China’s Rare Earth monopoly is a global threat

The world is once again waking up to the brutal reality of China’s strategic dominance over rare earth elements (REEs), the critical minerals that power everything from electric vehicles and smartphones to guided missiles and renewable energy systems. A recent report from Reuters has laid bare how China is now actively leveraging its control over rare earth processing to pressure rebels in Myanmar’s Kachin State, threatening to sever global access to nearly half the world’s supply of heavy rare earths (HREEs).

This is not just a geopolitical flare-up in Southeast Asia. It is a flashing red light for the global economy, and a stark warning: whoever controls the rare earth supply chain, controls the future. Fortunately, one major country is preparing to defy this monopoly. That country is India.

China’s New Economic Weapon: Rare Earths

For years, China has quietly amassed overwhelming control of rare earths. While it only holds about 36% of the world’s rare earth reserves, it is responsible for over 90% of the world’s processing capacity. This means that even if the raw minerals are mined elsewhere, they’re almost always refined in China.

This control has translated into real political muscle. Nowhere is this clearer than in Myanmar, where China is trying to dictate battlefield outcomes through economic pressure. The Kachin Independence Army (KIA), a powerful rebel group, recently took over major mining sites in northern Myanmar. China’s response? Threaten to halt imports entirely unless the rebels comply with Beijing’s wishes. This is a move straight out of the authoritarian playbook, weaponizing supply chains to influence sovereign and non-sovereign actors alike.

The implications are vast. Already, prices of rare earth elements such as dysprosium and terbium, critical for high-performance magnets in EVs and defense technologies have surged. Industries across the U.S., Europe, Japan, and Southeast Asia are scrambling to respond. Many had assumed rare earths were just another commodity. They are now realizing they are a strategic vulnerability.

The World’s Response: Too Slow, Too Fragmented

Despite the alarm bells, the global response remains sluggish. The U.S. has signed deals to source rare earths from Australia and Greenland. The European Union is investing in recycling and secondary sourcing. But none of these projects will mature fast enough to offset the short-term supply crunch or break the monopoly.

Even more worryingly, China isn’t just restricting access to raw materials, it’s tightening controls over finished rare earth products. In April 2025, Beijing implemented new licensing rules on exports of rare earth magnets, directly targeting global manufacturers dependent on Chinese-made components.

This is not protectionism. This is economic warfare by stealth.

India’s Rare Earth Strategy: A Rising Power Steps Up

Unlike many others, India has been quietly building the foundation of a rare earths counter-strategy. As the world’s fastest-growing major economy and a future manufacturing hub, India cannot afford to be a hostage to China’s whims. Recognizing this, New Delhi has made securing rare earths a matter of national importance.

First, India holds significant rare earth reserves, estimated to be the fifth largest in the world. While these were underutilized for decades, this is rapidly changing. The government is pushing forward with new exploration projects and reworking policies to allow private sector involvement in mining, something that was long restricted to public sector units.

In May 2024, India launched a strategic minerals alliance with countries like Australia, Canada, and Vietnam. This multilateral initiative focuses on co-investing in rare earth extraction, processing, and trade routes that bypass China. India has also signed bilateral pacts for supply diversification, including a major deal with Kazakhstan for rare earths and critical metals.

Second, India is investing heavily in domestic processing capacity. The Indian Rare Earths Limited (IREL), under the Department of Atomic Energy, is working to expand its processing plants, while new pilot facilities in Gujarat and Andhra Pradesh are being commissioned for refining high-value heavy rare earths.

Third, the Indian Space Research Organisation (ISRO) and the Ministry of Defence are jointly developing magnet production and component manufacturing facilities using domestically sourced and refined REEs. This is key for national security, especially as global tensions rise.

Fourth, and perhaps most importantly, India is building resilience into the supply chain. New strategic stockpiles of key rare earths are being created under the National Critical Minerals Strategy. Much like the petroleum reserve, this stockpile will act as a buffer in the event of export disruptions.

Geopolitics and the Minerals Race

China’s actions in Myanmar are a clear warning that the battle for minerals is the new great power contest. Much like oil shaped 20th-century geopolitics, rare earths will shape the 21st. And just as OPEC once held the world hostage through oil embargoes, China today is signaling that it will do the same with critical minerals.

But this time, the world has choices. India is emerging as one of the most serious contenders to provide an alternative. Its geological endowment, growing industrial base, and assertive diplomacy make it a credible challenger to Beijing’s monopoly.

The need of the hour is for like-minded democracies to rally behind India’s efforts, through co-investment, technology sharing, and long-term trade pacts. The Quad and BRICS can be ideal platforms for such collaboration, especially as India pushes for multilateral rules on rare earth access.

China’s weaponization of rare earths is not just a regional issue, it’s a global crisis in the making. If left unchecked, it will create a mineral iron curtain around the world’s technology and defense sectors.

India, however, is showing that alternatives are possible. With smart policy, global partnerships, and strategic ambition, New Delhi could soon be the world’s next critical minerals powerhouse, and a bulwark against China’s economic coercion.

The time to act is now. Because in the rare earths race, whoever controls the supply controls the future.