The editorial of September 2026

Rare Earths and Asia: The Geopolitics of Critical Resources.

Rare earths now occupy a central place in the global economy, at the intersection of the energy, digital and military transitions.

Behind their misleading name—these elements are not always rare in geological terms, but rather “critical” to countries’ economies—lies a group of metals with chemical properties that are essential for advanced technologies: permanent magnets, batteries, screens, radars and military equipment. In this strategic economy, Asia has emerged as the heart of the global system, both because of its resources and its industrial capabilities.

China’s dominance in rare earths is one of the major geopolitical developments of the early 21st century. It accounts for approximately 60 to 70% of global rare earth production and, above all, nearly 85 to 90% of refining and chemical separation capacity.

Since the 1990s, Beijing has gradually built a near-hegemonic position, not only in extraction but, more importantly, in the crucial stages of refining and processing.

The vast Bayan Obo deposit in Inner Mongolia symbolises this mining power, but the core of China’s advantage lies in its ability to process ores and produce high-value-added components. Today, China accounts for a large majority of global capacity for the chemical separation and refining of rare earths, giving it significant strategic leverage. This situation is the result of a proactive industrial policy combining massive investment, environmental standards that were for a long time more permissive than those in Western countries, and a determination to control a resource considered critical.

Other Asian countries play complementary, less visible but nonetheless essential roles. Myanmar, for example, has become a key supplier of heavy rare earths—particularly dysprosium and terbium—the most sought-after elements, which are indispensable for the manufacture of high-performance magnets. Deposits in the north of the country, particularly in Kachin State, directly supply Chinese industry.

This relationship illustrates a form of asymmetric dependence: Myanmar supplies the raw materials, while China processes them and captures most of the value.

This dynamic also unfolds against the backdrop of Myanmar’s unstable political situation, marked by internal inter-ethnic conflicts and fragile governance, raising major environmental and ethical concerns.

Malaysia, for its part, occupies an intermediate position in the value chain. It does not have significant mineral resources, but it hosts strategic industrial infrastructure, notably Lynas’s plant in Kuantan.

This site is one of the few outside China capable of processing rare earths on a large scale. It illustrates attempts to diversify the global supply chain, supported by countries such as Australia, Japan and the United States. However, this activity has generated local controversy, particularly because of the radioactive waste produced by the processing of certain ores. Malaysia therefore finds itself at the heart of a classic dilemma: taking advantage of a strategic industrial opportunity while addressing environmental and societal concerns.

Japan, meanwhile, occupies a distinctive position because it has embarked on a strategy to reduce its dependence, combining import diversification, advanced recycling and technological innovation.

Since the supply tensions with China in 2010, Tokyo has reduced its vulnerability by diversifying its sources of supply (Australia), investing in recycling, building strategic stockpiles and supporting alternative partnerships, particularly with Canberra.

India represents another interesting case. The country has significant resources, primarily in the form of monazite sands (cerium, lanthanum, neodymium and thorium) along its coasts. However, their exploitation remains limited by regulatory and technological constraints.

New Delhi is now seeking to develop a complete domestic supply chain, relying on partnerships with international actors such as the United States, Japan and Australia.

This strategy forms part of a broader effort to strengthen its strategic autonomy and integrate into value chains that offer alternatives to those dominated by China. Nevertheless, many challenges remain, particularly in terms of industrial capacity and competitiveness.

Beyond these examples, Southeast Asia and Central Asia have potential that remains largely underexploited. Countries such as Vietnam and Kazakhstan possess promising resources, but their development is constrained by technical, financial, political and environmental factors.

Indonesia has promising rare earth deposits, as well as other strategic minerals such as tungsten, tantalum and antimony. Part of Indonesia’s potential also comes from nickel-processing residues—the country being the world’s leading nickel producer—and tin-processing residues, which contain small quantities of recoverable rare earths.

Asia’s centrality in the rare earth sector can also be explained by the geography of demand. The continent is a major hub of industrial production, particularly in the electronics, automotive and renewable energy sectors.

The manufacture of permanent magnets, one of the main applications of so-called rare earths, is largely concentrated in China, Japan and South Korea. This proximity between raw-material production, industrial processing and final demand strengthens regional integration and gives Asia a lasting competitive advantage.

Rare earths have thus become an instrument of power. China has not hesitated to use its dominant position as diplomatic leverage, particularly during trade tensions with Japan or the United States.

This geopolitical dimension has led Western powers to recognise their vulnerability and launch initiatives to secure their supplies [1]. However, rebuilding alternative value chains is likely to be a lengthy and costly process, as it requires the recreation of highly complex mining, chemical and industrial capabilities.

Furthermore, the environmental challenges associated with rare earth exploitation are particularly acute in Asia. Extraction and refining processes are often polluting, generating toxic and radioactive waste. In some countries, weak regulations or their incomplete enforcement have resulted in significant damage to ecosystems. This situation fuels local tensions and could, in the long term, call into question the sustainability of certain production models.

Finally, the future of rare earths in Asia will depend on several key factors: changes in global demand, technological advances (particularly in recycling and substitution), and geopolitical dynamics.

While China is likely to retain a dominant position in the medium term, the rise of alternative actors (Australia, the United States, Canada, Brazil and Vietnam, among others) and the diversification of supply chains could gradually rebalance the system.

The rare earth landscape can therefore no longer be reduced to a binary opposition between Asia and the West. Rather, it is a hierarchical system: a dominant China at its centre, a structured and diversified industrial Asia, and a group of Western and intermediate powers (the United States, Europe, India and South Korea) pursuing strategies to reduce their dependence to varying degrees.

This system remains profoundly asymmetric, but it is now undergoing a gradual transformation under the combined effects of the energy transition and global geopolitical tensions.

[1] See https://www.elysee.fr/G7evian/2026/06/17/declaration-des-chefs-detat-et-de-gouvernement-du-g7-sur-la-securisation-des-chaines-dapprovisionnement-en-minerais-critiques.

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