How Rare Earths became the new battleground in US-China rivalry and where India fits in | Explained

Beijing recently expanded its export controls to cover five additional rare earth elements—holmium, erbium, thulium, europium, and ytterbium.

As tensions rise between Washington and Beijing, a new front has emerged in the global power struggle: control over rare earth materials. These minerals, often invisible in everyday life, are the foundation of modern technology, from smartphones and electric vehicles to missiles and satellites.

Now, with China tightening its grip on rare earth exports, countries are scrambling to secure their own supplies. India is preparing to launch a national stockpile. The United States is spending billions to build reserves. And the world is beginning to realise that rare earths could become to the 21st century what oil was to the 20th.

India’s strategic push

The Indian government is preparing to unveil the National Critical Mineral Stockpile (NCMS), a new scheme to secure rare earth supplies for domestic industries. As reported earlier, the Centre has set aside Rs 500 crore for the initiative, which aims to “guard against supply disruptions and ensure mineral availability for domestic use.”

“We are looking to create a two-month stockpile of rare earth elements under the programme, with a focus on private player participation,” a senior government official told Economic Times on condition of anonymity. “The initial focus is on rare earth elements. The scope will later expand to include other critical minerals.”

India’s reserves are considerable -- 7.23 million tonnes of rare earth oxide locked across 13.15 million tonnes of monazite, spread across states such as Andhra Pradesh, Odisha, Tamil Nadu, Kerala, West Bengal, Jharkhand, Gujarat and Maharashtra. However, India still lacks advanced technology to extract and refine these materials at scale.

The stockpile will mirror the model of India’s Strategic Petroleum Reserve, which currently stores 5.33 million tonnes of crude oil at three southern locations --Mangalore, Padur and Vizag -- to cushion against global supply shocks.

India plans to add another 5.2–5.3 million tonne reserve in Bikaner, Rajasthan, and a 1.75 million tonne facility at Mangalore, Karnataka, according to L.R. Jain, CEO of Indian Strategic Petroleum Reserve Ltd. “In case of exigencies, we will be better prepared,” Jain said.

Why Rare Earths matter

Rare earths are a group of 15 metallic elements known as the lanthanides. Though relatively abundant in the Earth’s crust, they rarely occur in concentrated deposits, making extraction difficult and expensive.

They are indispensable to modern life. These elements power smartphones, electric vehicles, wind turbines, aircraft engines, catalytic converters, medical imaging devices, and advanced military systems. A single smartphone contains as many as eight different rare earth materials.

Yet production is heavily concentrated. China refines more than 80 per cent of the world’s rare earths, giving it overwhelming leverage over global supply chains.

China tightens its grip

Beijing recently expanded its export controls to cover five additional rare earth elements -- holmium, erbium, thulium, europium, and ytterbium -- citing “national security and industrial policy” concerns. Exports of 12 such materials are now restricted.

These newly listed elements have high-tech and defence applications. Holmium is used in magnets, semiconductors, laser surgery devices, and nuclear reactor control rods. Erbium plays a vital role in fibre-optic communications and infrared technology. Thulium is essential in X-ray equipment, lasers, and microwave ceramics, while europium and ytterbium are used in nuclear reactors, glowing materials for medical imaging, and even quantum computing.

China’s Commerce Ministry said the restrictions were a direct response to US actions. “The US actions have severely harmed China’s interests and undermined the atmosphere of bilateral economic and trade talks, and China is resolutely opposed to them,” Beijing said, referring to Washington’s decision to add Chinese companies to a trade blacklist and impose port fees on China-linked ships.

Although China stopped short of directly linking its export curbs to US measures, it said the restrictions were driven by concern over the “military applications” of these materials at a time of “frequent military conflicts.”

Washington’s $7.5 billion countermove

In Washington, the Pentagon is taking no chances. The US Defense Logistics Agency (DLA), which manages the national stockpile, recently unveiled plans to buy more than $1 billion (Rs 88.68 billion) worth of rare earth materials.

The funding comes from President Donald Trump’s “Big Beautiful Bill,” passed by Congress, which allocated $7.5 billion (Rs 665.1 billion) for critical minerals. Of this, $2 billion (Rs 177.36 billion) is set aside to expand the national defence stockpile by 2026–27, while $5 billion (Rs 443.4 billion) will strengthen supply chains. Another $500 million (Rs 44.34 billion) will fund a credit scheme to attract private players into the sector.

The DLA’s procurement list includes rare earths, tungsten, bismuth, and 222 tonnes of indium, roughly equal to the US’s total annual refined consumption. Experts have warned that such large-scale purchases could strain non-Chinese supplies even further, pushing prices higher.

“Our relationship with China over the past six months has been a very good one, thereby making this move on trade an even more surprising one,” Trump said, defending the 100 per cent tariffs imposed on Chinese goods.

India’s window of opportunity

With China and the US locked in an escalating resource war, India has a rare opportunity to position itself as a reliable alternative in the global supply chain. The country’s vast reserves of monazite, combined with growing international interest in de-risking from China, could help India attract major investment—if it can overcome technological and policy bottlenecks.

The Centre’s new stockpile plan is a recognition that in the emerging world order, control over rare earths will mean control over technology and security.

If oil once defined the geopolitics of the 20th century, rare earths may well define that of the 21st. And as the world’s major powers scramble to secure their future, the real question is not whether rare earths are the new oil, but whether nations like India can learn from history before the next resource war begins.