Rare earth minerals explained: Why are they the world's most strategic resources?

From the smartphone in your pocket to the fighter jet in the sky, one obscure family of metals quietly powers modern life and modern warfare. Rare earths have moved from a niche geological curiosity to a front-and-centre issue in global diplomacy, trade wars and defence planning.

As Asit Saha, Director General of the Geological Survey of India (GSI), puts it, the concentration of rare earth processing capacities in a handful of geographies "has transformed these commodities from industrial raw materials into strategic assets," with mineral security today becoming "increasingly synonymous with economic and strategic security."

Here is everything you need to know about rare earth minerals, why are they important and which countries have the largest reserves?


Also read: Critical minerals, strategic stakes: Inside India's bid to break China's supply chain stranglehold

What are rare earth minerals?

Rare earths are a group of 17 metals with similar chemical properties but distinct physical and magnetic characteristics. Among these, the "magnet rare earths" neodymium, praseodymium, dysprosium and terbium, are the most commercially important.

According to the International Energy Agency's (IEA) latest report, magnets made from these elements account for around 95% of the total value of rare earth consumption worldwide.

These neodymium-iron-boron (NdFeB) magnets are among the strongest permanent magnets used in industry today, going into EV motors, wind turbines, industrial machinery, smartphones, hard drives, medical scanners, missile guidance systems and fighter jets, the invisible ingredient behind almost anything that needs to spin, sense or move precisely.

Turning rock into a usable magnet is a long, technically demanding chain: ore is mined, crushed and concentrated, then chemically upgraded and separated, the hardest step, before being refined into metals, alloyed, and finally pressed into magnets. Losing capability at even one stage can bottleneck the entire chain.

Why are they so important?

Rare earths sit at the intersection of clean energy, advanced technology and national defence. Demand for magnet rare earths has already doubled since 2015, driven by EVs and wind turbines, and is set to grow another third by 2030 under existing policies, per the IEA.

Automation, robotics and AI-linked hardware are expected to push demand even higher after 2030.

The stakes became evident in 2025. When China tightened export controls that year, the resulting disruption threatened downstream production worth an estimated USD 6.5 trillion annually across countries outside China, per IEA data, over USD 3 trillion of that in automotives alone, with electronics, aviation, defence and data centres also exposed.

The US and Europe each faced potential direct losses exceeding USD 1.5 trillion. That's why governments now treat rare earths less like a commodity and more like a strategic asset, on par with oil or semiconductors, with everyday uses ranging from LCD screens and satellites to certain cancer treatment drugs.

Why are they called 'rare' if found worldwide?

Here's the paradox: rare earths aren't actually rare. Most of the 17 elements are relatively abundant in the Earth's crust, some more common than gold or silver. The US Geological Survey (USGS) estimated global deposits at around 110 million tonnes in 2024.

Also read: India, Russia deepen rare earths ties amid Quad critical minerals push

What makes them "rare" is extractability, not scarcity. Economically viable, concentrated deposits are uncommon, and the elements are almost never found in pure form, their near-identical chemistry makes separation extremely difficult and only a handful of facilities worldwide can do it at scale. The process also carries real environmental costs: techniques like in-situ leaching produce acidic leachate and radioactive tailings, since rare earth ores often co-occur with thorium and uranium. High costs and environmental liabilities mean few companies pursue this without strong policy support, leaving the world dependent on one dominant supplier.

Which countries have the largest reserves?

China holds the largest known reserves at around 44 million tonnes (USGS), a substantial share of the global total. But Vietnam, Brazil, Russia and India also hold significant reserves, while Australia, the US, Lao PDR and Tanzania feature prominently in upcoming mining projects, per the IEA.

Mining is actually the stage where diversification is furthest along: non-China projects could push mining capacity past 50 kilotonnes of rare earth content by 2035, led by Australia and the US. The real bottleneck lies further down the chain.

Why does China dominate the supply chain?

Having reserves is only part of the story, it's processing where China's dominance is overwhelming. In 2024, China accounted for 60% of global mined production of magnet rare earths, but 91% of refining and 94% of finished sintered permanent magnets, per IEA data — up sharply from around 50% in 2005.

This scale has created a virtuous cycle: cheap, stable domestic demand feeding back into cheaper production. Competitors face the opposite, smaller scale, higher costs, tougher permitting, and buyers who want proven reliability before signing contracts.

As Saha notes, "the principal bottlenecks are no longer confined to geological discovery. The greater challenge lies in establishing large-scale beneficiation, separation, refining and advanced material manufacturing capabilities."

This concentration has already bitten twice. In April 2025, Beijing's export controls on seven heavy rare earths caused exports to collapse within weeks, forcing some automakers in the US and Europe to slow or halt production.

In October 2025, China expanded the list to 12 elements and added a licensing requirement covering any global product containing Chinese-sourced rare earths or made using Chinese technology. The curbs were suspended in November 2025, but in January 2026 China tightened separate controls on dual-use goods bound for Japan, a sign tensions remain unresolved.

Where does that leave India?

India's exposure isn't abstract. Kaira Rakheja, Energy Analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), notes that "India's dependence on China is significant and spans from raw materials into downstream products and technologies," making diversification "an economic priority and also a matter of industrial and national security now."

India's rare earth imports rose from roughly USD 14.1 million in 2014 to USD 17.5 million in 2024, with over 45% sourced from China, per Rakheja. The exposure is starker in finished products, China accounted for 59.6% to 81.3% of India's permanent magnet imports by value between 2022-23 and 2024-25, magnets that feed directly into India's EV, wind, electronics and defence programmes.

Closing this gap, Rakheja cautions, isn't just about mining more ore, India's real gap is in "technology, environmental management capabilities, and downstream industries that can absorb processed materials." She sees India's talent pool and cost competitiveness as advantages, but says progress will likely need Quad-style cooperation extending into technology transfer, not just financing.

The IEA estimates diversifying global supply chains needs around USD 60 billion in investment over the next decade, with refining and magnet manufacturing accounting for nearly 80% of that.

It's a large number, but dwarfed by the potential USD 6.5 trillion annual cost of a full supply disruption, which is exactly why rare earths, and India's place in the chain, remain one of this decade's defining strategic battlegrounds.