about the hostile ‘order’ that they have just put out, I will be forced, as President of the United States of America, to financially counter their move,” Trump wrote on Truth Social Friday. “For every Element that they have been able to monopolize, we have two,” he posted.
Analysts see the new move increasing Beijing’s leverage ahead of the proposed meeting between Trump and Xi in South Korea later this month. Investors have been spooked by the fresh deterioration in the China-US trade war, with Wall Street sinking on Friday after Trump threatened 100% tariffs on Chinese exports in retaliation after Beijing announced the restrictions on rare earths
Impact on India
The impact of China’s rare earth restrictions on India is expected to be limited, given its relatively low domestic consumption of rare earths (although demand has seen some growth in recent years).
India imported 2,270 tonnes of rare earth elements in 2023-24, up 23% from 1,848 tonnes in 2019-20, according to the Ministry of Mines. Imports from China accounted for 65% of this amount, and another 10% came from Hong Kong. The two sectors that have been badly affected by the Chinese supply curbs in April are the auto industry, especially EV makers, and the electronics sector.
Domestic mining and refining, meanwhile, remains modest, led by state-owned IREL Ltd, which operates a processing unit with a capacity of over 10,000 tonnes per annum. In contrast, China refined over 2 lakh tonnes of REEs in 2023 alone.
India is, however, hoping to ramp up its exposure to rare earths. In November last year, the country launched an auction for seven seabed blocks in the Andaman Sea for exploration and eventual mining. These blocks are estimated to hold polymetallic nodules and crusts, which can contain heavy rare earth metals.
The Department of Atomic Energy is learnt to have accorded in principle approval for the futuristic proposal of IREL towards setting up of rare earths theme park, which includes establishing pilot plants in the value chain of rare earths. A Rare Earth Permanent Magnet Park in Vizag and Rare Earth and Titanium Theme Park in Bhopal are coming up with the funding assistance of the Centre, which could enhance the visibility of IREL in the strategic and niche sector.
The US too is getting back into rare earths processing. The Trump administration is working on an executive order to allow stockpiling of deep-sea metals from the Pacific seabed, aiming to reduce reliance on China for battery minerals and rare earths, the Financial Times reported in April 2025.
Japan is one country that has successfully re-entered the rare earths supply chain after Chinese curbs on Tokyo in the early 2010s.
