Mahnur Asim

Every few decades, a new commodity emerges around which the new global order reconstructs. The twentieth-century hierarchy of power was anchored in oil, where control over resources, transit routes, and institutions decided geopolitical dominance. The barrel wasn’t just fuel; it was leveraging. When the resource supplier ties the distributor or controller, it entrenched a system around itself.

For the next decade, it is assumed that rare earth minerals will hold the same structural position that the barrel holds today. Every electric vehicle, wind turbine, EV battery, and defense technology is bound to share an input, which is what makes rare earth elements a strategic chokepoint in the emerging order, somewhere nobody currently owns at all.

Oil is considered one of the major drivers of structural hegemony of the region by converting a resource into a geopolitical leverage. The US has the largest reserves, roughly around 46 billion barrels (Texas 20.2 billion barrels by 2024, New Mexico 4.3 billion barrels, North Dakota around 3.9 billion barrels, Alaska 3.1 billion barrels), controlled the most efficient extraction and refining technology, and the trade routes that moved barrels from the Gulf to the rest of the world.

After the oil embargo, Saudi Arabia agreed to deepen its economic and security relationship with the United States in 1974 (Petro dollar 1974), followed by OPEC countries. Any country buying barrels had to hold dollars first. This single agreement has a crucial role in making the US dollar a reserve currency and giving us leverage far beyond its own barrel count.

Analysts argue that the next era will belong to those who hold the rare earth elements found inside magnets, batteries, semiconductors, and defense systems. Possessing raw reserves does not guarantee structural power. In the realm of rare earth elements (REE), China commands true hegemony. According to the US Geological Survey 2026 estimates, China holds 44 million metric tons of rare earth reserves, accounting for roughly 40 percent of the global total. While its ultimate leverage lies in controlling the downstream processing and magnet manufacturing infrastructures.

China also produced 270,000 metric tons of rare earths in 2025, about 69 percent of all global production. Brazil comes next with around 21 million tons of earth reserves, but Brazil’s mining industry is still growing. India owns about 7 million tons; Australia has between 5 and 6 million tons. The US has just under 2 million tons. These numbers are a fraction of China’s rare earth base, even though many have talked about reducing dependence on China. Myanmar adds another dimension that rarely makes its way into official statistics: a large share of the heavy rare earths that feed China’s refineries come from informal, loosely regulated mining in Myanmar’s Kachin State.

Leverage isn’t the reserves themselves, but what happens after the ore leaves the ground. Raw rare earth ore is not very useful on its own. It has to be separated into individual elements through a chemical process which is expensive, polluting, and technically demanding. China has spent some 30 years building up its refining capacity, partly because the West did not want the environmental cost on its own soil and was happy to outsource it. That investment has now left China refining close to 90 per cent of the world's rare earths regardless of where they were originally mined. An Australian or Myanmar mine may be able to produce ore, and China has the power to make it valuable.

The Chinese rare earth industry didn’t just pop up out of nowhere; it has been evolving since 1950. Baotou Steel mined the country first rare earths  from the Bayan Obo deposit in 1958, and by 1961 the government had already installed extraction and separation plants there. Breakthrough came in the 1980s when researchers perfected an acid roasting process and a chain of solvent extraction steps tailored to the Baotou ore mix. Till 2000, China had sufficient capacity and refining sources, while Western refiners, including the US-owned Mountain Pass mine, began to fall out due to the environmental cost involved.

This doesn’t mean oil stops mattering or that rare earths simply replace it. The massive capital investments can’t be dropped overnight, leading towards massive economic instability. Bypassing the existing system never gives states geopolitical leverage. Oil decides who can move and produce; simultaneously, rare earths increasingly decide who can build the technology everyone else depends on.

Also Read: The Two Gates of Crisis: Fragility of Global Economy and Energy Shocks

 The US is not directly countering China in this, majorly due to a lack of investment and social responsibility of a developed state, but China till now hasn’t claimed to be a developed country. China will never break down the oil-based order just to attain power. It will create a parallel one where it holds the same kind of position the US held in oil for half a century, leaving the rest of the world catching up to what it means.

Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the official stance of The Himalayan Research Institute Pakistan (THRIP) 

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Mahnur Asim is a final year International Relations student at Government College University, Lahore. Her research interests include political economy, particularly the ways global economic shape both domestic and international policy.