Rare earths are becoming the 'new oil' — but with a huge difference

The global scramble to secure rare earth elements is intensifying following Chinese suppliers' suspension of certain shipments to US clients, highlighting a weakness governments have long sought to eradicate. Reports indicate certain Chinese rare-earth firms have recently declined to deliver materials to the United States due to concerns over potential repercussions from Beijing.

This disruption occurs as President Donald Trump prepares for an expected September 24 meeting with Chinese President Xi Jinping, with critical minerals slated to be among the contentious trade topics. The latest developments underscore that the world's rare-earth predicament is not solely about discovering underground deposits.

The primary challenge lies in China's overwhelming dominance in refining, processing, and manufacturing powerful permanent magnets from these minerals. These magnets are vital for electric vehicles, wind turbines, industrial motors, aerospace systems, electronics, and military equipment. Rare earths, unlike oil, are primarily utilized as industrial inputs and remain embedded in products, meaning the objective is to bolster the supply chain's resilience against potential disruptions.

China's grip on the rare-earth market tightens as the US and allies strive to develop alternatives. Rare earth elements possess magnetic, luminescent, and electrical properties due to their electron configurations, despite their name. Although relatively abundant in the Earth's crust, they rarely occur in concentrated deposits. China's dominance of the rare-earth processing sector has been underscored by recent supply interruptions, emphasizing the difficulty for Washington and its allies to break Beijing's control over these essential minerals.