Rare Earths and the New Resource Nationalism

How critical minerals became the flash points of 21st-century power politics and of human suffering?

La-Taha still wakes at night when the pain in his scarred hand flares. The 28-year-old welder survived the 24 December 2023 furnace explosion that killed 21 co-workers in Indonesia’s Morowali nickel complex, but the blast left him with third-degree burns and a life-long disability. Three months later and 11,000 kilometres away, 12-year-old Muntosh staggered from a collapsed cobalt pit outside Kolwezi, Democratic Republic of Congo (DRC), clutching the body of his younger brother. “The earth swallowed him,” he whispers, “and no one came to help.” These two lives, stitched together by tragedy, illustrate the real cost of Resource Nationalism 2.0  a new scramble for the metals that anchor the world’s clean-tech dreams.

Since 2020, governments from Beijing to Kinshasa have re-imagined critical minerals as instruments of state power. Export licences, ore bans and surprise embargoes now shape the flow of samarium and nickel as surely as tankers once shaped oil. The result is a high-stakes contest to control, process and profit from materials that sit at the heart of electric vehicles (EVs), wind turbines and precision-guided weapons. Yet far from boardrooms in Shanghai or Washington, the battle lines run through villages, forests and factory floors where workers breathe toxic dust, children toil for a dollar a day and rivers run brown with tailings.

China's heavy-rare-earth squeeze, Indonesia’s downstream nickel boom, and the DRC’s cobalt embargo to show how resource nationalism is redrawing supply chains, redefining geopolitical leverage and reshaping local livelihoods. It's a story of ambition clashing with human reality, where the push for green energy often leaves behind those who make it possible.

On 4 April 2025, China’s Ministry of Commerce unveiled Announcement No. 18, mandating individual export licences for seven medium- and heavy-rare-earth elements. Within weeks, shipments of terbium- and dysprosium-based magnets  indispensable for F-35 actuators and EV drivetrains — fell 74 percent year-on-year. Component plants in Bavaria, Nagoya and Tamil Nadu shut assembly lines as inventory evaporated. Beijing’s timing was no accident: the directive landed 48 hours after Washington hiked Section 301 tariffs on Chinese EV parts. For families like those of laid-off workers in Chennai, it felt like a distant power play had stolen their paychecks overnight.

Chinese officials frame the controls as dual-use export management, yet insiders outline a two-track aim: Feedstock Sovereignty  China’s domestic EV and drone sectors will consume an extra 7,500 tonnes of heavy REOs by 2028, demanding secure supply. Coercive Signalling  By demanding end-user declarations, Beijing gains visibility into foreign defence chains, while delayed licences remind rivals of China’s choke-point leverage.

State refineries sweeten the stick with a carrot: “Magnet-relocation diplomacy. Japanese and German firms that move final assembly to Jiangsu can skip the licence queue entirely. The tactic echoes the 2010 rare-earth freeze on Japan, but with surgical precision that minimises WTO exposure. It's clever, but it leaves workers like Erhard Mueller in Germany wondering if their jobs will be next to relocate.

China’s rise rests on lax regulation that turned Inner Mongolia’s Weikuang tailings lake into a toxic stew of thorium-laced sludge. A 2025 investigation found airborne lead and cadmium five times WHO limits in Baotou suburbs. Cleaner extraction technologies now claim 95 percent recovery with 60 percent less power, yet local officials warn that a US-style environmental regime would erase China’s cost advantage overnight. For residents choking on dust, the "green" minerals feel anything but clean.

When President Joko Widodo re-imposed the nickel-ore export ban in 2020, critics called it economic suicide. Five years on, nickel exports have ballooned from US $4 billion to US $34 billion, and Indonesia commands 55 percent of global class-II nickel. Chinese-funded parks in Morowali, Weda Bay and Obi Island host more than 80,000 workers and feed Tesla cathode plants in Shanghai. Ernianti Salim, a 20-year-old who learned Chinese to snag a smelter job, saw her income jump 25-fold  a personal win in a national success story.

Boomtown headlines mask a brutal ledger of health and safety failures. Independent monitors count 114 smelter accidents since 2015, including the Morowali Christmas Eve blast that crippled La-Taha. Coal-fired power and acid-leach stacks blanket nearby villages in sulfur dioxide; respiratory infections in Weda Bay’s Lelilef Sawai rose from 434 cases in 2020 to 10,579 in 2023. Blood tests in July 2025 showed 47 percent of residents carry mercury above WHO limits, jeopardising cognitive development in children. For La-Taha, who returned to work despite his injuries, the promise of prosperity rings hollow without basic protections.

Seventy percent of the US $26 billion smelter boom is financed by Chinese policy banks. The industry burns as much coal as Portugal, putting Indonesian nickel well above EU carbon-border thresholds. Brussels is drafting counter-measures, while WTO panels have twice ruled the ore ban illegal. Undeterred, Jakarta plans similar bans on bauxite and rare-earth concentrates. Rosmini Bado, a farmer whose crops were ruined by waste runoff, asks: "Development for who? Not for us."

Facing collapsing royalties after prices sank 75 percent from 2022 highs, Kinshasa’s new regulator, ARECOMS, halted cobalt exports on 22 February 2025. The ban, extended to September, sequesters 100,000 tonnes of hydroxide, nearly 70 percent of global supply. Chinese refiners saw feedstock arrivals drop 60 percent within two months; IXM and Glencore declared force majeure on deliveries.

Cobalt’s human toll predates the embargo. An estimated 40,000 children toil in DRC artisanal pits, earning under US $2 a day. Amnesty researchers document forced evictions, sexual assault and groundwater laced with uranium near industrial concessions. A 2025 US Department of Labor survey found forced-labour prevalence at 17 percent in sampled mine clusters, with miners averaging 16-hour shifts. Muntosh's loss of his brother to a landslide is tragically common; for these kids, school is a distant dream replaced by back-breaking danger.

Officials liken the embargo to “OPEC on steroids,” seeking prices near US $40 per pound. Yet the move accelerates substitution: BYD’s sodium-ion packs debuted in May; Tesla’s high-manganese LFP line scales in 2026. S&P Global warns DRC must shift to quota-based controls or risk permanent demand erosion. Meanwhile, communities like Kolwezi's bear the scars, with no share in the wealth.

IEA models show a one-year cobalt gap delays 2030 EV goals by six months. Nickel spiked 45 percent post-ban, then crashed as LFP substitution rose. EU’s Critical Raw Materials Act caps single-supplier reliance at 65 percent, while US Inflation Reduction Act bars “foreign entities of concern.” ESG-linked funds shun Indonesian coal-powered nickel, but Chinese EPC contracts keep flowing. Recycling capacity for cobalt up 40 percent YoY; sodium-ion patents tripled in 2024.

Producer States: Impose sunset clauses on bans; link royalty escalators to transparent price bands. Allocate windfalls to grid upgrades, health clinics and education to dodge Dutch disease. 

Consumer Blocs: Prioritise mid-stream processing (e.g., dysprosium separation in Estonia) over green-field mines alone. Fund battery-recycling pull incentives; mandate recycled-content quotas in public EV fleets. 

Multilateral Governance: Restore WTO appellate capacity; craft a *Critical Minerals Code pairing market access with labour and environmental benchmarks. Embed mineral-supply clauses in climate-finance instruments to tie mitigation funds to responsible sourcing.

La-Taha’s scarred hands, Muntosh’s grief-stricken eyes and Ernianti’s soot-filled lungs reveal a stark calculus: the metals greening rich cities inflict invisible scars on distant communities. Resource Nationalism 2.0  surfaces because existing governance fails to share value or protect rights. Yet licence throttles, ore bans and embargoes alone cannot deliver justice; they too often swap one inequity for another.

A genuinely sustainable transition must fuse mineral security with social justice. Cheap batteries built on coerced labour and polluted rivers are a false bargain morally fraught and strategically brittle. The world’s next energy system will be judged not merely by carbon tonnes avoided but by the dignity and safety of those who mine its raw materials.

Whether that system redeems or abandons La-Taha, Muntosh and millions like them remains the defining question of our age.

Reference

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