In an era defined by supply chain volatility, geopolitical friction, and the race for technological supremacy, the global demand for rare earth elements (REEs) has taken on strategic urgency. Following China's latest move to impose export controls on a host of critical rare earth materials—minerals integral to advanced electronics, electric vehicles, and defense systems—the West has been forced to accelerate its search for reliable alternatives. Enter Canada: a nation with vast mineral reserves, a robust mining heritage, and the potential to challenge China's rare earth monopoly—if it can overcome significant hurdles.

China's Export Controls Reshape the Strategic Minerals Market

In early 2025, Beijing intensified its grip on global supply chains by halting exports of six rare earth elements and high-performance rare earth magnets. These are not obscure metals—they are indispensable for high-value technologies in automotive manufacturing, renewable energy, robotics, and military defense.

China’s dominance is no accident. The country currently accounts for 90% of global rare earth processing and nearly 60–61% of total production. With this move, China is effectively weaponizing its market control, forcing countries reliant on these imports to either accept delays and price hikes or develop alternative domestic and allied supply chains.

The United States and European Union are particularly exposed. They depend on Chinese suppliers not only for raw materials but also for the processing capacity that transforms mined concentrate into usable compounds.

Canada's Promise: Reserves, Reputation, and Responsibility

Canada’s potential as a counterweight to China rests on three pillars: its abundant mineral wealth, its globally respected mining tradition, and its commitment to environmental and regulatory integrity.

While Canada has the largest known reserves of certain rare earth elements in North America, its output remains relatively modest. The country has only recently begun to build processing capacity. In 2024, Canada inaugurated its first commercial-scale rare earth processing facility in Saskatchewan—marking a pivotal step toward vertical integration in the critical minerals space.

But progress is slow. Lead times of 10–15 years for developing new mines and refineries are standard, due to complex permitting, environmental assessments, and infrastructure needs. Canada’s mining tradition may be long-standing, but in the realm of rare earths, it is still finding its footing.

The China-Canada Paradox: Foreign Influence in Domestic Resources

Ironically, even as Canada positions itself as a strategic alternative to China, it must contend with Chinese state-owned firms holding stakes in several Canadian mining ventures. This foreign influence extends to cesium and lithium processing, with materials often shipped back to China for refining—a practice that undermines Canada’s goal of establishing a self-reliant supply chain.

The Canadian government has begun pushing back, tightening foreign investment rules in critical minerals sectors and seeking to reduce exposure to geopolitical adversaries. However, disentangling legacy partnerships will take time—and resolve.

Rare Earth Elements: Why They Matter and Why They're Hard to Replace

Rare earth elements are the backbone of 21st-century technologies. Comprising 17 metals like neodymium, praseodymium, dysprosium, and terbium, they are key inputs in permanent magnets, lasers, semiconductors, wind turbines, and military-grade components.

The processing of REEs is notoriously energy-intensive, chemically hazardous, and environmentally challenging. China’s advantage isn’t just scale—it’s that it has developed cost-effective methods, often under less stringent environmental rules, and built vertically integrated systems that dominate every step from extraction to finished product.

Canada’s path, by contrast, is more environmentally conscious but slower and costlier—often making it uncompetitive unless underwritten by government support or strategic necessity.

Strategic Risk or Economic Catalyst? Global Repercussions of China's Leverage

China’s control of the REE supply chain gives it immense strategic leverage. By manipulating exports, Beijing can effectively disrupt production lines in the West’s tech and defense sectors—a move with economic and national security implications.

While these tactics give China short-term bargaining power, they have a longer-term downside: they prompt rival nations to accelerate diversification efforts. Already, countries like Canada, Australia, and members of the EU are investing in domestic mining, refining, and stockpiling.

But those initiatives are expensive and slow to yield results. In the interim, Western companies may need to rely on recycled materials, substitute technologies, or strategic reserves to cope with shortages.

Canada’s Mountain to Climb: Eight Key Challenges

Despite its promise, Canada faces structural, logistical, and market-based hurdles in scaling up rare earth production. These include:

Lack of Processing Infrastructure: Canada lacks sufficient domestic facilities for the separation and refining of heavy REEs, forcing reliance on foreign refineries.

Technical Complexity: Canadian deposits are mainly hard-rock ores—more costly and complex to process than China’s clay-based sources.

High Upfront Investment: The financial risk of rare earth projects has made private capital wary. Government support is crucial.

Global Market Volatility: REE prices are erratic and China’s cost advantage puts competitors at a disadvantage.

Regulatory Burdens: Canada’s environmental safeguards, though commendable, lengthen timelines and inflate costs.

Indigenous Engagement: Many mining sites are located near Indigenous lands, requiring thoughtful and mutually beneficial partnerships.

Supply Chain Gaps: Canada lacks downstream manufacturing capacity for REE-based products, like magnets and batteries.

Long Project Timelines: New mines and refineries typically take a decade or more to bring online.

Canada vs. China: A Comparative Snapshot

Bottomline: A Critical Inflection Point and Time for Change for North America and Europe

Canada stands at a crossroads. It has the geological assets, institutional knowledge, and political will to become a global leader in rare earths—but not yet the infrastructure, speed, or cost advantage needed to compete with China. For now, its role will be that of a strategic supplement, rather than a substitute.

Nonetheless, China’s aggressive use of rare earth dominance as a geopolitical lever is forcing a shift in global strategy. If Western governments commit to public-private partnerships, regulatory reform, and long-term subsidies, Canada could become a linchpin in a diversified rare earth supply chain.

In a world increasingly defined by resource nationalism, supply chain security, and climate-driven industrial policy, the rare earth race is more than a commodity contest—it’s a defining element of the next global order. And Canada, while not there yet, is finally lacing up its boots.