China’s dominance in the global rare earth metals market comes with a heavy price—environmental devastation, human health concerns, and rising geopolitical tensions. These metals, critical to the world’s transition to green technologies and military advancements, are extracted and processed in ways that leave lasting scars on the land and its people.
The heart of China’s rare earth operations lies in regions like Bayan Obo in Inner Mongolia and Ganzhou in Jiangxi Province. These areas have suffered immense environmental damage due to decades of unregulated mining. Toxic waste ponds filled with radioactive thorium, heavy metals, and acidic sludge stretch for miles. Locals report poisoned groundwater, barren farmland, and health issues linked to chemical exposure. For every ton of rare earth metals extracted, China produces nearly 2,000 tons of hazardous waste.
Despite some recent regulatory efforts, cleanup remains inconsistent. Villagers living near these sites continue to endure the consequences of lax environmental policies of the past. In Baotou, one of the world’s largest processing hubs, a toxic tailings lake holds over 160 million tons of industrial slurry, threatening nearby communities.
China currently controls approximately 60–70% of global rare earth mining and nearly 90% of the processing. This dominance was not accidental but the result of decades-long strategic consolidation. Hundreds of small producers were merged into two state-run giants: China Northern Rare Earth Group and China Rare Earth Group. These companies now oversee output quotas, licensing, and technology, solidifying Beijing’s grip on the global supply chain.
This control gives China powerful leverage in global geopolitics. Export restrictions have been used in past diplomatic disputes, notably with Japan in 2010. In recent months, China imposed further restrictions on rare earth processing technologies, alarming Western governments who rely on these materials for electric vehicles, wind turbines, and advanced military systems.
In response, the United States, European Union, and allied nations are scrambling to reduce their dependence. New investments are flowing into rare earth projects in Australia, Brazil, Canada, and the U.S. The U.S. Department of Defense has backed MP Materials, the country’s only rare earth miner, to boost domestic processing and magnet production. The EU has passed legislation to accelerate the development of rare earth supply chains within its borders.
However, rebuilding capacity outside China is no simple task. The cost of extraction and processing is significantly higher in countries with strict environmental regulations. China’s lower production costs have long undercut competitors, and its continued control of overseas reserves, including operations in Myanmar guarded by allied militias, further complicates efforts to diversify supply.
The environmental cost of rare earth production raises ethical questions about the sustainability of the green energy transition. While these metals are essential for reducing carbon emissions, the pollution they cause in China contradicts global climate goals. Balancing the demand for clean technology with responsible sourcing and environmental protection remains one of the biggest challenges facing the international community.
As the world races toward electrification and digitalization, the demand for rare earth elements will only intensify. Whether the global community can break its dependence on China without replicating its environmental damage will be a defining issue of the coming decade.