In an era defined by digital innovation and geopolitical rivalry, rare earth elements (REEs) have emerged as linchpins of global power. From smartphones and solar panels to advanced weaponry and electric vehicles, these minerals underpin critical technologies – placing them at the centre of an intensifying contest between global powers.
China’s strategic leverage
In late 2024, China tightened export controls on gallium, germanium, and antimony – key materials used in semiconductors and green technologies. By requiring export licenses, Beijing signalled its readiness to wield resource dominance as geopolitical leverage.
China further escalated tensions by restricting the export of rare earth processing technologies, exacerbating supply vulnerabilities for countries dependent on Chinese refineries. With nearly 60% of global REE production and over 85% of global processing capacity, China enjoys near-monopoly status. This has allowed Beijing to deploy its rare earth dominance as a powerful bargaining chip in disputes over trade, Taiwan, and the South China Sea.
China’s actions serve a dual purpose: consolidating its industrial competitiveness while weaponising economic interdependence. By controlling the tap of critical minerals, China can subtly shape global supply chains and foreign policy alignments, especially in regions where rare earth-dependent manufacturing is central to economic strategy.
America’s supply chain reset
Despite possessing rare earth reserves, the US imports nearly 80% of its supply, mostly from China. This dependency has triggered a wave of domestic and international responses to secure alternative sources. America recognises that national security, green transition, and technological innovation hinge on reliable access to critical minerals.
Key US measures include:
- Expanding MP Materials’ operations at Mountain Pass, California, the only active rare earth mine in the US
- Launching the Round Top Project in Texas, focusing on heavy rare earths essential for magnets, defense systems, and EVs
- Utilising the Defense Production Act, along with tax credits and subsidies, to attract private investment.
- Forging partnerships with Australia and Canada, which boast significant REE deposits and political alignment with Washington
- Investing in recycling and circular economy initiatives, to reduce future dependence on virgin mining.
The Pentagon has also categorised rare earths as “essential for national defense,” underscoring their role in missiles, stealth fighters, radar systems, and night-vision equipment. In this light, rare earths are not just economic commodities, but strategic imperatives.
The Indo-Pacific theatre: Beyond China and the US
While the spotlight often rests on Sino-American dynamics, the Indo-Pacific region – and South Asia in particular – is emerging as a potential theatre in the rare earth saga. Nations such as India, Vietnam, and Malaysia are ramping up exploration and refining capacities, often supported by Western financing.
India, with its deposits in Andhra Pradesh and Odisha, has partnered with Australia and Japan to scale up REE extraction and build domestic refining capability. New Delhi’s aim is twofold: reduce import dependency and offer the world an alternative supply chain resilient to geopolitical coercion.
Through recycling, R&D, and diversifying imports as well as by facilitating a regional market for rare earth minerals, the dependence on the Chinese supply chain can be reduced.
— The Diplomat (@Diplomat_APAC) May 21, 2025
Gilgit-Baltistan: A quiet contender
Nestled in the northern reaches of Pakistan, the Gilgit-Baltistan region hosts REE-bearing minerals such as bastnäsite and monazite. Found in areas like Skardu, Astore, and Gilgit, these deposits are promising but vastly underexplored. A mix of rugged terrain, high-altitude logistics, and outdated geological mapping has delayed systematic mineral exploitation.
Strategically, Gilgit-Baltistan holds potential to:
- Reduce global dependence on dominant suppliers like China
- Offer Pakistan a rare chance to diversify its exports beyond textiles and rice
- Contribute to the global clean-tech ecosystem by supplying critical inputs.
However, these opportunities are tempered by political and security constraints. The region’s disputed status between India and Pakistan, environmental fragility, and local discontent over governance limit the scope for foreign investment and large-scale mining.
Balochistan: Potential amid volatility
Balochistan’s mineral wealth is no secret. Districts like Muslim Bagh and Khuzdar are known for chromite, but recent studies have indicated the presence of heavy REEs such as dysprosium and terbium—crucial for wind turbines, lasers, and missile systems.
Yet, mining in Balochistan is marred by insurgency, lack of infrastructure, and deep-rooted mistrust between local communities and federal authorities. Any meaningful extraction will require:
- Security guarantees and political reconciliation
- Transparent revenue-sharing agreements with local stakeholders
- Modern geological surveys and environmentally sensitive mining practices.
If handled judiciously, Balochistan could evolve into a globally significant REE and critical mineral hub. But failure to address local grievances risks igniting further instability, undermining both economic and strategic ambitions.
US eyes Pakistani resources
In April 2025, a senior US delegation visited Pakistan to explore investment opportunities in its underutilised mineral sector, with a focus on lithium and rare earths. The Export-Import Bank of the United States is reportedly assessing financing for projects like Reko Diq, managed by Barrick Gold, and smaller exploratory ventures in Gilgit-Baltistan and Balochistan.
This outreach is not altruistic. It is a calibrated move to:
- Secure alternate sources of rare earths and battery minerals
- Counter Chinese investments under CPEC
- Recalibrate America’s strategic footprint in South Asia after the Afghanistan withdrawal.
IMF Loan and strategic tensions
In May 2025, the IMF approved a $1 billion loan for Pakistan, with an additional $1.4 billion allocated for climate resilience. Officially aimed at economic stabilization, the loan reportedly came with discreet diplomatic riders – including a ceasefire with India and curbs on cross-border militant activity.
India abstained from the IMF vote, citing concerns that such funding, if unmonitored, could be diverted to support state-backed militancy or defense spending. This abstention, symbolic yet pointed, highlighted the risk of global financial tools being co-opted into regional power games.
Why Pakistan’s stability matters
For Washington, a stable Pakistan ensures:
- Nuclear security and control over fissile material
- Counterterrorism coordination, especially against Al-Qaeda remnants and regional offshoots
- A buffer against Chinese monopoly, especially in the mineral and energy domain.
For Beijing, Pakistan’s internal coherence protects:
- The integrity and flow of CPEC
- Access to Gwadar Port, offering China maritime flexibility
- The Xinjiang security perimeter, where separatism could be inflamed by regional instability.
Thus, Pakistan becomes more than just a bilateral partner – it is a strategic hinge in the broader balance of global mineral politics.
Conclusion: Resources and rivalries
Rare earths have become modern strategic assets, as crucial as oil once was. As the US and China entrench their mineral diplomacy through domestic initiatives, foreign investment, and covert manoeuvring, the contours of global alliances are being reshaped.
For Pakistan, especially Gilgit-Baltistan and Balochistan, this represents both a rare opportunity and a complex test: can it walk the tightrope of external engagement, internal security, and environmental sustainability to emerge as a responsible player in the global rare earth supply chain?
Only time – and policy – will tell. But one thing is clear: in the new world order, whoever controls the minerals will influence the machines, the markets, and the might of nations.
Read more: India Pakistan conflict 2025: Seeking clear direction in the fog of war
