Got a pair of these? There's more to them than meets the eye - and it may mean global trade war

For most of human history, no one paid all that much attention to the 17 rare earth elements.

An obscure suite of elements that sit in their own corner of the periodic table, they were mostly renowned among chemists and geologists for being tricky and fiddly - incredibly hard to refine, but with chemical facets that made them, well… interesting.

Not so much for a single thing they did by themselves, but for what they did in conjunction with other elements.

Added to alloys, rare earths can make them stronger, more ductile, more heat-resistant, and so on. Think of them as a sort of metallic condiment: a seasoning you add to other substances to make them stronger, harder, better.

The best example is probably neodymium. On its own, there's nothing especially spectacular about this rare earth element. But add it to iron and boron, and you end up with the strongest magnets in the world. Neodymium iron boron magnets are everywhere.

If you have a pair of headphones or earbuds, the speakers inside them ("drivers" is the technical term) are driven by these rare earth magnets.

If you have a pair of Apple AirPods, those magnets aren't just in the speakers; they're what's responsible for the satisfying "click" when the case snaps shut.

Rare earth magnets are in your car: in the little motors that raise and lower the windows, inside the functioning of the airbag and the seat adjustment mechanism.

And not just the little things. Most electric vehicles use rare-earth magnets in their motors, enabling them to accelerate more efficiently than the old all-copper ones.

More sensitively, from the perspective of Western governments, in the military, there are tonnes of rare earths to be found in submarines, in fighter jets, in tanks and frigates. Much of this is in the form of magnets, but some is in the form of specialised alloys.

So, for instance, there is no making a modern jet engine without yttrium and zirconium, which, together, help those metallic fan blades withstand the extraordinary temperatures inside the engine. Without rare earths, the blades would simply melt.

Yet the amount of this stuff we mine from the ground each year is surprisingly small.

According to Rob West of Thunder Said Energy, the total size of the rare earth market is roughly the same as the North American avocado market. But, says West, those numbers underplay its profound importance.

"Buyers would likely pay over 10-100x more for small but essential quantities of rare earths, if supplies were ever disrupted," he says.

"You cannot make long-distance fibre cables without erbium. You cannot make a gas turbine or jet engine without yttrium."

China's dominance

In short, these things matter. And that brings us to the politics.

Right now, about 70% of the world's rare earth elements are mined in China.

Roughly 90% of the finished products (in other words, those magnets) are made in China. China is dominant in this field in an extraordinary way.

This is not, it's worth saying, for geological reasons.

Contrary to what the name suggests, rare earth elements aren't all that rare. Pull a chunk of soil out of the ground and there will be trace amounts of most of them in there.

True: finding concentrated ores is a bit harder, but even here, it's not as if they are all in China.

There are plenty of rich rare earth ores in Brazil, India, Australia, and even the US (indeed, the Mountain Pass mine in California is where rare earth mining really began in earnest).

Low cost of Chinese rare earths

The main explanation for Chinese dominance is that China has simply become very good at extracting lots of rare earths at relatively low cost.

According to figures from Benchmark Mineral Intelligence, the prevailing cost of Chinese rare earths is at least three times lower than the cost of similar minerals refined in Europe (to the extent that such things are available).

At this point, perhaps you're wondering how China has managed to do it - to dominate global production at such low prices.

Part of the explanation, says West, probably comes down to "transfer pricing" - in other words, China being China, refiners and producers are probably able to buy raw materials at below market prices.

Another part of the explanation is that refining rare earth ores is phenomenally energy and carbon-intensive.

Most European and American firms have pulled out of the sector because it is hideously dirty.

Such qualms are less of an issue in China, especially since most of their mines, including the biggest of all, Bayan Obo in Inner Mongolia, are hundreds if not thousands of miles from the nearest city.

Energy costs are less of a constraint in a country whose grid is still built mostly on a foundation of cheap thermal coal.

Add it all up, and you end up with the situation we have today: where the vast majority of the world's rare earths, that go into all our devices, come from dirty mines in China, produced at such a low cost that device manufacturers are happy to put them anywhere.

Anyway, that brings us to the politics.

Global trade war flaring up again

In recent months and years, China has periodically introduced controls on rare earth exports.

Last week, it announced the most serious rule change yet, essentially insisting that anyone using Chinese rare earths would have to apply for a licence from them.

It has been seen, in Washington at least, as a declaration of economic war, and, in response, Donald Trump has announced a fresh set of tariffs on China.

In short, the global trade war seems to be flaring up all over again.

Where this ends up is anyone's guess. Tim Worstall, a former scandium expert who has been in and out of the rare earths sector for decades, suspects China might have overplayed its hand.

"The end result here is that there can be two outcomes," he says.

"A: The entire world's usage of rare earths is mapped out in detail, end uses, end users, quantities, and times for the Chinese state and depends upon their bureaucracy to administer.

"B: The plentiful rare earths of elsewhere are dug up, and the supply chain is rebuilt outside China.

"My insistence is that B is going to be the outcome, and it'll be done, intervention or no."

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In practice, the new rules may simply represent an element in China's trade negotiations with the US.

So it's hard to know whether they, or for that matter America's 100% extra tariffs, will ever really bite.

Either way, it's yet more evidence of the rocky road the global economy remains on.

(c) Sky News 2025: Got a pair of these? There's more to them than meets the eye - and it may mean global trade war