Rare Earths: The New Focus of Global Competition
Rare earths, known as the "vitamin of industry", have recently drawn unprecedented international attention. Within a week, four major events occurred consecutively: the U.S.-led alliance with eight countries, Vietnam's sudden ban on rare earth raw ore exports, and favorable policy and market conditions for two leading Chinese rare earth enterprises. These developments have elevated global competition over rare earths. As a critical material for products from smartphone chips to fifth-generation fighter jet radars, rare earths have become a key strategic focus in great power competition, with every move impacting the global industrial chain.
On December 12, the U.S.-led "Critical Minerals Partnership Alliance" was officially launched. The U.S., together with Japan, South Korea, Australia and other five countries, signed the "Rare Earth Supply Chain Security Declaration" to build a "de-China" rare earth supply chain. Specific cooperation has been finalized: Japan will supply 3,000 tons of rare earth ore to the U.S. annually for five years and transfer 6N-level purification technology, in exchange for substantial U.S. investment funds. The core goal is to reduce reliance on China's rare earth industrial chain.
Notably, one day before the alliance's establishment, Vietnam's National Assembly overwhelmingly passed an amendment to the "Geology and Minerals Law", imposing a comprehensive ban on rare earth raw ore exports starting January 1, 2026. On the surface, this aims to help Vietnam move beyond low-value-added raw material exports, urging foreign and local enterprises to build refining facilities and upgrade the industrial chain. Essentially, Vietnam seeks to leverage its 3.5 million tons of rare earth reserves to secure Western technical and financial support amid Sino-U.S. rare earth competition, enhancing its global bargaining power.
However, a significant technical gap exists between Vietnam's goals and reality. The industry generally believes its ban will not substantially impact the global market short-term. Vietnam's annual rare earth output is only 300 tons (a negligible global share), and it lacks core separation and purification technologies—China's cascade extraction achieves 99.9999% purity, while Vietnam has not completed even an experimental 99.9% purification line. Additionally, China has long controlled key rare earth equipment exports, and Western-supplied equipment is mostly second-hand with confidential core technologies, making Vietnam's industrial chain upgrade efforts challenging.
Amid international rare earth supply chain deployments, China's core rare earth enterprises are seeing policy and market benefits. On December 12, Northern Rare Earth's inclusion in the Shanghai Stock Exchange 50 Index took effect, expected to attract 600 million to 960 million yuan in passive funds, supporting its stock price and strengthening policy and negotiation advantages. It also upgraded its independent director system to improve corporate governance. On the same day, China Rare Earth's board unanimously approved the 2026 daily connected transaction plan, standardizing processes to meet regulatory requirements, avoid tax disputes and boost market confidence.
These positive developments are underpinned by China's absolute advantages in the global rare earth industrial chain. Data shows China holds 49% of global rare earth reserves and controls nearly 90% of smelting and separation capacity, forming a complete industrial chain from mining to high-end applications. Particularly in strategic heavy rare earths (e.g., dysprosium, terbium), China's southern ionic mines account for over 90% of global reserves—critical for advanced military equipment. The U.S., despite domestic rare earth mines, lacks smelting capacity, requiring 100% of its concentrates to be processed in China, driving its alliance efforts.
In response to the U.S.-led "de-China" initiative, China's Ministry of Foreign Affairs stated firmly: "All parties should abide by market economy and fair competition principles to maintain global supply chain stability." This reflects recognition of in-depth global industrial chain integration. Building a rare earth supply chain takes 5-10 years, and China's technological, cost and environmental advantages are irreplaceable short-term. The global rare earth pattern of "diversification with dependence" will not be fundamentally altered soon.
Essentially, recent rare earth events have transcended resource trade, becoming a competition of strategic endurance and industrial competitiveness. The U.S. alliance and Vietnam's ban are part of this competition, while China's leading enterprises' steady development demonstrates its confidence. With surging rare earth demand from new energy vehicles and wind power, global competition will intensify. Whoever grasps core technologies and a complete industrial chain will hold the initiative.
Dec 15, 2025|
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