Rare Earth Elements and Strategic Competition in the Arctic

The strategic importance of rare earth elements (REE) originates from their key role in the “green transition” and the use of renewable energy technologies. In addition, thorium is extracted from REE ores, which promises to replace uranium in the future as the basis for nuclear fuel production due to greater availability and environmentally friendly features. One ton of thorium can produce as much energy as 200 tons of uranium or 3.5 million tons of coal¹.

In 2025, the REE market volume exceeded $7.2 billion, and in 2026, it is projected to reach $7.6 billion, and by the end of 2035, it will reach $12.6 billion, increasing by 6% per year². In absolute terms, this is quite a bit but access to the rare earths is critically important for developing modern technologies and ensuring national security.

The reserves of REE ores in the world are large, including in the Arctic, and the main problem lies in obtaining technologies for processing and producing REE. Having relied on the development of the critical minerals in the early 1990s, China now occupies a leading position.

First, it extracts 60% of the raw materials and controls from 60 to 80% (depending on the specific metal) of the REE market. This allows China to supply 94% of permanent magnets to the global market, which are used for the production of semiconductors, cars, industrial engines, data centers, jet aircraft, and weapons systems³.

China strives to strengthen its position by imposing export controls on critical minerals of strategic importance through measures such as the Export Control Act of 2020⁴. China uses quotas to limit the production of rare earths in order to regulate the global market. At the same time, China is also diversifying its mineral imports and investing in countries with high concentrations of important resources.

Second, China is the only country in the world with a full production cycle. It makes it possible to control global production chains that include REEs or corresponding technologies. In April 2025, China imposed restrictions on exports to the United States of seven types of REE (scandium, yttrium, samarium, gadolinium, terbium, dysprosium, lutetium) and components based on them. In October 2025, restrictions on the export of technologies and equipment were added. Wherever the product is manufactured, foreign companies are required to obtain a permit in China if they use Chinese REE, derived components, technologies, and equipment⁵.

The monopoly position allows China to regulate prices on the global market and use this trump card in the economic war with the US. For example, in response to American sanctions on semiconductor supplies, China in December 2024 banned the supply of gallium and other components necessary for the production of semiconductors in the United States. According to expert estimates, US high-tech industrial production is 70% dependent on Chinese exports of REE⁶, which means that a sharp reduction in supplies creates serious difficulties for leading chip manufacturers like AMD, Apple, Broadcom, Qualcomm, Nvidia, Intel.

The Trump administration is annoyed by China’s leadership position. In 2024, the US was forced to import about 80% of REE for its needs⁷. Since its own ore reserves are small, the US is showing interest in rare earth ores in other countries, including Canada (830,000 tons) and Greenland (1.5 million tons). Particular attention to Greenland is due to the higher ore concentration (1.43% versus 0.033% in Texas).

Trump’s harsh policy on Greenland’s annexation explains the fact that if Western investments are not large enough, Greenland is ready to turn to other countries, including China. Strategic rivalry for Greenland aggravates presence of the Chinese company Shenghe Resources already involved in the development of the most important Kvanefjeld deposit⁸. The establishment of control over Greenland completely solves the problem of ore and at the same time makes it possible to displace China.

Mutually beneficial cooperation with Russia (3.8 million tons of REE ore)⁹ is also possible for the US in case of some normalization of relations. Russia has announced ambitious plans to create its own full-cycle technologies for the production of REEs. Russia is attractive to the US because the Tomtorskoye deposit, located in the Arctic zone of Russian Federation has the highest ore concentration in the world at 14.5%¹⁰.

In addition to mining ore, the US also needs investment of tens of billions of dollars in the development of its own full-cycle REE production. According to experts, the US can create these technologies and industrial facilities by 2035, but at the same time it will be able to cover only 25% of its needs. Thus, it will take years to eliminate dependence on China, even with the expansion of the raw material base. Meanwhile, blocking the supply of REE by China will affect the production of modern weapons (F-35, Arleigh Burke-class destroyer, Virginia-class submarine), since 77.7% of them contain REE¹¹. The development of satellite systems and hypersonic weapons will also slow down. There are about 2,500 tons of key REE in the US strategic reserve, which is enough for 6 months of operation for critical defense needs¹².

Therefore, American experts propose to establish an international coalition for long-term investment in the development of a full-cycle REE production¹³. The main American partners are the EU (SecREEts project) and Australia (Lynas Corporation), but the US is also bringing Japan and Saudi Arabia to balance China. Possibly, the US will invite India as principal adversary of China.

As for West-European partners of the US, they can receive raw materials from Scandinavia. But Europe is not ready for a direct confrontation with China, as well as to deal with financial and environmental risks associated with the extraction and processing of rare earths on its own territory¹⁴.

China turned out to be the only state that was able to challenge the US because of the unilateral economic sanctions imposed. It was after the introduction of restrictions on the export of rare earths that Donald Trump was forced to soften his position on sanctions against China. Obviously, control over REE has become one of the main components of the rivalry between the US and China in the Arctic, and China will gain the upper hand in the foreseeable future. Russia needs to find its own niche in cooperating with China or India.