De-Risking Rare Earths

A transition with a shadow

Rare earth elements sit quietly inside the devices and machines that define modern life—electric cars, wind turbines, smartphones, advanced medical equipment, and military systems. They are rarely visible to consumers, yet they are increasingly visible to governments. The reason is not just technology. It is leverage.[1]

The clean-energy transition has a shadow supply chain. Behind the promise of lower carbon emissions sits an industrial reality that is harder to market: the extraction and processing of the metals that make “green” technology work can be intensely chemical, energy-hungry, and - when poorly managed - highly polluting.[2]

That tension is not a footnote. It shapes public acceptance of new mines, determines how quickly countries can build domestic supply, and influences whether “green industrial strategy” is perceived as credible or hypocritical. It also explains why rare earths have moved from niche mineral policy into the centre of security and trade debates.[1]

The paradox of the green revolution is that the very elements required to save the planet from carbon emissions often require mining processes that can devastate local ecosystems if left unregulated.[2]

What rare earths are - and why the name misleads

“Rare earth elements” (often shortened to REEs) are a group of 17 metallic elements with broadly similar chemical behaviour. They include the 15 lanthanides on the periodic table (from lanthanum to lutetium), plus scandium and yttrium.[3]

The surprising part is that many rare earths are not especially rare in a geological sense. For instance, Cerium is more abundant in the Earth's crust than copper or lead.[3] The label “rare” is more historical than scientific. It reflects how these elements were first discovered in unusual mineral samples and, more importantly, the fact that they are seldom found in high concentrations that are easy to mine and profitable to process.[4]

This is the first key idea: the world does not face a simple “we’re running out” problem. It faces a “we can’t easily get them in the form we need, at the scale we need, without consequences” problem. Availability is not just about what exists in the ground. It is about what can be separated, purified, and manufactured reliably - under acceptable environmental rules and acceptable costs.[1][4]

Why they matter: small amounts, outsized effects

Rare earths are sometimes described as “technology metals” because tiny quantities can change the performance of an entire system. Their value is not that we use huge volumes of them. Their value is that they enable properties engineers struggle to get elsewhere - especially in compact, high-performance applications.[1]

The best-known case is magnetism. Elements such as neodymium and praseodymium underpin powerful permanent magnets used in electric motors and generators.[3] Heavy rare earths such as dysprosium and terbium can be used in small additions to help magnets keep their strength at higher temperatures - critical for demanding uses in transport and defence.[4]

But magnets are only part of the story. Rare earths can also matter for optical behaviour (important in certain lighting and display technologies) and for catalytic effects in industrial processes. The common thread is not glamour; it is function. Rare earths are often the quiet enablers of efficiency, miniaturisation, and reliability. Without these elements, an electric vehicle motor would either be significantly less efficient or far too heavy to be practical for the consumer market.[3]

The real scarcity: not the mine, but the messy middle

If rare earths are not truly rare, why is supply such a strategic headache? The answer lies in what happens after the rock is dug up. Rare earths tend to occur together in mixed ores. Because the elements are chemically similar, separating them into individual, high-purity materials is complex.[4] In practice, it can require long, multi-stage chemical processes involving hundreds of tanks of solvent. This is the “messy middle” of the supply chain: the industrial step where costs accumulate, waste streams expand, and environmental risks can multiply.[2]

That middle stage is also where power concentrates. Countries and companies that master large-scale separation and refining do not just sell materials; they can shape prices, set standards, and - at moments of tension - restrict flows. This is why rare earth debates so often turn into arguments about processing capacity rather than mining permits alone.

The uncomfortable side-effects: pollution, waste, and public health

The environmental footprint of rare earth production varies sharply by deposit type, processing route, and - crucially - regulation and enforcement. Yet the overall pattern is consistent: separation chemistry can be harsh.

One recurring challenge is that rare earth ores often occur alongside radioactive by-products such as thorium (and sometimes uranium). When ore is cracked and leached, those by-products can end up in tailings and sludge. If waste storage is inadequate, contaminants may leach into water systems or spread as dust.

The industry has also historically relied on strong acids and large volumes of solvents, generating acidic wastewater and chemical residues. Communities near unregulated or poorly monitored operations can face higher exposure risks - whether through air, water, soil, or occupational hazards. This is one reason the debate about rare earths is not just economic; it is ethical and political. Outsourcing supply can mean outsourcing harm.

The twist is that stricter regulation - essential for legitimacy - can also raise costs and lengthen timelines. That is the second key idea: “cleaning up” rare earths is not a simple engineering upgrade. It is a structural decision that changes the economics of supply.

Observations and Contradictions

While the geological abundance of REEs is well-documented, there is a slight tension in the video sources regarding the "scarcity" narrative. Some emphasize that the scarcity is purely an industrial processing bottleneck[4], while more policy-oriented video sources still use the term "rare" to describe the difficulty of securing a stable, non-Chinese supply chain.[1] There is no factual contradiction, but rather a difference in how "scarcity" is defined: geologically (abundant) versus strategically (scarce).

If chapter 1 introduced the paradox - clean technology relying on a potentially dirty and politically sensitive supply chain - this chapter explains where the dependency really comes from. It is not just about who has ore in the ground. It is about who can turn that ore into the precise materials industry actually buys.[1]

The supply chain, in plain terms: from rock to component

In everyday debate, rare earths are often talked about as though they were a single commodity. They are not. The rare earth story is a relay race of distinct industrial stages - each one filtering, transforming, and adding value.

First comes extraction: ore is mined and physically processed into a concentrate. Then comes the chemical work: the concentrate is “cracked” and dissolved so the rare earths enter solution. After that comes the most demanding step - separation - where chemically similar elements are split apart and purified into individual products. Finally, those products may be converted into metals or alloys and manufactured into components such as permanent magnets.[2]

The reason this matters is simple: countries can mine ore and still be dependent. For example, the Mountain Pass mine in California produces significant amounts of rare earth concentrate, but for years it had to ship that material to China for the final, high-value separation and refining stages.[3] What confers strategic advantage is the ability to refine and separate at scale, consistently, safely, and cheaply enough to supply manufacturers without interruption.

The “messy middle”: why processing is the real battleground

Mining is visible - there is a pit, a landscape, a community debate. Processing is less visible but far more decisive. The economics and geopolitics of rare earths hinge on the fact that the elements are not merely extracted; they are manufactured, in effect, through chemistry.[2]

Rare earths tend to occur together in mixed ores. And because their chemistry is so similar, separating them into individual, high-purity materials is complex. Separation becomes an exercise in fine discrimination: repeated cycles designed to pull one element away from the others, gradually, until purity is high enough for industrial use.[4]

This is where costs, expertise, environmental risk, and scale collide. It is also where supply chains become fragile. If a mine fails, an alternative mine may exist. If a separation plant fails - or if a country that hosts most of that capacity restricts exports - many downstream manufacturers simply cannot substitute quickly.

The real bottleneck isn't the mine; it's the separation plant. Without the ability to split these elements apart, you just have a pile of mixed oxides that no magnet manufacturer can use.[2]

Why separation is so hard (and so central)

Separation is the rare earth industry’s defining challenge because it is both technically complex and structurally difficult to replicate. It requires specialised equipment, a skilled workforce, stable chemical supply, waste handling capacity, and - above all - time to optimise flowsheets for specific ore bodies.[4]

The dominant industrial method has long been solvent extraction. In simplified terms, a rare earth-bearing solution is repeatedly contacted with an organic solvent containing molecules that preferentially bind certain elements. Achieving very high purities may require hundreds of repeated steps.[2]

The unglamorous consequence is scale: large footprints, large chemical consumption, and large waste streams if systems are not tightly controlled. This is why processing capacity is not simply a “factory you can build anywhere.” It is an ecosystem of engineering, regulation, and industrial learning.

New approaches - stronger extractants, membrane-based separation, ion exchange, and even biological concepts - aim to reduce chemical use and shrink the number of stages. For instance, researchers at Oak Ridge National Laboratory (the largest science and energy national laboratory in the United States Department of Energy system by size) are using AI to predict solvent extraction outcomes, potentially shaving years off the development of new separation chemistries.[2] The strategic point, however, remains the same: whoever controls separation controls the tap.

The magnet metals: demand is concentrated, and so is risk

Not all rare earths matter equally. Much of the economic gravity in the rare earth market comes from permanent magnets - especially NdFeB magnets, the strongest widely used permanent magnets. These magnets are central to modern electric motors and generators because they deliver high power density in a compact package.[3]

Four elements dominate this story. Neodymium and praseodymium provide the magnetic backbone. Neodymium is the workhorse of the modern world. Every smartphone vibration motor and every electric vehicle drivetrain relies on its unique magnetic properties.[3] Dysprosium and terbium, used in smaller quantities, can improve high-temperature performance - vital in more demanding settings like electric vehicle engines.[3][4]

This concentrates risk. Supply disruptions in a small subset of elements can cascade into large sections of advanced manufacturing. It also shapes national security concerns: rare earths are not just “for green tech”, they also underpin high-performance systems that governments are unwilling to leave exposed.

Chokepoints, not just mines

Rare earth vulnerabilities are often described as a mining problem, but the chokepoints run deeper:

• Separation capacity: even with ore in hand, manufacturers ultimately need separated, high-purity products. Without domestic or allied separation, raw materials may still flow through the same geopolitical bottleneck.[1]
• Metal-making and component manufacturing: the strategic “high ground” is not simply oxides in a drum, but metals, alloys, and finished components such as magnets. China currently controls over 90% of this downstream processing.[3]

There is also a subtler economic trap known as the “balance problem”. Rare earths occur together. So a producer cannot simply make more of the one element the market craves (like Neodymium) without also producing more of others (like Cerium).[4] That means the profitability of a project can depend on markets that are secondary - or oversupplied - even if one critical element is scarce.

Put differently: rare earth supply is not a single pipeline you can widen at will. It is a set of coupled flows. And that coupling shapes both prices and power.

Observations and Contradictions

The video sources highlight a significant industrial challenge: while the United States for example is increasing its mining output, it still faces a "metallurgical labor skills" gap. Most of the expertise in large-scale separation currently resides in China, making workforce development as critical as building the physical plants.[3]

The outline of the problem is clear: rare earth supply is not simply a question of geology, but of industrial capability. The next question is political. How did one country come to dominate so much of the chain - and what happens when others decide that dependence is unacceptable?

How China built the centre of gravity

China’s dominance in rare earths is often described as a “monopoly”, but it did not emerge by accident. It is the product of long-term industrial strategy, scale, and a willingness - especially in earlier decades - to accept environmental costs that would have been politically difficult elsewhere.[1]

At present, China is the largest producer of rare earth ores, followed by the United States and Myanmar, while production elsewhere is marginal.[2] More importantly, the refining of rare earth ores and the production of permanent magnets are almost completely controlled by just one country, China.[2] Over time, that capability turned into something more valuable than raw material access: expertise. Separation and magnet manufacturing are not plug‑and‑play technologies; they are accumulations of chemical know‑how, engineering practice, supply networks, and industrial learning.[1]

There is also a qualitative shift. China is no longer just the low‑cost producer of a dirty commodity. It has become a technical leader in rare earth separation and, crucially, in downstream manufacturing - particularly NdFeB magnets used in electric vehicles, wind turbines and electronics.[9] That means the dependency is not merely about ore or oxides, but about finished components that sit inside high‑value goods.

What’s more, the refining of rare earth elements ores and the production of permanent magnets are almost completely controlled by just one country, China.[2]

Export leverage: when a supply chain becomes a bargaining chip

The world’s “wake‑up call” came when export restrictions and quotas revealed how quickly rare earth flows could become political. When a single country that dominates processing tightens exports of refined rare earths and permanent magnets, it exposes how dependent others have become on what is effectively a single point of failure.[2]

Rare earths sit at an awkward intersection. They are embedded in systems - motors, sensors, guidance, communications - where redesign takes years. When that is the case, the ability to interrupt supply is a form of leverage. It does not need to be used often to be effective.[1]

Export restrictions from China on rare earths and rare earth permanent magnets brought into everyone’s consciousness how reliant the United States are on a single point of failure for its entire defence industrial base - and frankly the industrial economy of the United States.[9]

The shadow side: illegal mining, consolidation, and cross-border supply

A full picture of rare earth dominance includes the grey edges of the market. In periods of rapid growth, an illegal mining sector flourished where enforcement was weak and environmental rules could be evaded. This helped keep prices low, but at heavy local cost - particularly where crude leaching methods damaged land and water.[1]

As environmental damage and social backlash grew, China sought to curb illegal production by consolidating the industry into a small number of state‑controlled groups and tightening regulation. Yet grey supply does not simply disappear when squeezed; it can relocate. Heavy rare earths (from ion‑adsorption clays) have increasingly been associated with cross‑border flows, with Myanmar frequently cited as an upstream source feeding Chinese processing plants.[2] The result is a supply chain that can look “cleaner” on paper in one country, while externalising risk and damage elsewhere.

This is where environmental, economic and geopolitical pressures intersect: the same policies that seek to clean up domestic production can deepen dependencies on less regulated jurisdictions.

The United States: rare earths as national security, not just trade

In the United States, rare earths have become a national security story as much as an industrial one. The logic is straightforward: advanced defence systems and high‑tech manufacturing rely on materials and components that pass through a supply chain dominated by a strategic rival.[9]

Mountain Pass in California - one of the largest rare earth mines in the world - illustrates both potential and vulnerability. It hosts some of the highest‑grade rare earth deposits and can produce Neodymium‑Praseodymium (NdPr) oxide at commercial scale, theoretically enough for up to several million electric vehicles per year once fully expanded.[9] Yet historically, much of its concentrate still had to be shipped abroad for final processing.

The response from the United States has included:

• critical minerals lists and executive actions treating rare earths as strategic materials;
• direct involvement by the Department of Defense in funding new separation and magnet‑making capacity;
• public–private partnerships, such as investments in recycling plants and support for domestic NdFeB magnet production.[9][5]

Experts caution that rebuilding a full “mine‑to‑magnet” chain will take longer than a single political cycle; realistically a decade or more. The challenge is not only capital expenditure but also the loss of metallurgical skills. Some quotes: 

• “We’ve lost a lot of our metallurgical labour skills; most of that exists in China, so workforce development has to be part of the deal”.[9]
• “It’s not realistic to think this will be done in two or five years. If we’re showing incremental progress and resolve, that’s what matters.”[9]

Europe and new entrants: the promise and the bottleneck of time

Europe’s predicament is acute. Many European countries want a clean‑energy transition without swapping one strategic dependency (on fossil fuels) for another (on Chinese rare earth processing). Yet new projects face long permitting timelines and intense scrutiny - especially where chemicals, waste and radioactivity are involved.[2][5]

Elsewhere, countries such as Australia, Canada and several in Africa and South America are positioning themselves as new suppliers. Australia hosts major projects and is building separation capacity with international partners; Canada is piloting advanced solvent‑extraction systems; and Japan, scarred by a 2010 supply scare, has invested in both upstream mining in “friendly” countries and downstream technologies like recycling and even deep‑sea mud exploration.[5]

But reserves are not supply. Turning a deposit into a reliable stream of separated materials requires:

• demonstrably workable metallurgy;
• processing infrastructure and skilled labour;
• stable regulation and social licence to operate;
• long‑term offtake agreements that make investors comfortable with price volatility and the “balance problem”.[2]

This is why political promises of “new mines” often overstate how quickly dependence can be reduced. The more realistic path is “friend‑shoring”: building a distributed chain where mining, processing and magnet manufacturing are spread across a group of allied countries rather than concentrated in a single jurisdiction.[5]

Observations and tensions

Across the used video sources there is no direct contradiction, but there is a persistent tension in emphasis:

Technical and geological accounts stress that rare earths are not geologically scarce, and that multiple countries could in principle supply them.[2]

Geopolitical and market analyses stress that processing, magnets and reagents remain overwhelmingly concentrated in China - and that this concentration gives Beijing structural leverage, even if it never fully “turns off the tap”.[1][9]

The emerging consensus is neither simple alarm nor complacency: China will likely remain central, but other actors are racing to ensure that no single country can hold the entire system hostage.

The rare earth debate is often framed as a race: find new mines, build new refineries, reduce dependence, move faster. But a more useful frame is a choice. How much resilience is a society willing to buy - and what is it willing to pay, financially and politically, to get it?[1]

Demand is rising; vulnerability rises with it

Rare earths have become a proxy for a larger shift: advanced economies are electrifying transport, expanding renewable generation, and digitalising almost everything. That combination drives demand for components - particularly permanent magnets - that sit at the heart of motors and generators.[4]

The risk is not theoretical. Many manufacturers have built their supply chains around “just-in-time” delivery, optimised for cost rather than disruption. That is efficient in calm conditions and fragile in geopolitical storms. When supply is concentrated, a policy change or trade conflict can propagate quickly through downstream industries. By 2035, it is estimated that 600,000 tons of NdFeB magnets will be retired, highlighting the massive scale of the material flow we are becoming dependent upon.[5]

Substitution: can we engineer rare earths out of the system?

One response to dependency is to remove it. If rare earths create a chokepoint, the cleanest solution would be to design technologies that do not require them. This has become an explicit goal in parts of the electric vehicle industry and beyond.[1]

In motors, engineers can choose architectures that rely less on rare earth permanent magnets - induction motors, externally excited synchronous motors, or designs using weaker but more widely available magnetic materials. In some applications, these options are already viable, especially where cost and supply security matter more than maximum performance per kilogram.[4]

But substitution is not a magic wand. Permanent magnets became central for reasons that do not disappear: they offer high power density and efficiency in compact packages. Where space, weight, and performance are critical - such as in the drivetrain of a high-performance EV or the nacelle of an offshore wind turbine - the alternatives may impose significant penalties in weight or energy consumption.[4][9]

Recycling: the promise of “urban mining”, and the arithmetic that blocks it

If substitution is the long-term engineering route, recycling is the circular-economy route. In theory, rare earths should be perfect candidates: valuable, strategic, and increasingly embedded in large volumes of equipment. In practice, recycling has been stubbornly limited, with current global rates estimated at less than 1%.[5][9]

The main obstacle is dilution. Consumer electronics may contain rare earths, but in tiny quantities dispersed through complex assemblies. A computer's hard disk drive, for example, might contain just a few grams of rare earth elements.[4] Collecting and extracting these grams is often more expensive than mining new ore.

The most promising route is “magnet-to-magnet” recycling: recovering rare earth magnets from cleaner, higher-grade scrap streams such as industrial motors, wind turbine components, and manufacturing offcuts. New hydrogen-based processes, like HPMS (Hydrogen Processing of Magnetic Scrap), can break down scrap magnets into a powder that can be directly re-sintered into new magnets.[5]

Directly recycling NdFeB magnets can save up to 90 to 95% of the energy compared to producing them from mined oxides, while simultaneously keeping these critical materials within domestic borders.

Policy meets economics: the “China price” and the “security price”

The market for rare earths has long been shaped by a simple reality: the lowest price tends to win, and for decades China could supply at very low cost. For countries now trying to rebuild supply chains under stricter rules, this creates a dilemma: internalise standards and pay more, or rely on cheap supply and remain vulnerable.[1]

That is where policy enters: subsidies, targeted loans, and long-term offtake agreements. For example, the United States Department of Defense has directly funded magnet recycling plants in Texas to ensure a secure supply for the defense industrial base.[5] Stockpiling can add a buffer, but as seen in Japan's response to the 2010 crisis, it is only one part of a broader strategy that must include upstream investment and downstream innovation.[9]

The ESG pressure: legitimacy is becoming a supply-chain constraint

Companies increasingly face environmental, social, and governance (ESG) pressure to show that their supply chains are not built on hidden environmental damage. This is particularly challenging for rare earths, where ores often occur alongside radioactive thorium.[4] While some facilities, like those run by Energy Fuels in the United States, are specifically designed to handle radioactive by-products, many global sources lack such oversight.[9]

The result is a political balancing act: societies want secure supply and clean technology, yet they often resist the industrial footprint required to achieve it. The "green premium" - paying more for traceable, responsibly produced material - is becoming a real factor in corporate procurement.[1]

A plausible future is hybrid, not pure

The most realistic near-term outcome is not total self-sufficiency, nor a sudden collapse of China’s role. It is a hybrid system: more mines outside China (like Mountain Pass), more processing capacity in allied countries (like Estonia or Australia), more recycling where feedstocks are clean, and gradual substitution in applications where performance trade-offs are acceptable.[5][9]

Finale: the materials politics of the energy transition

Rare earth elements reveal something uncomfortable about the energy transition: it is not only a technological transformation, but a materials transformation. That brings with it the politics of extraction, the chemistry of separation, and the geopolitics of industrial capacity.[1]

The friction - cost, pollution, time, expertise, and leverage - is what turns a periodic-table category into a strategic problem. Countries now face a choice that is simultaneously economic and moral. They can buy the cheapest supply and accept vulnerability, or they can pay more to build cleaner and more resilient systems.[1][4]

In the end, rare earths are less a story about minerals than about priorities: what the future is made of, and who gets to decide the terms.

1. Rare Earths Are China’s Trump Card In The trade war
2. Rare Earth | The Toxic Truth Behind Clean Energy
3. The Big Lie About Rare Earth Elements: They’re Not Rare at All!
4. Rare Earths Processing: Past, Present, and Future
5. French-American chemist makes major breakthrough in recycling
6. Rare Earth Elements | 60 Minutes Archive
7. Rare earth elements
8. Rare earths crunch? Why we need them and who has them
9. How China won the rare earth race against the U.S. | About That