The New Oil of the 21st Century

In the 20th century, wars and global power rivalries were shaped by access to oil. From the Middle East to the South China Sea, nations fought or maneuvered diplomatically to secure energy supplies that fueled their economies and militaries.

Today, rare earth elements (REEs)—the 17 metallic minerals crucial for everything from smartphones to stealth fighters—have become the new oil of the digital age.

As the world accelerates toward green technologies, electric mobility, and advanced weaponry, rare earths have emerged as critical enablers of modern power.

They are essential for electric vehicle motors, wind turbines, laser guidance systems, and satellite communications. 

Yet their supply chains are fragile, highly concentrated, and deeply politicized, creating the perfect conditions for future trade wars—or even physical conflicts—over access and control.

The question is no longer whether these materials are strategically vital, but how far nations are willing to go to secure them.

1. The Strategic Nature of Rare Earths

Rare earths may sound obscure, but they are fundamental to national power. Every F-35 fighter jet contains nearly half a ton of rare earth materials. Advanced radar systems, missiles, and precision-guided munitions depend on neodymium, samarium, and dysprosium magnets.

Civilian technologies—from iPhones to MRI scanners—also rely on the same minerals. This dual-use character blurs the line between civilian supply chains and military readiness, turning rare earth access into a matter of national security and sovereignty.

Because these elements are difficult to substitute and refining them requires advanced technology, whoever controls their supply chains holds a powerful geopolitical lever.

That lever, at present, belongs largely to China.

2. China’s Dominance and the Weaponization of Supply Chains

China’s dominance in the rare earth sector is both economic and strategic. It controls around 60–70% of global production and more than 85–90% of refining capacity, giving Beijing an unparalleled ability to influence global markets.

This monopoly didn’t happen by chance. Since the 1980s, China pursued a long-term industrial strategy, prioritizing rare earth extraction, refining, and manufacturing integration. Western nations, meanwhile, shut down environmentally costly operations and outsourced processing to China, unknowingly ceding control over a strategic resource.

Beijing has not hesitated to use this control as a geopolitical weapon.

• In 2010, China briefly halted rare earth exports to Japan following a maritime dispute over the Senkaku/Diaoyu Islands, causing panic in Tokyo and disrupting global markets.

• In 2019, amid the U.S.–China trade war, Chinese state media hinted that rare earths could be used as a retaliatory measure against American tariffs.

• More recently, in 2023–2024, China imposed export restrictions on gallium and germanium, critical for semiconductors—signaling its willingness to extend similar tactics to rare earths if provoked.

These precedents reveal how supply chains can easily become instruments of coercion in geopolitical rivalries. If diplomatic tensions escalate, a “rare earth embargo” could cripple high-tech manufacturing or defense industries in rival nations.

3. From Trade Conflicts to Strategic Confrontations

Trade disputes over rare earths could intensify into broader strategic conflicts. Here’s how such escalation might unfold:

a. Economic Warfare and Sanctions

Countries may impose export bans, tariffs, or quotas to punish rivals or secure domestic advantage. In response, affected nations might retaliate with sanctions or countermeasures targeting critical technologies or markets.

Such tit-for-tat measures could disrupt global supply chains, leading to shortages, inflation, and industrial slowdown—especially in sectors like electronics, automotive, and defense.

b. Proxy Competition in Resource-Rich Regions

Just as oil-rich nations became arenas of geopolitical contest during the Cold War, rare earth-rich regions—such as Africa, Southeast Asia, and South America—could become new battlegrounds for influence.

Major powers are already investing heavily:

• China in Burundi, Tanzania, and Myanmar;

• The U.S. and Australia in rare earth ventures across Africa and Latin America;

• The EU seeking strategic partnerships in Greenland and Namibia.

If rival powers back competing mining interests or governments, proxy conflicts could emerge, driven less by ideology and more by control of strategic resources.

c. Military Tensions in Critical Transit Zones

Many rare earth shipments pass through maritime choke points such as the South China Sea or the Strait of Malacca. Increased militarization or blockades in these zones—whether during war or sanctions—could paralyze supply chains and trigger confrontation between naval powers.

d. Strategic Sabotage and Resource Nationalism

Nations desperate for supply security might resort to covert operations, cyberattacks, or political interference to disrupt competitors’ mining or refining operations. Meanwhile, local governments in resource-rich states could use resource nationalism—renegotiating or nationalizing contracts—to assert control, potentially igniting disputes with foreign investors.

4. Lessons from the Oil Wars and Resource Conflicts

The world has seen this pattern before. The oil crises of the 1970s reshaped geopolitics, leading to wars, coups, and shifting alliances. The Gulf Wars, Iran–Iraq War, and Sudanese oil conflicts all had energy security at their core.

Rare earths could play a similar role in future conflicts—not over barrels of oil, but over kilograms of dysprosium, neodymium, or terbium.

However, the dynamics differ in one key respect: rare earths are more dispersed and harder to substitute, but the refining process is heavily centralized. That makes control over processing technology and infrastructure, rather than just raw deposits, the ultimate power source. Wars might not always be fought with armies, but through economic blockades, trade embargoes, and cyberattacks targeting industrial facilities.

5. Emerging Flashpoints and Risk Scenarios

Scenario 1: The Pacific Tech Cold War

If U.S.–China tensions escalate further, both sides could weaponize critical materials. China might restrict exports of refined rare earths to the U.S. and allies, while Washington could cut off semiconductor and AI chip access to Beijing. This mutual dependency standoff could cripple supply chains, spark global recession, and pressure third-party nations to take sides.

Scenario 2: The African Resource Rivalry

Africa holds significant untapped rare earth reserves. Competing investments from China, the U.S., and Europe could politicize mining projects, leading to social unrest or proxy conflicts—especially where governance is weak. For example, disputes over control of strategic deposits in countries like Congo, Malawi, or Tanzania could mirror the Cold War–era resource struggles.

Scenario 3: Arctic and Oceanic Tensions

As melting ice opens access to mineral-rich Arctic seabeds, nations like Russia, the U.S., and China could clash over territorial claims and extraction rights. Similarly, the South China Sea, believed to contain rare earth-rich sediments, could become a flashpoint for confrontation between China and Southeast Asian nations.

6. The Role of Alliances and Collective Defense

Recognizing the risk, major alliances are already strategically reorganizing:

• The Quad (U.S., Japan, India, Australia) and AUKUS are coordinating critical mineral supply chains to reduce dependency on China.

• The EU Critical Raw Materials Act mandates diversification and recycling of rare earths.

• The U.S. Defense Production Act has been invoked to fund domestic mining and refining projects.

These moves signal preparation for economic resilience in potential conflict scenarios—a recognition that industrial security is now national security.

Still, unless global cooperation prevails, such defensive strategies could harden rival blocs, accelerating the fragmentation of global trade and heightening tensions.

7. Preventing Conflict: Towards Resource Diplomacy

Avoiding future wars over rare earths requires a cooperative governance framework that balances national interests with global stability.

Key measures could include:

• Multilateral agreements under the UN or WTO ensuring open and fair trade of critical minerals.

• Strategic stockpiles and recycling programs to reduce supply shocks.

• Joint research initiatives on substitution materials and sustainable mining technologies.

• Transparency mechanisms to prevent weaponization of supply chains.

In short, the world needs a form of “resource diplomacy” akin to nuclear or energy cooperation—recognizing that interdependence, if managed wisely, can be a source of stability rather than conflict.

From Resource Rivalry to Shared Security

The world stands at a crossroads. The technologies that promise to save the planet—renewable energy, electric mobility, digital infrastructure—depend on minerals that could divide it once again.

If nations pursue zero-sum competition for rare earth dominance, the future may echo the resource wars of the past—fought not for oil wells, but for metallic dust hidden beneath the earth’s crust.

However, a cooperative path remains possible. If the international community learns from history and builds transparent, sustainable supply chains, rare earths could become a foundation for shared prosperity, not conflict.

Whether they ignite wars or enable peace will depend not on the elements themselves—but on how wisely humanity chooses to manage them.