"Rare Earth Elements: The New Battleground in the Competition for Hegemony and Weaponization of Resources" Report
As the US-China trade war reignites, rare earth elements are emerging not only as industrial materials but also as strategic assets and diplomatic bargaining chips. On October 9, after China announced plans to strengthen export controls on rare earths, US President Donald Trump immediately threatened an additional 100% tariff on Chinese products. Experts have advised that, given South Korea's complete dependence on rare earth imports, the country should diversify its supply sources and secure technologies for resource recycling in response to China's weaponization of rare earths.
On the 16th, Samil PwC announced the publication of its report, "Rare Earth Elements: The New Battleground in the Competition for Hegemony and Weaponization of Resources." The report examines the resource characteristics of rare earths, the current state of the global supply chain, and provides strategic direction for South Korea.
According to the report, rare earth elements are critical resources, often referred to as the "rice" or "vitamins" of high-tech industries, due to their complex mining and refining processes and the severe environmental pollution they cause, which limits global production sites. Rare earth permanent magnets are used in various electronic devices and electric vehicle motors, and rare earths are also essential for the development of next-generation technologies such as defense equipment-including fighter jets, submarines, and aircraft carriers-as well as humanoid robots.
In April, as retaliation for the US’s announcement of reciprocal tariffs, China imposed export controls on seven types of rare earths, reportedly causing production disruptions for US automakers and defense companies. The measures announced on October 9 expanded the scope of export controls to include products manufactured overseas using Chinese rare earths and related technologies. The report predicts that China will continue to use rare earths as a weapon to pressure the US in the ongoing trade war.
The report points out that China effectively controls the rare earth supply chain, and that South Korea, which relies entirely on imports, is not immune to the effects of resource weaponization. According to the US Geological Survey (USGS) and the International Energy Agency (IEA), as of 2024, China produced 270,000 tons of rare earths, accounting for 69% of global production, and more than 90% of global refining, representing an overwhelming share. Last year, South Korea’s imports of Chinese rare earth compounds and metals accounted for 61% and 80%, respectively. If export controls persist, there are concerns that South Korea’s key export items-such as semiconductors, electric vehicles, and batteries-could be directly impacted.
The report further diagnoses that it is necessary to diversify supply chains beyond China by forming alliances with other rare earth-rich countries such as India, China, and Vietnam. It suggests that incentives such as export financing and tax benefits should be established to encourage cooperation and local infrastructure investment with these countries. In addition, the report proposes a strategy to foster rare earth refining and processing sectors, providing solutions by supplying technology and equipment to overseas mining sites. By enhancing processing capabilities, South Korea could emerge as an important alternative partner amid the US-led trend toward de-Chinaizing supply chains.
The report also states, "In the long term, recycling technology for rare earths and the development of alternative materials will become key competitive advantages," advising that "given the limited nature of these resources, it is necessary to develop technological alternatives that either reduce rare earth usage or achieve similar performance with other elements."
Choi Sungwoo, partner of the Energy, Utilities, and Resources division at Samil PwC, said, "To accelerate the recycling and development of alternative technologies for rare earths, expanded government R&D support and active participation from companies are required," adding, "Particular focus should be placed on key rare earth elements directly linked to Korea’s main industries, such as semiconductors, batteries, and defense."
Detailed information on the report can be found on the Samil PwC website.
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