Collaborative research funding and institutional support would ensure that innovation translates into deployable solutions.

Rare earths have quietly become one of the most consequential fault lines in the global economy. The latest move by the United States to create a critical mineral trading bloc to counter China’s dominance over rare earth supply chains reflects a growing recognition that access to rare earth elements (REEs) now shapes economic competitiveness, technological power, and strategic autonomy.

Nearly four decades after former Chinese Premier Deng Xiaoping remarked “if the Middle East has oil, China has rare earth elements,” the observation has aged with unsettling accuracy.

As the global economy pivots toward electrification, automation, and data-intensive systems, demand for RREs is no longer driven only by hardware. Artificial intelligence (AI) has emerged as a major multiplier of rare earth demand, as the development and deployment of AI systems depend on materials whose supply chains are fragile and geographically concentrated.

Despite holding some of the world’s largest rare-earth reserves, India remains marginal in extraction and processing—leaving it exposed to China’s dominance over critical mineral supply chains that underpin modern defense, technology, and clean energy systems. Translating reserves into genuine strategic autonomy will require India to move beyond regulatory inertia and invest across the value chain, from mining to processing and recycling.

Lessons from China’s Rare Earth Experiment

Paradoxically, rare earths are not geologically scarce. They are moderately abundant and well distributed across the Earth’s crust, including in India, which holds the world’s third-largest known reserves. What makes them “rare” is the absence of economically viable concentrations and the technological, environmental, and regulatory hurdles associated with extraction and processing.

At present, China dominates nearly every node of the REE supply chain—accounting for roughly 60 percent of global mining, and more than 80 percent of global processing. This dominance reflects decades of coordinated industrial policy, control over upstream and downstream processes, and a deliberate effort to retain technological know-how by restricting foreign participation.

China has demonstrated its willingness to weaponize this dominance time and again, from export restrictions in 2010 to trade disputes with Japan and the United States. This reveals the geopolitical risks embedded in concentrated supply chains and has triggered renewed global concern and efforts to diversify sources — from Japan’s recent deep-sea sediment retrieval to the latest effort by the US to form a free trade zone.

Yet even as countries race to secure alternative supplies, the processing and manufacturing choke points remain firmly entrenched because most refining capacity is still clustered in China. In an era where AI systems increasingly determine economic and military advantage, such concentration poses not just a supply risk but a strategic vulnerability.

Why India Matters

From India’s perspective, rare earths sit at the intersection of industrial policy, strategic autonomy, and technological sovereignty. India holds nearly six percent of global known rare earth reserves, almost thrice as much as the United States, yet accounts for barely one percent of global production. The Mines and Minerals (Development and Regulation) Amendment Act, 2023, launched by India’s Ministry of Mines, marked a belated recognition of this imbalance by ending Indian Rare Earths Limited’s long-standing monopoly and opening the sector to greater participation.

While this is a step in the right direction, it does little on its own to address the deeper constraints that have historically sidelined REEs in India’s mining strategy. As a result, rare earth extraction has continued to be treated largely as a secondary by-product rather than a deliberate, strategic industrial objective. This underscores the need for a more comprehensive policy push that goes beyond regulatory liberalization.

At the same time, India and the United States share a growing dependence on rare-earth—intensive technological demands and a common interest in reducing over-reliance on China—an objective neither can achieve independently. For both nations, this shared objective offers a new frontier on alignment and cooperation: using partnership to accelerate REE capacity, close technological gaps, and integrate into resilient, non-coercive supply chains.

Policy Pathways for Cooperation

Four coordinated actions can turn India’s rare earth interests from a source of strategic vulnerability into a foundation for long-term autonomy in critical technologies, while putting it on a path to global leadership across the supply chain.

Facilitating Indian Production Capacity

China’s share of global REE mining has declined over the last decade, largely because countries such as the United States, Australia, and Japan actively coordinated policy, finance, and technology to revive domestic mining. India has not yet undertaken a comparable effort. While recent regulatory changes indicate a willingness to move beyond legacy arrangements, they stop short of enabling large-scale production.

Expanding the remit of existing US–India working groups to explicitly include the commercialization of REE production in India is therefore essential. Encouraging private sector participation can help translate regulatory opening into capacity, while access to American extraction technologies and targeted viability gap funding could make upstream investments commercially feasible.

Building Downstream Processing Capabilities At Scale

If rare earths are to modern technology what salt is to food, then extracting them from mineral deposits is like extracting salt from freshwater – technically complex, energy-intensive, and environmentally sensitive. Despite its reserves, India has only recently developed limited processing capacity for rare earth oxides. High capital costs, energy requirements, and technological barriers continue to deter private investment.

A formal bilateral framework for jointly funded oxide-processing ventures, combined with cooperation on AI-enabled mineral processing, separation technologies, and automation, could significantly reduce costs and improve efficiency.

Exploring Maritime and Deep-Sea Resources

Terrestrial REE deposits remain geographically concentrated. Diversification, therefore, requires looking beyond land. The deep seabed – among the least explored regions on Earth – offers potential mineral resources that could reshape supply dynamics. India’s capabilities in oceanography and seabed exploration, combined with emerging AI-driven mapping and sensing technologies, position it well for leadership in this domain.

Expanding existing multilateral frameworks to include cooperation on responsible, ethical, and sustainable deep-sea mineral exploration would align economic objectives with environmental stewardship.

Investing in Recycling and Alternatives

Known REE sources are finite, and primary extraction alone cannot meet long-term demand. Recycling and substitution technologies therefore become indispensable.

At present, rare earth recycling remains economically unattractive due to high costs, limited infrastructure, and weak regulatory incentives. Investment in recycling technologies, material recovery, and alternative materials – supported by coordinated regulatory frameworks and workforce development – can help bridge this gap. Collaborative research funding and institutional support would ensure that innovation translates into deployable solutions.

As India looks toward 2047 and the centenary of its independence, the next two decades will be defined by the choices it makes today on critical technologies and industrial capacity.

Rare earths will shape the trajectory of its AI-driven growth, strategic autonomy, and technological sovereignty. Leveraging partnerships to strengthen domestic production, processing, and innovation can move India from a passive holder of reserves to an active shaper of supply chains.

In this context, cooperation with the United States and within the emerging free trade zone for critical minerals, offers a practical pathway—not just to reduce dependence on China, but to build resilient, responsible, and future-oriented technology ecosystems.

Disclaimer: Views expressed by writers in this section are their own and do not reflect Milli Chronicle’s point-of-view.

The United States is encouraging faster international cooperation to strengthen global supply chains for rare earths and other critical minerals that are essential to modern industries.

The focus is on improving supply resilience, diversifying sourcing options, and supporting stable access for manufacturing and innovation.

Rare earth elements play a crucial role in a wide range of products, from consumer electronics to renewable energy systems.

As global demand rises, ensuring steady and reliable supplies has become an important economic and industrial priority.

A high-level meeting of finance and economic leaders from advanced and emerging economies is aimed at accelerating coordination on this issue.

The discussions emphasize collaboration, shared responsibility, and long-term planning to meet future mineral needs.

The participating countries together represent a significant share of global demand for critical minerals.

By working collectively, they aim to encourage balanced development of supply chains across different regions.

Officials have highlighted the need to move from planning to implementation.

Faster progress is seen as essential to keep pace with growing industrial requirements and technological expansion.

Critical minerals such as lithium, cobalt, graphite, copper, and rare earths are fundamental to clean energy technologies.

They are also key components in batteries, electric vehicles, power grids, and advanced manufacturing processes.

Strengthening supply chains is viewed as a way to support global economic stability.

Diversified sourcing can help reduce disruptions and improve predictability for businesses and consumers alike.

Several countries have already taken steps to invest in domestic production and international partnerships.

These efforts are intended to expand processing capacity and encourage responsible resource development.

Collaboration with mineral-rich nations is another important pillar of the strategy.

Long-term agreements and shared investment frameworks are designed to support sustainable extraction and processing.

Innovation and technology development are also central to the approach.

Improved recycling, alternative materials, and efficiency gains can help ease pressure on raw material demand.

The discussions place strong emphasis on transparency and shared standards.

Clear frameworks are expected to improve confidence among investors and industry stakeholders.

Participants have noted that building new supply chains takes time and coordinated effort.

However, early action can help ensure smoother transitions as demand continues to rise.

International cooperation is seen as a way to align economic growth with environmental responsibility.

Responsible sourcing and processing practices remain an important consideration in future planning.

The United States has indicated it will continue engaging partners through dialogue and practical initiatives.\

The goal is to support a resilient and diversified minerals ecosystem that benefits global markets.

Officials stress that the approach is forward-looking and focused on shared economic interests.

By working together, countries can help ensure that critical minerals remain accessible for innovation and development.

The meeting is expected to reinforce momentum around coordinated action and knowledge sharing.

Such engagement is viewed as a foundation for long-term supply security in a rapidly evolving global economy.

The discussions reflect mounting concern among advanced economies about their heavy dependence on a narrow group of suppliers for critical minerals.

Rare earth elements are essential for modern technologies, including electric vehicles, renewable energy systems, advanced electronics, and defense equipment.

Supply disruptions or price volatility in these materials could have far-reaching consequences for global manufacturing and national security.

The Washington meeting is expected to take place on January 12 and will bring together finance leaders from the United States, Europe, and Asia.

According to sources familiar with the agenda, one of the central topics will be the idea of introducing price floors for rare earth materials.

Price floors are seen as a mechanism to encourage investment in mining and processing projects outside dominant supply regions.

Without such safeguards, companies often struggle to compete with lower-cost producers, making alternative supply chains financially unviable.

Most G7 nations, with the exception of Japan, remain heavily reliant on China for rare earths and related processing capabilities.

This dependence has raised alarms amid rising geopolitical tensions and concerns over the use of trade leverage.

The issue gained urgency after past export restrictions and policy shifts highlighted the vulnerability of global supply chains.

Last year, G7 leaders agreed on a coordinated action plan aimed at securing critical mineral supplies and strengthening economic resilience.

That plan emphasized diversification, domestic production, recycling, and cooperation with trusted partners.

Officials began exploring the concept of minimum price guarantees as early as last year to support non-Chinese producers.

The United States took a first step by setting a minimum price in a contract designed to boost domestic rare earth production.

Supporters argue that such measures reduce investment risk and provide long-term certainty for mining and refining projects.

Critics, however, caution that price floors could distort markets if not carefully designed and internationally coordinated.

The Washington talks are expected to examine how G7 countries can align their approaches to avoid fragmentation.

Finance ministers will also likely discuss broader critical mineral strategies, including lithium, cobalt, and nickel.

These materials are central to energy transition goals, particularly the rapid expansion of electric vehicles and battery storage.

Securing reliable supplies has become a core economic priority as governments invest heavily in green technologies.

The meeting signals a shift toward treating rare earths not just as commodities, but as strategic assets.

Coordination at the G7 level is intended to send a strong signal to markets and potential investors.

It also reflects a broader effort to reduce systemic risks created by concentrated supply chains.

While concrete policy announcements are not guaranteed, the talks are expected to shape future cooperation.

Outcomes may influence national subsidy schemes, trade agreements, and partnerships with resource-rich countries.

As competition for critical minerals intensifies globally, the G7’s approach could set a benchmark for other economies.

The Washington meeting highlights how economic policy, industrial strategy, and geopolitics are increasingly intertwined.

Rare earths, once a niche concern, are now firmly at the center of global economic planning.