Rare earth elements—vital for clean energy, defense systems, electronics, and the global tech and raw materials economy—have become a strategic battleground. As China maintains its dominance in mining, smelting, and separation, major global players including the US, the EU, Japan, Brazil, and Southeast Asia are deploying unprecedented state-backed measures to rebuild or protect their rare earth supply chains. The result is an escalating race driven by state capital, resource nationalism, and geopolitical alliances.
The Americas: State Capital Steps In as Resource Nationalism Rises
Across the Americas, governments are no longer merely regulating the critical minerals sector—they are investing in it directly. Nowhere is this more pronounced than in the United States.
The US Department of Defense took the extraordinary step of acquiring a 15% stake in MP Materials, the country’s largest rare earth producer. The $400 million investment made Washington the company’s largest shareholder, underscoring a shift from policy support to direct ownership in strategic mineral assets.
The US then guaranteed MP Materials a floor price of $110 per pound for key elements like neodymium and dysprosium—double the market rate in China—and committed to securing customers for all magnet output through a long-term horizon. Apple soon followed with a $500 million long-term offtake agreement, forming a stabilizing framework of “state-backed prices + industry-backed demand.” This model drastically lowers investment risks for private companies and anchors the US push to rebuild its domestic value chain.
Meanwhile, Brazil, home to the world’s second-largest rare earth reserves, is rolling out an aggressive industrial agenda. The government has identified 27 strategic rare earth projects and allocated R$5 billion in discounted credit lines through its national development bank. Brazil also authorized the issuance of incentive bonds for critical minerals—expected to draw nearly R$5.2 billion in annual investments.
The Minister of Mines and Energy summarized the ambition clearly: “Brazil intends not only to supply raw materials, but to lead the global energy transition.”
Brazil is deepening cooperation with the US and its partners under the Minerals Security Partnership (MSP), while simultaneously restricting Chinese investment—an emerging hallmark of regional policy.
Canada is moving in parallel. The government disclosed plans to acquire equity stakes in domestic rare earth processing projects, mirroring the US investment approach and signaling a cohesive North American strategy.
Asia: US-Led Alliances Meet Regional Resource Nationalism
Asia’s rare earth landscape is shaped by two opposing forces: US-led alliance building and assertive resource nationalism from countries seeking more local value capture.
The United States is expanding its Indo-Pacific rare earth network, culminating in a framework agreement with Japan. The deal establishes joint financing mechanisms, strategic stockpiles, and a rapid-response supply security team co-led by the US Department of Energy and Japan’s METI. Japanese leaders in advanced magnet technologies—Shin-Etsu and Hitachi Metals—are now positioned as pillars of an alternative supply chain outside China.
Across Southeast Asia, countries rich in rare earth deposits are tightening export rules. Malaysia, despite signing a critical minerals agreement with Washington, retains its ban on raw ore exports. The Minister of Trade emphasized a long-term national shift: “We no longer want to be a country that simply exports cheap raw materials.” The objective is clear—force foreign investors to process materials locally and transfer key technologies.
Vietnam, holding the world’s second-largest rare earth reserves, is emerging as a strategic partner for the US. A rare earth cooperation framework focuses on technology transfer and private investment. Yet Vietnam’s refining capacity remains limited, signaling that large-scale development could take years.
Europe: From Dependence to Strategic Autonomy—A Difficult Transition
Europe’s rare earth sector faces a harsh reality: heavy dependence on external suppliers and a limited domestic industrial base. To counter this vulnerability, the EU is implementing structural reforms and long-term investment plans.
Under the Critical Raw Materials Act, the EU set strict targets:
10% of rare earths mined within Europe
40% processed domestically
25% sourced from recycling
No more than 65% dependency on any single non-EU country
Yet Europe currently needs roughly 18,000 mt of permanent magnets yearly—while producing just 1,000 mt.
In response, the European Commission launched the “RESourceEU” plan, featuring strategic stockpiles, centralized procurement, and accelerated project financing.
France, meanwhile, is undertaking a national exploration campaign—effectively a resource “treasure hunt”—to map out domestic deposits of lithium, tungsten, antimony, and rare earths.
New industrial projects are taking shape across the continent:
France is now home to the world’s only non-Chinese refinery capable of processing all 17 rare earth elements, supported jointly by Paris and Tokyo.
Estonia launched the largest magnet plant in Europe, initially producing 2,000 mt annually and targeting 5,000 mt.
These steps mark Europe’s slow but determined march toward strategic autonomy.
How Governments Are Redrawing the Global Rare Earth Map
Across regions, state intervention strategies generally fall into several key models:
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Direct State Investment and Equity Stakes
US ownership of MP Materials
Canada exploring similar acquisitions
This approach provides immediate capital and strengthens national control, though it risks market distortion. -
Guaranteed Prices and Long-Term Offtake Deals
Washington’s price floors and long-term procurement commitments represent a hybrid model: government-guided, market-operated. It stabilizes supply chains and incentivizes private investment. -
Export Restrictions and Resource Nationalism
Malaysia bans raw ore exports
Brazil limits exports of unprocessed materials
These policies aim to capture more value locally but can tighten global supply in the short term. -
Alliance Building and “Friend-Shoring”
The US-led MSP includes Japan, Australia, South Korea, India, Canada, and select EU states. These networks seek to create a China-free supply chain architecture. -
Regulatory Streamlining and Financial Incentives
Countries like Brazil have created powerful inter-ministerial bodies to manage long-term mineral strategies, coupled with tax incentives, low-interest loans, and bond financing.
The Future: A Fragmented but Expanding Global Supply Chain
Resource-rich nations such as Brazil and Malaysia are pursuing industrialization through selective export controls, navigating between China’s dominance and Western investment incentives. Meanwhile, the US, EU, and Japan are building parallel processing and magnet production ecosystems anchored in secure alliances.
Despite these efforts, China’s technical capabilities and cost advantages in rare earth refining remain unmatched, ensuring its central role in the global supply chain.
What is clear is that the rare earth sector has entered a new era—one defined not by market dynamics alone but by strategic state power. This is no longer just a competition for minerals; it is a contest for industrial leadership in the technologies that will define the future.
