Geo-politics of rare earth elements: Assessing the influence of foreign direct investment, trade agreements, and environmental policies on rare earth elements: Production and global trade.

This paper provides a comprehensive assessment of the strategic positions of India, Australia, and select African nations (South Africa, Namibia, Democratic Republic of Congo, and Tanzania) within the global Rare Earth Elements (REE) supply chain and examines the geopolitical and economic significance of Rare Earth Elements (REEs) in the context of global supply chains, with a particular focus on the strategic vulnerabilities arising from China’s overwhelming dominance in extraction, processing, and manufacturing. By analyzing the roles of India, Australia, and select African nations, the study employs robust quantitative methodologies—including time series analysis, correlation matrices, panel regressions, and the Gravity Model—to assess production capacities, foreign direct investment (FDI), policy frameworks, and environmental, social, and governance (ESG) risks from 2016 to 2023. The findings reveal that China keeps over 90% control in REE processing and manufacturing, creating significant strategic risks for other nations dependent on these critical minerals for technological advancement and energy transition.

The analysis proves that increasing domestic refining capacity, attracting FDI, and strengthening governance are essential for countries seeking economic resilience and strategic autonomy as far as rare minerals are concerned. Notably, the research finds strong positive correlations between FDI, refining capacity, and REE production, underscoring the importance of investment in value-added activities. Policy simulations, such as Difference-in-Differences and Impulse Response analyses, further illustrate how strategic policy interventions can meaningfully alter production trajectories and reduce dependency on single-source suppliers.

The paper concludes with actionable policy recommendations, advocating for the diversification of supply sources, the development of comprehensive domestic value chains, and enhanced international cooperation through trade agreements and strategic alliances. These insights are vital for emerging and resource-rich nations aiming to mitigate dependency on China, strengthen technological sovereignty, and navigate the evolving geopolitics of critical minerals amid the global shift toward sustainable energy and innovation.