As the green energy revolution continues to progress and gain traction in Europe, the United States, and China, there is a noticeable surge in the demand for rare-earth metals (REMs), which are among the vital building blocks for clean energy technology. The 17 elements that make up REMs, also known as rare-earth elements, are lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium, and yttrium. Countries are actively seeking to acquire these vital resources, leading to a competitive race among nations.
The term “rare-earth elements” was first attributed to these compounds when they were discovered during the 18th and 19th centuries. At the time, “earths,” was a designation used to describe materials that displayed resistance to further modification when subjected to heat. In contrast to other types of earth materials, such as lime or magnesia, these “rare earths” were discovered to be rather limited in abundance.
Despite their current prevalence in comparison to their historical availability and application, the perceived scarcity of these resources is assessed and established based on the level of competition surrounding them. Although most REMs do not exhibit the level of scarcity that their classification implies, they are now essential to modern technology and lifestyles.
Moreover, the concentrated and economically feasible deposits of REMs are far less prevalent, rendering their identification and extraction more challenging.
REMs occupy a pivotal role in a diverse array of items that are integral to the continuous shift toward sustainable energy. From solar photovoltaic (PV) plants, wind farms, and electric vehicles to electric networks, battery storage, and hydrogen, REMs are indispensable to producing these systems and instruments. REMs also serve a vital role in the production of various goods that are integral to numerous aspects of society and daily life. These goods encompass a wide range of items, from guided missiles to items used by civilians around the world: hybrid and electric vehicles, flat-screen televisions, computer monitors, smartphones, and digital cameras, as well as fluorescent and light-emitting diode (LED) lights.
Some items require a significantly higher quantity of REMs compared to others. On average, an electric vehicle (EV) requires six times the number of REMs compared to a conventional internal combustion engine vehicle. In contrast to a conventional automobile, which necessitates approximately 25 kilograms of copper and approximately 10 kilograms of manganese, an EV uses more than 50 kilograms of copper, roughly 45 kilograms of cobalt, more than 50 kilograms of graphite, and double the quantity of manganese. Within the realm of renewable energy technologies, an offshore wind system necessitates the use of 100 kilograms of copper and 75 kilograms of zinc.
Thus, as nations go deeper into the green energy revolution, there is an increasingly significant need for these minerals. According to a report titled “The Role of Critical Minerals in Clean Energy Transitions” by the International Energy Agency (IEA), since 2010, the average quantity of minerals required for the establishment of a new unit of power generation capacity has grown by 50 percent, coinciding with the increasing proportion of renewable energy sources in new investments. According to the IEA, the transition toward a clean energy system is expected to result in a substantial surge in the demand for certain minerals. Therefore, the energy sector is emerging as a significant influencer in mineral markets.
As the IEA noted, “our bottom-up assessment suggests that a concerted effort to reach the goals of the Paris Agreement (climate stabilization at ‘well below 2°C global temperature rise’…) would mean a quadrupling of mineral requirements for clean energy technologies by 2040.”
To achieve a more expeditious global transition toward achieving net-zero emissions by 2050, it will be necessary to increase mineral inputs in 2050 by a factor of six compared to the present. The positive aspect is that, notwithstanding the implications of their nomenclature, these minerals are abundant and may be readily obtained in significant volumes. But while these resources are abundant in terms of quantity, their deposits are only present in specific regions. Undoubtedly, a cursory examination of the primary locations for extraction, processing, and production reveals a restricted geographic distribution.
As a result, a handful of nations have a significant influence on the mining of REMs and associated minerals, including lithium, cobalt, and nickel. According to IEA data from 2022, the U.S., Russia, and Saudi Arabia dominated the extraction of fossil fuels, specifically oil and natural gas. Only a small number of nations engage in mineral extraction, including Chile for copper, Indonesia for nickel, the Democratic Republic of the Congo for cobalt, China for REMs, and Australia for lithium.
In terms of processing, the United States, Qatar, China, and Saudi Arabia were the principal entities engaged in the processing of fossil fuels, specifically in the areas of oil refining and liquefied natural gas (LNG) exports, while China held a prominent position in the processing of various minerals, including copper, nickel, cobalt, lithium, and REMs.
When observing the processing phase, it is evident how significant China’s dominance in this sector is. It controls 60 percent of the extraction of REMs and 90 percent of their processing. China has been the dominant supplier of REMs to the global market, accounting for around 85–95 percent of the total supply since the late 1990s.
The extraction of REMs in China has traditionally been conducted via subterranean mining within the country. However, this practice has resulted in adverse impacts on China’s environment. Beijing is seeking alternative sources of REMs, including in the South China Sea.
The South China Sea region has garnered significant interest mostly because of the strategic importance of the manmade islands and assets located there, as well as the substantial volume of trade, amounting to trillions of dollars, that traverses the disputed waterway annually. China has exhibited a growing interest in the South China Sea, demonstrating a strong determination to assert its maritime and territorial claims in the area.
Adding to the geopolitical significance, the subaquatic terrain in this region holds a vast abundance of REMs.
Cementing its authority over the South China Sea would ensure China’s current dominance in the market and production of REMs while avoiding further environmental damage to the Chinese mainland. In contrast to regions such as Central Africa, which not only are located at a considerable geographical distance from China but also entail distinct security challenges, the South China Sea emerges as a compelling reservoir of REMs.
In the South China Sea, the tempo of deep-sea exploration and extraction is accelerating. A lack of essential regulatory frameworks to protect shared interests, national sovereignty, and the environment exacerbates competition over REMs in the region. These three considerations are seen as less important for nations aiming to either preserve their dominance in extraction and processing (like China) or for nations contemplating the potential of challenging such monopolies by other governments.
Significant advancements in renewable energy and eco-friendly technologies have prompted states to seek control over REMs. As China strives to maintain its near-monopoly position, there is evidence that Chinese agents are working to undermine Western corporations. These developments have subsequently facilitated the intensification of rivalry, establishing the foundation for prospective conflicts and potentially military involvement. China and the United States are anticipated to experience the most intense competition over critical resources. But they are not the only players involved.
Across Southeast Asia, governments are attempting to set themselves up as hubs for crucial green technology, including electric vehicles. Many of these same nations – Malaysia, the Philippines, Indonesia, and Vietnam – have claims to economic rights within the South China Sea that overlap with each other and with China. The race to develop new sources of REMs to set up domestic industries for success could see repeats of past incidents where deep-sea exploration efforts sparked tense standoffs between Chinese and Southeast Asian vessels.
The South China Sea is not the only site of geopolitical contest linked to maritime mineral wealth. The Pacific Ocean, which encompasses over 30 percent of the Earth’s surface, harbors significant mineral resources, offering states the opportunity to acquire a competitive edge through exploration and extraction activities.
The governments of the Cook Islands, Kiribati, Nauru, and Tonga have allocated funds for exploratory expeditions aimed at identifying and assessing key mineral deposits inside the Clarion-Clipperton Zone (CCZ). This zone is situated in the depths of the ocean, extending over an expansive area of approximately 4.5 million square kilometers, located to the west of Mexico and to the east of the Hawaiian Islands.
The advancement of underwater mining technology, which is crucial for extracting mineral resources from inaccessible locations, is now restricted to a select few states possessing the necessary resources and financial capabilities to undertake such endeavors. However, the pace of extraction in this region, which is characterized by high biodiversity, is experiencing a rapid increase.
Given the abundance of resources and the unregulated nature of a large portion of the ocean, deep-sea mining using remotely operated vehicles (ROVs) appears to be a viable alternative to locating new sources close to societally significant areas. However, public opposition has already emerged and is likely to grow. Nonetheless, as the ability to extract valuable resources from these areas increases, so too will geopolitical competition for influence with the Pacific Island states that control these areas.
Whether in the South China Sea or the Pacific Ocean, it is evident that the extraction of REMs from the ocean floor could become another source of contention between nations. The introduction of this factor would pose an additional potential geopolitical risk to a region that is already burdened with a multiplicity of geopolitical challenges that currently lack viable remedies.