GRACELIN BASKARAN: Co-ordinated strategy will allow SA to benefit from China’s weaker grip on rare earths

For decades, China has treated its dominance over rare earths as an untouchable pillar of global power. But the past year has shown that Beijing’s overreach may have finally triggered what it long feared most: a collective, co-ordinated response from the rest of the world.

When China imposed and tightened rare earth export controls in 2024 and 2025, it sought leverage in a broader trade confrontation with the US. Instead, it accelerated the very process it hoped to delay — the diversification of supply chains away from its borders. From Australia and Japan to Saudi Arabia, Brazil and the US, countries are fast-tracking new mines, refining plants and processing hubs. Rare earth production networks that didn’t exist two years ago are now taking shape across multiple continents.

The US, in particular, has moved faster than anyone expected. Just 12 months ago, few would have imagined Washington becoming the largest shareholder in its leading rare earth producer, MP Materials. The defence department’s $400m investment has since doubled in value, proving that strategic industrial policy can yield economic and security dividends.

China’s rise in rare earths was not inevitable. In the early 20th century, the US Bureau of Mines ensured US dominance in materials essential for war and industry. But when the bureau was shuttered in 1996, the country effectively outsourced its mining future. While Washington was shifting resources away from strategic industries, Beijing was doubling down. It strategically invested in overseas mines, scaling its domestic refining capacity and absorbing the environmental costs others refused to bear. Today, China still accounts for 60% of global rare earth production and 90% of processing.

That dominance, however, is weakening. Lynas in Malaysia has launched the first heavy rare earth separation plant outside China. US firm Noveon Magnetics is now producing permanent magnets domestically. These may be early steps, but they mark the beginning of a long-overdue rebalancing.

Critics worry that US government intervention — in the avenues of equity stakes, price floors and concessional financing — distorts markets. But strategic industries are never born in free markets alone. Japan once subsidised Honda. Finland backed Nokia. And when the US vehicle sector faced collapse in 2008, it was a federal bailout that saved millions of jobs. Supporting critical minerals today prevents far costlier bailouts tomorrow — like when carmakers were forced to halt production earlier this year due to a rare earth shortage.

What’s needed now is sustained partnership. Minerals are at the centre of nearly every major US foreign policy move — from Ukraine and the Democratic Republic of Congo (DRC) to Saudi Arabia, Japan, and Australia — because no single nation can achieve minerals security alone.

China’s overuse of its mineral leverage has awakened the world. For SA, the opportunity now lies in leveraging its own resources strategically by transforming its rare earth endowment into diplomatic and economic power. The country holds significant deposits across the Western Cape’s Steenkampskraal mine, the Northern Cape’s Zandkopsdrift project, and the Phalaborwa complex in Limpopo.

Yet to convert these assets into true geopolitical leverage, Pretoria must move beyond fragmented policymaking. A co-ordinated, interagency strategy — linking mining, trade, foreign affairs and finance — will be essential to position SA not just as a supplier of minerals but as a prominent player in the future of global minerals security.

Ultimately, innovation will do what it always has: change the equation. Advances in recycling, substitution, and material efficiency will reduce demand over time. But until that day arrives, supply chains must be secured.

• Dr Baskaran, a development economist, is the founding director of the Project on Critical Minerals Security at the Centre for Strategic & International Studies in Washington DC.