But the 21st century is being shaped by a different kind of resource. It is not as visible as oil. It does not move through giant tankers or pipelines. It does not make daily headlines. Yet without it, the modern world would slow down very quickly. These are rare earth elements, the hidden minerals behind electric vehicles, wind turbines, smartphones, drones, satellites, semiconductors, and advanced defence systems.

Rare earths are not “rare” in the sense of being unavailable. The real problem is that they are difficult to extract, separate, refine, and process economically. They require technology, capital, environmental discipline, and a complete industrial ecosystem. A country may have rare earth deposits in the ground, but if it cannot process them into usable oxides, metals, alloys, and magnets, it remains dependent on someone else.

That is why rare earths are now being called the “new oil”. Oil powered the industrial age. Rare earths power the digital and electric age. Oil controlled mobility and energy. Rare earths  control clean technology, artificial intelligence infrastructure, advanced manufacturing, and modern warfare.

Looking Behind The Numbers

The danger becomes clear when one looks at the data. Global rare earth mine production in 2025 was estimated at around 390,000 tonnes of rare-earth-oxide equivalent. China alone produced roughly 270,000 tonnes, nearly 70% of the global total. The US produced about 51,000 tonnes, while Australia and Myanmar were also important producers.

But mining figures do not tell the full story. 

China’s real strength lies further down the chain, i.e. in processing, refining, and magnet manufacturing. That is where the world is most vulnerable. Rare earths become powerful only when they are turned into materials that industries can actually use.

For decades, China understood something that many Western countries ignored. The future would belong not only to those who controlled oil fields but also to those who controlled the materials inside motors, chips, magnets and weapons. Beijing built this industry patiently. It invested in mining, separation plants, refining, magnet manufacturing, and export-control systems, while other countries outsourced the difficult and dirty parts of the supply chain to China.

The result is that China today holds a form of power that is less dramatic than an aircraft carrier but in many ways more powerful. It can slow exports through delays in licences, tighten customs rules, or demand end-use certificates. It does not always need to announce an embargo. It can simply make the supply uncertain. In modern manufacturing, uncertainty itself is a weapon.

China’s Supply Chain Weapon

The world first understood this in 2010, when China’s rare earth supplies to Japan were disrupted during a maritime dispute. That incident was a warning that rare earths were not just commercial materials.

Since then, China has become far more sophisticated. It no longer needs blunt force. It uses legal controls, licensing systems, and technical restrictions to squeeze rivals while still claiming that it is acting for national security.

The latest export-control restrictions show how serious this has become. In April 2025, China imposed controls on seven medium and heavy rare earth-related items. These were not random elements. They are critical for high-performance magnets, aerospace systems, defence equipment, electronics, and semiconductors.

Then, in October 2025, China expanded the restrictions by adding five more rare earths, i.e. holmium, erbium, thulium, europium, and ytterbium. More importantly, Beijing moved towards extraterritorial control. That means even foreign companies producing goods outside China would need Chinese approval if their products contain Chinese-origin rare earths or use Chinese rare-earth technology.

This is a major escalation. China is effectively saying that its control does not stop at its borders. It is borrowing the logic of American semiconductor controls and turning it against the West.

Countering Trump’s Tariff Politics

This is where rare earths become China’s answer to Trump’s tariff politics. Trump has tried to pressure China through tariffs, sanctions, and industrial policy. His aim has been to bring manufacturing back to America and reduce dependence on China.

But Beijing has a much stronger counter weapon. Tariffs make imports expensive. Rare earth controls can stop factories from producing at all.

That is the real weakness in Trump’s strategy.  The US can put tariffs on Chinese goods, but if American companies still need Chinese-controlled minerals, magnets, and processing, the pressure returns in another form. A car company cannot build electric vehicles without reliable magnets. A defence contractor cannot deliver advanced systems without specialised materials. A semiconductor or aerospace supplier cannot plan properly if licensing decisions are controlled by a rival power.

China does not need to completely shut off supply. That would be counterproductive and push the world to break away faster. Instead, it keeps the world supplied just enough to remain dependent, but insecure enough to remain cautious. That is the smarter strategy. It keeps Beijing at the centre of the supply chain while reminding everyone that access is not guaranteed.

America Wakes Up Late

The US has finally recognised the danger. Mountain Pass in California is America’s best-known rare earth mine, and Washington is supporting domestic processing and magnet manufacturing. But rebuilding an industrial chain that was allowed to disappear over decades is not easy.

A mine can be opened, but separation plants, metallurgical capacity, magnet factories, skilled workers and defence-grade qualification systems take time. America is learning a harsh lesson that supply-chain security cannot be rebuilt overnight.

That is why the response is now becoming alliance-based. The US-led Pax Silica initiative is one example of this new thinking. India formally joined Pax Silica at the India AI Impact Summit in February 2026. The initiative focuses on securing the full technology stack from critical minerals to semiconductors, AI infrastructure, and data systems.

This is not only about chips. It is about ensuring that trusted partners are not blackmailed by concentrated supply chains controlled by strategic rivals.

Why India Matters

India is not a small partner in this story. It has scale, engineering talent, a large domestic market, semiconductor ambitions and a strategic location. For the US, India is one of the few countries that can become a serious alternative manufacturing and technology hub. For India, participation in such frameworks offers access to technology, supply chain coordination and a stronger position in the emerging minerals-semiconductors-AI order.

India has also deepened cooperation with the US bilaterally on critical minerals and rare earths. In May 2026, India and the US formalised a framework for securing supply in mining and processing of critical minerals and rare earths. This is sensible because India cannot solve the problem through domestic mining alone. It needs overseas assets, refining partnerships, recycling capacity, and long-term purchase arrangements.

India’s partnership with European Union is also becoming more important. Through the India–EU Trade and Technology Council, both sides are working on green technology, battery recycling, and resilient supply chains. In May 2026, India and the EU launched a joint initiative worth about €15.2 million to advance electric vehicle battery recycling.

This may sound small compared to the scale of the global minerals race, but the direction is right. Recycling is future mining. Batteries, motors, electronics, and industrial scrap will become strategic mineral sources. Europe needs reliable alternatives to China. India needs technology, investment, and market access. The logic of cooperation is strong.

India’s Domestic Push

India’s own domestic actions are finally moving in the right direction. The National Critical Mineral Mission, launched in 2025, aims to secure domestic and global supply chains for critical minerals. It covers exploration, extraction, processing, recycling, overseas acquisitions and public-private partnerships.

More specifically, India has approved a ₹7,280-crore scheme for manufacturing sintered rare earth permanent magnets. The target is 6,000 metric tonnes per annum of integrated rare earth permanent magnet capacity. This is crucial. Raw minerals alone will not make India secure. The real value is in processing and magnet manufacturing. The money, technology, and leverage are all downstream.

Budget 2026–27 also announced dedicated rare earth corridors in Odisha, Kerala, Andhra Pradesh, and Tamil Nadu. These corridors are meant to connect mining, processing, research, and manufacturing. India does not need scattered projects. It needs integrated industrial clusters where minerals, technology, logistics, skills and end-use industries work together.

The Hard Truth

But India must be brutally honest with itself. China has a 30-year headstart. If India moves at bureaucratic speed, it will remain dependent.

The sector needs private investment, clear environmental rules, foreign technology partnerships and guaranteed offtake from industries such as EVs, defence, electronics and renewable energy. India should also build strategic reserves of the most critical rare earths. Just as countries maintain oil reserves, they now need mineral reserves.

India must invest heavily in recycling, acquire overseas assets in friendly countries, and work with Australia, Japan, the US, EU, Africa, and Latin America. It should encourage Indian companies to enter refining, separation, alloying, and magnet production. Most importantly, it must treat rare earths as a national security subject.

New Geopolitics Of Minerals

The global economy is entering a new phase. The old model of globalisation was based on cheap manufacturing and just-in-time supply chains. The new model will be based on trusted supply chains, mineral security, technology alliances and strategic stockpiles.

Countries will no longer ask where a product is assembled. They will ask where the minerals came from, who refined them, who made the magnet, and whether the supply can survive a geopolitical crisis.

Rare earths are not just minerals. They are leverage. They are industrial insurance. They are the invisible foundation of the modern economy. China saw this early and converted supply-chain dominance into geopolitical power. The United States is trying to fight back through domestic investment and alliances like Pax Silica. Europe is trying to reduce risk through critical mineral partnerships. India has started acting through the National Critical Mineral Mission, rare earth magnet manufacturing, India–US cooperation, and India–EU technology collaboration.

The lesson is simple. The country that controls rare earths will not control everything. But the country that ignores rare earths will control very little. In the 20th century, nations built oil reserves to protect their economies. In the 21st century, they must build rare earth resilience. The future will belong not just to those who use technology, but to those who control the minerals, magnets, and materials that make technology possible.

(The writer is a former Ambassador. Views expressed are personal.)