Rare earths, real power: How the Bharat–China pact redefines geoeconomics

The new oil of the 21st century

In a world once defined by oil barrels and battle fleets, power today lies in something far less visible: supply chains. And within these, rare earth elements (REEs) have emerged as the true “vitamins of high-tech.” From electric cars to missiles, smartphones to wind turbines, these 17 obscure metals, names like neodymium and dysprosium, power modern life.

When China, in April 2025, implemented tighter, new export controls—mandating special licenses and strict end-user certificates for rare earth magnets—it effectively created a choke point. Citing "licensing issues" and national security, Beijing brought immediate friction to the supply chain.

EV production lines froze, wind energy projects stalled, and defence manufacturing slowed. For six months, the bureaucratic friction was weaponised, and Bharat felt firsthand how economic dependencies can be wielded as geopolitical weapons.

The crisis eased only in October 2025 when India signed an agreement allowing specific firms to resume licensed imports, a deal that included strict end-user clauses and non-re-export assurances. But beyond the headlines, this pact revealed the contours of a new world order—one where geoeconomics is geopolitics.

How China cornered the rare earth market

China's dominance in rare earths wasn't a lucky accident. It was, as Deng Xiaoping predicted in 1987, the result of foresight. "The Middle East has oil; China has rare earths,” he declared. Over the next four decades, Beijing executed a masterstroke:

Subsidised mining and refining: Plants in Baotou operated with near-zero environmental oversight and cheap power, undercutting global rivals.

Global resource control: Through Belt & Road investments, China secured supply deals with Myanmar, Laos, and African nations.

Technology capture: By acquiring Western know-how and refining its own solvent extraction methods, China made refining more efficient and cost-effective.

By the early 2000s, it controlled 97 per cent of global REE processing. Today, even as that figure stands at 87 per cent, Beijing retains a near-monopoly over the technologies that turn raw ores into magnets — the building blocks of everything from smartphones to fighter jets. If "rare earths are the new oil — and China owns the wells."

The West's mistake: Profit over strategy

While China played the long game, the West chased quarterly profits. Mines like Molycorp's Mountain Pass in the US closed in the early 2000s for being “unprofitable.” Europe's Critical Raw Materials strategy gathered dust until recently. Japan, despite learning lessons from China's 2010 REE embargo, still relies on Beijing for 60 per cent of its magnets.

Bharat’s vulnerability — and its opportunity

India's 2025 REE crisis was both a shock and a wake-up call. Despite holding the third-largest reserves globally, 6.9 million tonnes, Bharat imports nearly 93 per cent of its magnets from China. The six-month tightening of export exposed a critical national weakness. But out of this dependence has emerged a new urgency.

The government's proposed ₹7,300 crore Production-Linked Incentive (PLI) scheme aims to jumpstart domestic refining and magnet manufacturing.

They reflect ongoing initiatives under the National Critical Mineral Mission (NCMM) and Atmanirbhar Bharat framework, spurred by China's export curbs.

Key efforts are already underway:

IREL is expanding beach sand extraction in Kerala and Andhra Pradesh. KABIL JV (India, Australia, Argentina) is securing overseas mineral assets.

Export ban on raw monazite ores to China since 2019.

Yet, the road ahead remains steep. The PLI scheme targets an annual production capacity of 6,000 tonnes by 2030, but India’s domestic demand already stands at 4,010 tonnes in 2025 and is projected to double to 8,220 tonnes by 2030. Even if full capacity is achieved by 2028, it would meet only about 73 per cent of future demand. Without rapid scaling and parallel investments, India risks merely shifting its dependency from oil imports to magnet imports.

Geoeconomics is the new geopolitics

The rare earth saga has redrawn the boundaries between economics and strategy. Nations are no longer competing over land or ideology, but over who controls the invisible arteries of technology.

For China, rare earths are a leverage. For Bharat, they are both a challenge and a chance to assert sovereignty in a multipolar world.

Beijing's recent willingness to reopen the export tap, even with strings attached, underscores this shifting reality. It knows that dependence breeds influence. "Those who control the magnets control the machines; those who control the machines control the future.”

The Global Race to Break the Monopoly

New Delhi isn't alone in this scramble. The US, EU, Japan, and Australia are all racing to build their own supply chains:

MP Materials (US) is constructing a refinery in Texas, expected by 2028. Arafura's Nolans Project (NdPr oxide) is now targeting initial production by early 2028 with a ramp-up to steady-state by 2029. The EU has pledged €2.5 billion for critical mineral independence.But projections suggest that even by 2030, non-Chinese supply will meet less than 25 per cent of global demand. Breaking Beijing's grip will take massive investment, innovation, and political will.

New Delhi's Strategic Playbook for 2035

For Bharat, the 2025 deal with China may have been necessary, but it cannot be permanent. True sovereignty lies in controlling the whole supply chain — from ore to magnet. To get there, Bharat must:

Approve and expand the PLI scheme without delay.

Stockpile critical REEs for at least a 12-month buffer. Deepen QUAD partnerships with the US, Japan, and Australia for joint refining ventures. Invest in skill development, especially in chemical and process engineering. If implemented with urgency, these steps could make Bharat a regional refining hub by 2035 — reducing dependence and increasing bargaining power.

The Bigger Picture: Power Beyond Politics

The India–China rare earth deal is not just about trade; it is about control over technology, growth, and the future itself. As New Delhi learns to navigate this new reality, it must remember that military strength means little without a robust supply chain.

China's playbook demonstrates that a long-term vision outperforms short-term gains. The question for Bharat now is not whether it can secure enough minerals, but whether it can build the ecosystem to process, innovate, and lead. The clock to 2035 is ticking — and in this race, those who control the elements will shape the world.

(The author is Founder of My Startup TV)