MINERALS
Control of critical resources has historically shaped global power dynamics: oil defined the 20th century and rare earth elements (REEs) are increasingly defining the 21st.
Comprising 17 chemically similar minerals, REEs are essential to technologies ranging from renewable energy and electric vehicles to semiconductors, satellites and precision-guided weaponry. Global demand has surged, along with the geopolitical contest over access, processing and supply chain security.
China dominates the global rare earth elements sector, holding reserves of 44 million tons and accounting for nearly 85 per cent of worldwide production, processing and supply. This dominance has made even major economies -- most notably the US, which imports 80 per cent of its REEs from China -- heavily dependent on Beijing for critical inputs vital to high-tech and defence industries worth trillions of dollars. Although the US has initiated efforts to develop domestic capacity, including Pentagon-funded exploration projects, reducing reliance on China will take years.
Meanwhile, global demand for REEs is projected to rise from 140,000 tons in 2019 to 220,000 tons by 2025, at a 7.0 per cent annual growth rate, driven primarily by Asia-Pacific economies. While cerium and lanthanum are currently the most consumed, future demand will increasingly centre on neodymium, dysprosium and terbium, further reinforcing the strategic importance of REEs in the emerging global economy.
China accounts for approximately 70 per cent of global REE extraction and more than 85 per cent of refining capacity. Its dominance rests on three pillars: vertical integration, with complete control from mining to refining to downstream manufacturing; an overseas acquisition strategy, securing concessions in Africa, Latin America and Central Asia; and technological investment, advancing refining, recycling and exploring thorium as a potential nuclear fuel. Beijing has shown its willingness to leverage this dominance as a geopolitical tool. During disputes with Japan and the US, China restricted REE exports, signalling the potential to weaponise supply control. This has raised alarm among industrialised states whose advanced sectors depend heavily on steady access to these minerals.
The US retains a strong geological endowment but suffers from dependence on Chinese refining capacity. The Mountain Pass mine in California, once the world’s largest producer, has resumed operations under MP Materials, yet most ore is still shipped to China for processing. American vulnerabilities are threefold: limited refining capacity, as separation and processing technologies remain underdeveloped; environmental and cost pressures, since high compliance costs have historically deterred domestic refining; and strategic dependency, as industries critical to defence and innovation remain reliant on imports from China.
Efforts to reverse this dependence include federal investment in recycling technologies, strategic partnerships with Australia and Canada, and attempts to re-establish domestic refining capacity. Nonetheless, China’s entrenched position makes decoupling a long-term rather than an immediate prospect.
Pakistan is estimated to possess mineral reserves exceeding $50 trillion, with rare earth reserves alone potentially worth $6 trillion. Surveys conducted by the Geological Survey of Pakistan (GSP) and the Pakistan Atomic Energy Commission (PAEC) have highlighted significant occurrences in Chagai (Balochistan), with granitic and pegmatite complexes rich in thorium and uranium; Dir, Swat and Kohistan (Khyber Pakhtunkhwa), with REE-bearing granites and metamorphic complexes; Sindh and Balochistan coastal sands, which may contain monazite deposits similar to those in India and Sri Lanka; and the Himalayan and Hindukush belts, where igneous and metamorphic formations are linked to monazite, xenotime, and bastnäsite. Despite this endowment, Pakistan remains absent from the global REE supply chain. Weak regulation, lack of refining capacity, political instability, and security risks -- particularly in Balochistan -- have constrained development.
Pakistan’s mineral wealth is beginning to attract foreign interest. During COAS Field Marshal Asim Munir’s visit to Washington in June 2025, discussions reportedly included rare earth exploration and cooperation. While no formal agreements were signed, diplomatic sources suggest that preliminary frameworks were considered, including joint exploration with US companies, establishing refining and separation capacity within Pakistan and integrating Pakistan into US-aligned supply chains to reduce dependence on China. Such cooperation could mark a shift in Pakistan-US relations, broadening them from a traditional security focus to a strategic economic partnership. For Washington, this aligns with efforts to diversify REE sources. For Islamabad, it presents opportunities for investment, technology transfer and renewed strategic leverage.
Despite mineral reserves estimated at over $50 trillion in situ value in 2019 -- including metallic, fuel, industrial and gemstone resources -- Pakistan has struggled to capitalise on its potential. Exports of mineral fuels and related products amounted to only $500 million in 2018
Pakistan’s entry into the REE sector faces several constraints. Outdated mining laws, corruption and opaque licensing reflect serious regulatory weaknesses. Technological deficits further limit progress, with no domestic refining or processing capacity available. Security concerns, particularly insurgent activity in Balochistan, continue to pose a threat to mining projects. Geopolitically, Pakistan’s deep integration with China through CPEC complicates the possibility of closer alignment with American supply chains.
Despite mineral reserves estimated at over $50 trillion in situ value in 2019 -- including metallic, fuel, industrial and gemstone resources -- Pakistan has struggled to capitalise on its potential. Exports of mineral fuels and related products amounted to only $500 million in 2018. The failures of major copper-gold projects such as Saindak and Reko Diq highlighted these shortcomings, as the government eventually handed over national assets to foreign entities after years of mismanagement.
The reasons behind these failures include an inadequate legal and institutional framework, limited regulatory capacity at the national level, weak research and development facilities, a shortage of skilled workforce and modern technology, insufficient infrastructure such as electricity and transport and persistent security risks due to the remote locations of most mines. Unless these barriers are addressed, Pakistan risks perpetuating the cycle of low-value exports and strategic irrelevance.
Pakistan sits atop immense mineral wealth: copper and gold in the Tethyan Belt of Balochistan, lithium in Gilgit-Baltistan and rare earth elements critical for semiconductors and defence. Yet inconsistent policies, weak infrastructure, and security concerns have long hampered development. Recent reforms -- such as resolving the Reko Diq dispute -- signal Islamabad’s willingness to engage global investors.
For Washington, this is more than economics. China already dominates Pakistan’s infrastructure through CPEC and is securing mining contracts, while its thorium research promises to reshape global energy. The US, reliant on Chinese rare earths, urgently needs cost-effective alternatives. Pakistan offers both resources and a strategic location. However, American engagement will be transactional -- resources in exchange for capital, technology and jobs.
Pakistan now has leverage. It can demand better royalty structures, technology transfer and workforce participation. Yet it must also ensure regulatory stability, learning from past failures. Rather than relying on outdated geopolitics, Islamabad should present itself as an economic partner. In an era where resources define power, Pakistan has the chance to shift from bystander to stakeholder -- if it acts decisively before the window closes.
To unlock its potential, Pakistan must adopt a multi-pronged strategy. Modernising mining governance with transparent, investor-friendly policies is essential to attract foreign capital. At the same time, the country must develop refining and processing capacity by pursuing joint ventures with advanced economies to move beyond raw extraction. Investing in human capital and research is equally critical, requiring the development of a skilled workforce and the strengthening of universities in mineral sciences. Pakistan must also secure its mineral-rich regions by integrating development with security strategies, particularly in Balochistan. Finally, it will need to balance great power competition carefully, leveraging US interest in its resources without undermining its long-standing relationship with China.
Such steps would allow Pakistan not only to monetise its reserves but also to position itself as a credible player in a sector shaping future geopolitics. The contest over rare earth elements reflects a profound shift in global power politics. China has already established dominance, while the US is struggling to rebuild lost capacity.
Pakistan, though endowed with vast reserves, risks remaining a passive bystander unless it pursues bold reforms and strategic partnerships. The opportunity, however, is unprecedented: by modernising governance, developing refining capacity and carefully balancing its relations with both Washington and Beijing, Pakistan can transform its geological wealth into sustainable economic and strategic capital.
If Islamabad acts decisively, it will not only secure a stronger position in the global REE supply chain but also redefine itself as a strategic partner in shaping the future of 21st-century resource geopolitics.
The writer is a freelance contributor.