Rare earth: politics, promise and peril

As China tightens its export grip, Pakistan’s mineral wealth is back in global focus. This puts to test Pakistan’s promise, politics and the peril to test; and its ability for turning potential into policy, and geology into growth?

Pakistan’s long-buried mineral wealth is once again in the headlines. The country’s rare earth potential — lithium, copper, cobalt, and other strategic minerals — has suddenly become geopolitically significant as global supply chains shift and China clamps down on technology exports.

For decades, Pakistan’s minerals were more a subject of geological reports than of global commerce. Now, with its first commercial shipments of enriched minerals to a US firm and a $500 million strategic agreement signed this year, Pakistan has formally stepped into the critical-minerals arena.

Pakistan’s mineral geography is indeed promising. Rich deposits are scattered across Balochistan, Khyber Pakhtunkhwa, and Gilgit-Baltistan. Many of these contain rare earth elements (REEs) vital for electric vehicles, wind turbines, semiconductors, and defense systems — resources at the heart of the 21st-century technological race. The Reko Diq and Saindak copper-gold projects have already proved that Pakistan sits atop one of the most mineral-endowed belts in the world. The next frontier is the extraction and processing of REEs — a much more complex business.

Globally, the rare earth sector is no longer just about mining; it’s about technology, processing, and geopolitics. Today, China dominates more than 80 percent of global refining capacity. That stranglehold has prompted the United States, Japan, South Korea, and the EU to diversify supply chains, seeking alternative sources — and Pakistan fits naturally into that new strategic calculus.

Beijing’s decision to tighten exports of REE refining technology and specific materials has sent shockwaves through global markets. What began as quiet regulatory control has evolved into a strategic policy tool. For Pakistan, this presents both opportunity and challenge. On the one hand, China’s restrictions make new suppliers like Pakistan more valuable. On the other, the curbs deprive Islamabad of affordable Chinese processing technology — the most accessible route to value addition.

This means that Pakistan will now need to court Western and East Asian partners who possess the know-how but demand transparent governance, legal protection, and stable contracts. It’s an opening — but one that will test Pakistan’s institutional credibility.

The next challenge is: “From discovery to dollars: the time reality.”

The biggest misconception about mineral wealth is the speed of monetization. Globally, the journey from exploration to full production can take anywhere between seven and twenty years. Mines require roads, power, water, and ports — and rare earths require sophisticated separation plants. Even optimistic projections suggest that Pakistan could see notable revenue within five to ten years, assuming sustained investment, policy consistency, good governance, political consensus and stability and above all security of men and material. These are all demanding and challenging musts.

Early pilot exports and sampling shipments, like those recently announced, are encouraging but symbolic. Meaningful earnings as foreseen — in hundreds of millions annually — will only come once processing and export infrastructure matures. For now, Pakistan’s mineral wealth is still more potential than profit.

If handled well, the payoff could be transformative. Rare earth development can diversify Pakistan’s narrow export base, boost foreign exchange, and generate high-tech jobs. The Reko Diq model already projects tens of billions in long-term revenue from copper and gold; similar structured investment in REEs could add another high-value stream.

Crucially, Pakistan must avoid the trap of exporting raw ore. Countries that move up the value chain — from extraction to refining to component manufacturing — capture far more jobs, taxes, and industrial capability. For Islamabad, that means establishing joint ventures for refining and magnet production, training local metallurgists, and ensuring domestic technology transfer.

But the path is steep. Several deterrents, dangers and risks loom large:

With China out of the equation on this subject, Pakistan will be required to build partnerships with Western and regional players, who will insist on transparent contracts and legal predictability.

Developing REE projects requires billions in long-term investment. That won’t flow without credible dispute resolution mechanism, security assurances, political consensus and stability.

Complex permitting, overlapping jurisdictions, and political volatility can delay or derail mining timelines. Many deposits lie in sensitive regions. Without community benefits and environmental safeguards, local resistance could block progress.

The “environmental concerns” are for real. Rare earth processing can be toxic if poorly managed. Pakistan must set modern environmental standards or risk international backlash and domestic opposition.

Then there are technology and business challenges. REE prices are linked to global tech cycles. A downturn in EV or semiconductor demand can quickly erode profits.

The next few years in this business, which promises trillion of dollars, are crucial. Islamabad needs to act on three fronts. The foremost is the “institutional clarity”. This needs a single-window mineral authority, which should handle exploration licensing, environmental oversight, and export permits, reducing red tape.

The second is the value-addition, which offers incentives for refining and processing within Pakistan — tied to strict environmental compliance and local employment.

The third is the technology partnerships and strategic alliances with global buyers from the US, Australia, Japan, and South Korea, all of whom are actively seeking the REEs.

Pakistan’s mineral wealth could also be tied into larger economic corridors. Integrating mineral transport and processing with the China–Pakistan Economic Corridor (CPEC) and new US-backed investment frameworks could help balance competing influences and maximize returns.

Rare earths are the oil of the clean-energy era — but only for nations that can extract and refine them efficiently and responsibly. For Pakistan, the opportunity is immense but perishable. Global demand will peak over the next two decades as the energy transition accelerates and new suppliers emerge. If Islamabad can establish itself now as a credible player, it could gain billions in exports, strengthen its currency, and climb the industrial value chain.

If not, Pakistan risks watching yet another resource boom pass it by — the minerals dug, the profits gone, and the promise unfulfilled.

Copyright Business Recorder, 2025