Author: Revaz Topuria, Researcher at UGSPN
On February 4, the first ministerial meeting on critical minerals was held in Washington, attended by representatives from 55 countries. The United States announced an initiative to create a critical minerals trade alliance that would coordinate mineral prices and thereby reduce China’s dominance in critical minerals.
Recently, critical minerals have been mentioned frequently in international politics—not because they were newly discovered, but because geopolitical, economic, and technological shifts have clearly revealed how strategically vulnerable existing supply chains are. Control over critical mineral supply chains is inseparable from technological leadership, economic resilience, and national security. A 2023 report by a U.S. government special committee warned that dependence on critical mineral supply chains could lead to “disruptions in defense production and the suppression of other advanced technology manufacturing.”
President Trump has repeatedly stated his intention to strengthen domestic mineral production in the U.S. to reduce this dependence. However, it is also noteworthy that last year the American side was forced to make certain concessions in its trade war with China, amid fears that Beijing might halt exports of rare earth elements.
This article examines why critical minerals have become so important and what the new U.S. strategy entails.
What Are Critical Minerals?
First, we need to clarify what critical minerals are. You will often encounter two terms—critical minerals and rare earth minerals (or rare earth elements). These are not the same, although they overlap.
Rare earth elements consist of 17 chemically similar metallic elements, primarily used in high-performance magnets, electronics, and defense systems. Critical minerals, on the other hand, are a broader category defined by governments as resources essential for the economy or national security. This category includes rare earth elements, but also lithium, cobalt, nickel, graphite, and other materials.
Simply put, rare earth elements are often considered critical minerals, but not all critical minerals are rare earth elements. In international politics, the term “critical minerals” is used more frequently, though it can be considered somewhat political, as discussions often primarily concern rare earth elements.
Despite their name, rare earth elements are not geologically rare—they are widely distributed in the Earth’s crust. However, economically viable concentrations are relatively scarce, and extraction is often technically difficult and expensive.
What Are These Minerals Used For?
Rare earth elements have become foundational to modern high-tech systems in both civilian and military domains.
For example, neodymium (Nd) and praseodymium (Pr) are essential for neodymium-iron-boron (NdFeB) magnets, which are critical in electric vehicle motors, robotics, industrial equipment, and wind turbine generators. Dysprosium (Dy) and terbium (Tb) are used to increase heat resistance, which is important in automotive and aerospace industries.
Certain elements are also found in optical glass, camera lenses, televisions, and LED screens.
Beyond civilian use, rare earth elements are embedded in advanced defense technologies. For instance, F-35 fighter jets, submarine stealth systems, missile guidance systems, and unmanned aerial platforms rely on rare earth magnets and components for precision movement and sensing functions. A single F-35 may contain more than 400 kilograms of rare earth elements.
In addition to their practical uses, rare earth minerals have become a key issue in U.S.–China geopolitical competition.
Rare earth elements underpin modern technology, but their supply chains are highly concentrated, creating systemic risk. Dependence on limited sources can threaten economic and national security, as disruptions quickly affect manufacturing, defense readiness, and the deployment of renewable energy.
States that control critical mineral supply chains can use them as geopolitical tools. There are already examples: in 2010, China restricted rare earth exports to Japan during a diplomatic dispute, triggering global concern. More recently, China has imposed export controls on certain elements, further increasing risks and pushing other countries to diversify supply chains.
The Current Situation and China’s Dominance
As noted, rare earth minerals are not particularly rare, and many countries possess reserves. The challenge lies in extraction and processing.
Mining these minerals causes significant environmental damage and is often not highly profitable. As a result, years ago Western countries relocated hazardous and polluting industries—including rare earth processing—to China, while simultaneously reducing research investment. Over time, this led to an erosion of their scientific and industrial capacity. China, in contrast, increased investment in the sector and today holds a leading position in the global rare earth industry.
China is currently responsible for about 69% of global rare earth extraction. Beyond mining, it also controls a large share of processing capacity.
Processing these elements is costly and often inefficient. Studies show that up to 70% of mined material in China is classified as waste and yields no economic profit. Similar challenges exist in other countries, limiting the number of players in the industry. However, China does not focus narrowly on short-term economic gain; it approaches the sector from a geopolitical perspective, allowing it to absorb temporary losses to strengthen its position in global supply chains.
For example, the Democratic Republic of Congo accounted for 70% of global cobalt production in 2021, but 90% of that volume was sent to China for processing. Similarly, over 75% of global lithium supply in 2021 came from Australia and Chile, yet 72% of processing took place in China.
For some rare earth elements, China controls more than 95% of processing, including 99% of three elements essential for heat-resistant magnets. This gives China the ability to act as the primary—and often sole—supplier for many countries, allowing it to dictate terms within global supply chains. Unsurprisingly, this has generated concern, particularly in the United States.
U.S.–China Rivalry in Rare Earths
Several interconnected factors explain why rare earth elements receive such attention today. First, growing strategic competition between the U.S. and China has highlighted structural dependencies within globalized production networks. China’s dominant role not only in extraction but, more importantly, in processing, refining, and magnet production has transformed what was once seen as a commercial issue into a strategic problem.
For the United States, heavy dependence on China for rare earth elements represents a significant strategic vulnerability in both economic and national security terms. According to the U.S. Geological Survey and other reports, the U.S. imports more than 95% of the rare earth elements it needs, about 70% of which come from China.
These are precisely the types of elements required for high-performance magnets used in defense systems and advanced technologies. This gives China substantial leverage. If necessary, Beijing could use export controls or licensing requirements to disrupt U.S. supply chains, threatening both defense and high-tech sectors. This creates a supply chain “chokepoint” that an adversary could exploit.
As a result, U.S. policymakers increasingly view reducing dependence on rare earths not just as industrial policy, but as a national security priority.
The New U.S. Strategy
Recently, the Trump administration has taken steps toward diversification. These include increasing domestic investment in critical mineral infrastructure, providing financial support to companies such as MP Materials (the only major rare earth mining company in the U.S.), and expanding processing and magnet production capacity linked to the defense sector.
In 2025, the administration acquired shares in seven mining companies, including a 10% stake in USA Rare Earth, which plans to build rare earth and magnet production facilities in the U.S., with operations expected to begin in 2028.
The organization of the first critical minerals ministerial and the plans discussed there further highlight the urgency of the issue. U.S. Secretary of State Rubio and Vice President Vance emphasized that China’s dominance—especially in processing—poses significant geopolitical, economic, and national security risks.
As a result, representatives from 55 countries agreed to deepen cooperation on critical mineral security, including rare earth elements. Initiatives such as Project Vault, multi-partner forums, and bilateral agreements were launched to strengthen supply structures with allied countries. The U.S. also signed memoranda of cooperation on critical minerals with 13 countries and established the Forum for Geostrategic Resource Engagement (FORGE).
Particular attention should be given to Project Vault, announced by Trump. The project will be funded by $2 billion in private capital and $10 billion in loans from the U.S. Export-Import Bank. It aims to create strategic stockpiles, protect against supply disruptions, and coordinate pricing with allies.
Additionally, an extra $4.8 billion in funding from the Export-Import Bank was announced to support rare earth mining companies within the United States.
The case of rare earth elements clearly illustrates how a natural resource once considered a technical niche has become central to global competition, economic security, and technological leadership. As technology continues to advance, demand for these minerals will only grow, creating new challenges for many countries and driving the need for new partnerships to reduce dependence on China.
This article was translated from the original language with the assistance of AI tools and revised by the author.