Rare earth elements have entered the public discourse because they underpin much of the technology we use daily and that we need to decarbonize the economy. In a very short time, they have gone from being virtually unknown to making headlines for their importance in industry, defense, and energy, and for the geopolitical tensions they trigger. The key is not that they are lacking on the planet, but that their extraction and especially their processing present bottlenecks. that influence price, availability, and security of supply.
This article gets straight to the point about their economic impact: what they are, why they matter, who controls the value chain, how all of this affects Spain, and what tensions are emerging between major blocs. We gather data, examples, and contrasting viewpoints to understand the combination of market, technology, regulations, and geopolitics. that defines the rare earth elements landscape.
What are rare earth elements and how do they differ from critical minerals?
The term "rare earth elements" refers to seventeen chemical elements located in the lower part of the periodic table: the fifteen lanthanides plus scandium and yttrium. For a more detailed explanation of what they are and their uses, see [link to relevant documentation]. what they are and what they are used for. Despite their name, they are not "rare" because of absolute scarcity, but because they rarely appear in concentrations sufficient for profitable extraction.Hence its technical and economic complexity.
It is important to separate concepts: critical or strategic minerals is a broader label that encompasses any raw material essential to the economy and with a risk of supply. All rare earth elements fit the definition of "critical," but not all critical minerals are rare earth elements.This includes, for example, lithium, cobalt, or copper, with their own supply and demand dynamics.
Furthermore, within rare earth elements, a distinction is usually made between the so-called "light" and "heavy" ones, categories associated with their chemistry and industrial uses. This division helps to understand why certain elements are especially valued for permanent magnets or displays, while others are geared towards more niche applications. in healthcare, defense, or lasers.
A detail that is not insignificant: a smartphone can contain dozens of chemical elements, including several rare earth elements, and a fighter jet can incorporate hundreds of kilograms of these materials. Technological interdependence is so high that a small bottleneck in a specific oxide can halt entire production lines. in electronics or automotive.
Applications, demand and the reason for its economic value
The “magic” of rare earths lies in their magnetic, optical, and electrochemical properties when combined with other elements. Neodymium and dysprosium, for example, allow the manufacture of high-power permanent magnets, the heart of electric motors and wind generators. that promote electrification and the energy transition.
Other rare earth elements such as europium and terbium are essential for displaying vivid colors on screens, while gadolinium and holmium find a place in advanced medical equipment such as MRI machines and lasers. The range extends from wireless headphones and industrial robots to defense and guidance systems, creating a cross-cutting and growing demand.
The global appetite for these elements has skyrocketed with the electrification of transport, digitalization, and renewable energies. There are estimates that place the growth of accumulated demand between 400% and 600% in the coming decadesespecially in segments such as magnets for electric vehicles or large wind turbines.
This pressure is reflected in prices and industrial planning. An illustrative example is neodymium-praseodymium oxide, whose value skyrocketed to around €60.000 per ton in a short period, reflecting the appetite for powerful magnets. In a market with few players in refining, price fluctuations can be abrupt, with a direct impact on costs and margins. from global manufacturers.
The substitution is limited. Partial alternatives exist for some functions, and research is being conducted on new materials with similar properties, but performance does not always match that of rare earth elements. Recycling still has a long way to go: only about 1% of these materials are recovered. at the end of the devices' useful life, so there is room to improve design, logistics, and separation technology.
Who controls the supply chain: China's leadership and its implications
Decades ago, China planned its position in the value chain, supporting mining, refining, and separation with a long-term vision. At different times it is attributed with around 60%-75% of world extraction and, above all, between 85% and 95% of processing, the real bottleneck that gives power over prices and availability.
The combination of economies of scale, subsidies, and historically more lax environmental regulations than in the West consolidated that advantage. Today, the Chinese industry operates separation plants with solvent extraction technologies that analysts describe as "a generation ahead" of competitors.This strengthens its competitiveness in terms of cost and product purity.
This leadership is complemented by an active policy of quotas, controls, and strategic stockpiling, which can be extended to other critical materials used by the semiconductor industry, such as gallium, germanium, or antimony. In 2024, restrictions on the export of some of these items were strengthened., a reminder of how economic and technological security are intertwined with supply chains.
In parallel, significant innovations have been documented within the mining industry itself. Recent research in China reports a field-assisted method with high recovery rates and lower energy consumption, as well as reduced emissions of compounds associated with leaching. If these improvements are consolidated on an industrial scale, the technological gap in extraction and refining could even widen. during years.
For Western companies, access to Chinese materials may require requests detailing end use and processes, with uncertain response times. This context makes production planning difficult in sectors such as automotive or electronics and adds tension to two sensitive areas: the military industry in the United States and the European automotive industry., especially vulnerable in technological transition cycles.
The US, the EU and the race to rebalance supply
The United States went from having significant production during the Cold War to seeing mines close in the 1990s due to environmental costs and price competition. In recent years, the response has accelerated. Executive Order 13817 recognized the critical nature of 35 raw materials, including rare earth elements, and activated measures to expedite exploration, processing, and financing.as well as seeking alliances with Australia and Canada.
The next phase has combined incentives, tariffs in the trade war with China, and cooperation with partners. The so-called Minerals Security Partnership, launched in 2024 with about fifteen countries, aims to support projects that secure essential materials for the technology industry., from mining to refining and component manufacturing.
Politics also plays a role. Motives have been considered ranging from interest in Greenland for its strategic value and resources, to pressure to secure mineral rights in wartime contexts. In the case of Ukraine, proposals and counter-offers with multimillion-dollar figures and claims for access to resources have circulated, while the EU emphasizes “mutually beneficial” formulas. to secure critical European materials.
However, even with new mines in operation, the consensus is that simply opening deposits is not enough. Without separation and refining plants, and without associated industrial capabilities, real autonomy is not achieved.And therein lies the Chinese advantage in setting paces and prices for a good number of years.
Spain: geological potential, projects and obstacles
Spain presents both opportunities and dilemmas. In Castilla-La Mancha, the Campo de Montiel area contains monazite deposits with neodymium, known from the Matamulas project. Initial estimates point to approximately 29,9 million tons of monazite, a volume that, according to some analyses, could cover up to a third of the annual European need. of certain compounds if the value chain were completed.
However, in 2018 the Junta de Castilla-La Mancha rejected the project due to its high water consumption and the potential impacts on protected species such as the Iberian lynx or the imperial eagle. The case symbolizes the clash between industrial ambition and environmental safeguards which is repeated in other communities.
In Galicia, the Monte Galiñeiro case has been suspended despite its geological interest, largely due to environmental sensitivities and local opposition. Similar tensions are detected in Extremadura and Andalusia, and especially in the Canary Islands.where studies indicate valuable resources in areas with high natural and tourist value.
In the archipelago, there has been talk of several million potential tons, equivalent to around 1,5% of world reserves, although much of it would be located in sensitive areas. Access to resources on islands with fragile ecosystems and high dependence on tourism requires extreme caution in risk assessment., social costs and benefits.
In parallel, the Mineral Raw Materials Action Plan 2025-2029 in Spain aims to boost extraction and processing with sustainability criteria, pending its final processing. The challenge is twofold: to attract investment for a national chain and, at the same time, to respond to environmental demands and the expectations of local communities..
Costs, social opposition and the “not in my backyard”
Rare earth mining requires high investments in exploration, extraction and, above all, in separation plants, with strict environmental controls. Competing against players with lower industrial costs and gigantic scale complicates the economic viability of European projectsespecially when all regulatory requirements are internalized.
Added to this is the social factor. In many areas, the well-known NIMBY effect emerges: the need for magnets for wind power or metals for electronics is accepted, but the idea of locating a mine or processing plant nearby is rejected. Without channels for participation, tangible benefits for the territory, and strong environmental guarantees, rejection often blocks projects. in early stages.
Local, regional and state administrations are at the center of that balance. The goal is to facilitate responsible mining, provide legal certainty, and ensure a return in employment and wealth for the surrounding area.without relaxing environmental standards or undervaluing biodiversity or water in water-stressed regions.
Environmental impact: from the subsoil to the refinery
The environmental impact of rare earth elements depends on the type of deposit and the process used. Some mines barely scratch the surface, while others require drilling to depths of hundreds of meters. Separation processes can generate waste and emissions that, if mismanaged, damage soil, water, and health.which explains the regulatory sensitivity in Europe.
In fact, emissions from certain processes have been compared with those from steel manufacturing, showing that not all the environmental cost lies "in the mine". The refining link is as critical, or even more critical, than extraction.And that's why industrial capabilities make a difference in compliance, footprint, and final price.
To reduce environmental pressure, three complementary approaches are being explored. First, recycling devices and components with high rare earth content, improving sorting and separation. Second, eco-design to use less material per unit of product without sacrificing performance. Third, the search for alternative materials with similar properties, such as iron and nickel alloys investigated for their magnetic performancealways with caution due to its state of maturity.
Map of world reserves and production
On a global scale, China is estimated to lead the reserves with tens of millions of tons, followed by Vietnam, Brazil, Russia and India. In Europe, a recent discovery in Norway has stood out, exceeding one and a half million tons.This is good news for reducing dependencies if the local value chain thrives.
In terms of production, China leads by a wide margin, followed by Australia, Thailand, Russia, and Madagascar. The European Union starts from very low extraction levels and virtually no refining capacityThis explains the strategic urgency to recover links in the chain.
In Spain, beyond Matamulas, there are expectations in Galicia, Castilla-La Mancha, Andalusia or Extremadura. But without a robust environmental assessment and an industrial roadmap that includes separation and processing, the opportunity will fall short., with the risk of exporting concentrates and re-importing added value.
Geopolitics in action: constraints, rivalry and standards
Geopolitics acts as a multiplier of supply risk. China has occasionally used restrictions on exports of sensitive materials, with immediate effects on Western industries. For Europe, the automotive sector is especially vulnerable; for the United States, the military and aerospace sector. feel the pressure more intensely.
Added to this scenario is the competition to secure rights over deposits and refining chains. The United States and the European Union are seeking agreements with third countries, particularly Ukraine, while Moscow is emerging with sales offers from occupied territories., a complex context fraught with legal and ethical implications.
In this tug-of-war, setting environmental and social standards can become a competitive advantage in the medium term. Those who manage to produce with a smaller footprint, reliable traceability, and regulatory certainty will have preferential access to clients who want to decarbonize their supply chains.even if the initial cost is higher.
Market and outlook: prices, innovation and resilient supply chains
The global rare earth market has grown strongly, and analysts project double-digit expansion rates over the next decade, driven by consumer electronics, electric vehicles, and renewable energy. Permanent magnets account for a large part of the incremental demand, accompanied by catalysts, screens and high-tech uses.
At the same time, innovation in extraction, separation and recovery processes is emerging as a key way to lower costs and reduce impacts. Methods that improve energy efficiency or chemical selectivity and new recycling techniques can alleviate the bottleneck if they scale up quickly and with financial support.
One lesson this decade teaches us is that the mine alone does not guarantee independence. Without local refining, long-term agreements with manufacturers, and dedicated R&D capabilities, value capture is lost.Rebalancing the supply chain requires sustained investment, public-private collaboration, and clarity on permits.
How does Spain fit into the new chessboard?
For Spain, rare earths are part of a broader industrial strategy: green reindustrialization, European strategic autonomy and territorial cohesion. The priority is to rigorously evaluate projects with potential, listen to communities, and mobilize funding if the environmental and social accounts are positive., including rehabilitation and post-closure monitoring.
In resource-rich areas, the benefits should be tangible: skilled employment, local suppliers, infrastructure, and training. Building separation and refining capabilities would be a qualitative leap that would allow us to supply the ceramics, glass, and electromobility industries. without being completely dependent on external factors.
Because of its location, Spain can be a bridge between Europe and Latin America for critical raw materials, and a testing ground for responsible mining in the Mediterranean environment. With territorial planning, demanding standards and robust logistics chains, the “made in Europe” label for rare earth elements can cease to be an aspiration. and become a competitive advantage.
Rare earth elements encapsulate the tension of our time: electrifying and digitizing the world faster without neglecting nature or social cohesion. In a market dominated by China in extraction and, above all, refining, Europe and the United States are accelerating the development of alternatives but still lag behind. Spain has resources, concrete cases under evaluation, and a society that demands environmental awareness; if it manages to align investment, permits, and social acceptance, it can turn a geological opportunity into industrial value. and resilience for its economy.
