Up until a decade ago, the risks surrounding processing and supply of rare earths were overlooked by a large part of the world. With the advent of high tech and clean technologies these elements made their way onto the international political scene. Today, China produces at least 80% of the world’s rare earth elements, and for some rare earths such as Dysprosium, it remains the world’s only producer.

China is not shy about its ambition to retain leadership in rare earth ore, oxide and metal production while increasing control of up to 70 or 80% of downstream value-added production of rare earth related technologies including permanent magnets production (for which it already occupies around 90% of the global total output). As we face a hungrier integrated system, we are witnessing the internationalisation of the upstream production where Chinese state-owned and state-sponsored entities are accelerating international investments in rare earths mines and stepping in international trades to secure import of the necessary unprocessed minerals. In parallel, rare earths are now considered a critical raw material by a number of western countries and industries i.e., a resource for which the industrial risks associated with a supply shortage are high and for which there is no possible substitution. They are additionally considered a strategic raw material in some countries i.e., an indispensable resource for state policy or national defence.

In the wake of these new trade dynamics and of international investments in rare earth mines, it becomes relevant to understand how rare earths fare in strategic resources geopolitics, national security and public policy exceptions with regards to arbitration as a potential dispute resolution mechanism.

This article revisits the originality of rare earths as a type of raw material, the criticality of its supply chain to a world busy with electrification and decarbonisation agendas, and what challenge this is likely to pose to arbitrators in commercial and investment arbitrations.