A New Resource Rush with Old Shadows

The 21st century’s green and digital revolutions are built on invisible foundations—rare earth elements (REEs). These 17 metallic elements are critical for producing smartphones, electric vehicles, wind turbines, and guided missiles.

Demand for them is skyrocketing as the world transitions to renewable energy and advanced technologies.

But behind this global scramble lies a troubling question: Will the rare earth boom repeat the patterns of exploitation that defined the colonial and neo-colonial eras?

Developing countries across Africa, Asia, and Latin America are being courted by global powers and corporations eager to secure access to rare earth deposits.

These nations face a dangerous paradox: they are rich in resources, yet poor in infrastructure, bargaining power, and technological capacity.

Without strong governance, the rare earth sector could easily become a new form of economic colonialism—where wealth flows outward while environmental and social costs remain local.

1. The Colonial Legacy of Resource Extraction

The fear of “resource colonialism” is not theoretical; it’s deeply rooted in history. During the 19th and 20th centuries, colonial powers extracted Africa’s gold, copper, and oil with little benefit to the colonized nations. Local populations were marginalized, ecosystems were destroyed, and profits were funneled abroad to fuel European industrialization.

Even after independence, neo-colonial economic structures persisted. Multinational corporations, backed by powerful states, often secured extraction rights through unequal contracts. Developing nations provided cheap labor and raw materials while importing expensive finished goods—a cycle that reinforced dependency.

Today, the rare earth industry risks following the same path if structural power imbalances are not corrected. Instead of European empires, the new actors are state-backed enterprises and multinational corporations from China, the United States, and the European Union, all competing to control the future of green technology.

2. The Global Rare Earth Race: New Players, Old Patterns

China currently dominates more than 90% of rare earth refining and around 60% of mining. However, as Western nations seek to diversify supply chains, they are turning to developing countries—especially in Africa and South America—for alternative sources.

Examples include:

• Tanzania, Malawi, and Namibia, which have discovered high-grade rare earth deposits and are negotiating mining rights with foreign firms.

• Brazil, with vast reserves of niobium and other critical minerals.

• The Democratic Republic of Congo (DRC), already the world’s largest source of cobalt, now attracting rare earth interest.

• Madagascar and Burundi, hosting rare earth-rich carbonatites targeted by international investors.

On the surface, these partnerships promise economic growth and jobs. Yet the terms of engagement often resemble old colonial arrangements: foreign companies extract raw materials, export them for refining abroad, and leave minimal value addition or industrial capacity behind.

This system locks developing nations into the lowest rung of the global value chain—suppliers of raw resources, not beneficiaries of technological advancement.

3. The Mechanisms of Neo-Colonialism in the Rare Earth Economy

a. Unequal Contracts and Investment Terms

Many developing countries, eager for foreign investment, offer tax holidays, royalty exemptions, and relaxed environmental standards to attract mining companies. The immediate gains—such as infrastructure or employment—mask long-term losses in sovereignty and revenue.

For instance, contracts may allow companies to repatriate profits without reinvestment, or transfer pricing may be used to underreport export values. Over time, the host nation becomes dependent on foreign capital and expertise, unable to manage or regulate the industry independently.

b. Environmental and Social Externalities

Rare earth mining is notoriously toxic. The refining process involves acid leaching and radioactive waste, often leaving behind contaminated soil and water. In countries with weak environmental governance, local communities bear the brunt—through displacement, health hazards, and destroyed livelihoods—while foreign companies profit.

This mirrors the environmental injustice of earlier colonial eras, where extractive zones became sacrifice zones for global consumption.

c. Technological Dependence

Refining and magnet production—the high-value stages of the rare earth supply chain—are concentrated in advanced economies. Developing nations typically export raw ore and import expensive finished products. This technological dependency perpetuates inequality and prevents industrial diversification.

d. Geopolitical Leverage

Rare earth partnerships are often tied to strategic alliances or debt-based diplomacy. Some countries risk falling into “resource-for-infrastructure” traps, where critical minerals are exchanged for loans or infrastructure built by foreign contractors—creating long-term dependency rather than empowerment.

4. The China Factor: Development Partner or Neo-Colonial Actor?

China’s engagement with developing countries, particularly in Africa, is complex. On one hand, Beijing presents itself as a partner in South–South cooperation, providing infrastructure, financing, and technical expertise without the political conditions often imposed by Western donors.

On the other hand, China’s dominance in the global rare earth value chain raises questions about power asymmetry and dependency. In many cases:

• African countries export raw rare earths to China, where they are refined and used in high-tech manufacturing.

• Chinese companies secure exclusive rights through opaque contracts or joint ventures with limited local participation.

• The resulting value capture overwhelmingly favors China, while local economies remain underdeveloped.

This dynamic can be seen as a new form of resource colonialism—less about political occupation and more about economic control through value chain dominance.

5. Western and Multinational Interests: A Different Approach or the Same Game?

Western nations, alarmed by China’s monopoly, are now courting resource-rich countries to build “ethical” or “sustainable” supply chains. Initiatives such as the U.S.-led Minerals Security Partnership (MSP) and the EU’s Critical Raw Materials Act aim to secure access to rare earths from developing nations.

However, critics argue that these programs still prioritize resource security for industrialized economies, not equitable development for producers. Without binding commitments to local processing, technology transfer, or fair revenue sharing, such partnerships risk becoming greenwashed versions of colonial extraction—justified by the rhetoric of sustainability.

6. Breaking the Pattern: How Developing Countries Can Avoid a New Colonial Trap

To prevent a repeat of history, developing nations must act strategically, asserting sovereignty and value over their resources.

a. Build Local Value Chains

Instead of exporting raw ore, countries can mandate local refining and processing through industrial policy. Partnerships should include commitments to establish refineries, magnet plants, and training centers.

b. Regional Cooperation

African and Latin American nations can form critical minerals alliances, similar to OPEC, to coordinate policies, standardize royalties, and increase bargaining power against multinational corporations.

c. Transparency and Governance

Public disclosure of contracts, revenue flows, and environmental impact assessments can deter corruption and exploitation. Initiatives like the Extractive Industries Transparency Initiative (EITI) provide models for accountability.

d. Sustainable Development Clauses

All mining agreements should include binding environmental and social obligations, with local communities receiving a share of royalties or equity stakes in projects.

e. Technology Transfer and Skills Training

Foreign investors must be required to train local engineers and scientists, ensuring long-term self-reliance. Partnerships with universities and research centers can help build domestic capacity.

f. Aligning with Global Climate Goals

Developing nations can leverage their rare earth resources as bargaining chips in climate negotiations, demanding fair compensation for sustainable mining and carbon offset contributions.

7. The Role of Global Governance and Ethics

Preventing economic colonialism in the rare earth sector also requires global policy reforms.

• The WTO could enforce fair pricing and prohibit exploitative export terms.

• The UN could adopt a Global Minerals Sustainability Framework linking human rights and environmental protection to trade access.

• Multilateral lenders like the World Bank and IMF could condition financing on fair benefit-sharing and technology localization.

Civil society and NGOs must also play watchdog roles, ensuring that resource deals align with local welfare, not foreign profits.

Avoiding a Green Colonial Future

The rare earth boom holds both promise and peril for developing countries. It could either become the engine of industrial empowerment—creating jobs, technology, and regional prosperity—or degenerate into a new form of economic colonialism, where wealth extraction continues under the banner of sustainability.

The deciding factor will be agency—whether developing nations act as mere suppliers or as strategic partners shaping their own destiny.

The world must recognize that the clean energy transition cannot be built on dirty economic hierarchies. True sustainability means not just decarbonizing energy, but also decolonizing resources—ensuring that the benefits of rare earths flow equitably across nations.

Only then can the rare earth revolution become a story not of exploitation, but of shared progress and global justice.