Chagai mountains, once famous for Pakistan’s historic atomic explosion, are now attracting attention worldwide. This time, they are becoming famous for being the quiet determinant of future power. Like nuclear weapons, they are once again commanding headlines across global trading nations. The class of minerals known as rare earth metals are now shaping the strategic balance of the 21st century, just as crude oil shaped the 20th.
There are 17 metals, including the lanthanides, along with scandium and yttrium, which are classified as rare earth. It is not that they are rare in a geological sense, like their name suggests; they are scattered and widely dispersed across the Earth’s crust. Their refining process is very challenging and expensive and this is where they gain strategic weight. Mining is just the beginning; the actual phases lie in separation, processing, alloying and magnet production. Only through advanced technologies, strict environmental controls and dedicated long-term capital investment can complex stages be achieved. long term capital investment in this context refers to foreign direct investment (FDI).
Our modern life has been sustained in many ways because of these elements. Although we rarely encounter these elements in our ordinary lives, electric vehicles and wind turbines use high-strength permanent magnets made from neodymium and dysprosium. Modern optical technologies, battery systems, and refining catalysts use lanthanum and cerium because they are essential to their production processes. High-grade military installations and equipment, such as radar systems, precision-guided munitions, fifth-generation fighter jets and satellites, rely heavily on rare earth minerals. Fifth-generation fighter jets use more than 100 kilograms of these metals in their manufacturing, while missile systems and submarines require even more. The world’s industrial and defence sectors rely heavily on these metals and their ecosystems can stall without reliable access.
Because of their use in both civilian industries and military systems, states are considering them as their strategic assets. The control over the supply chain of these rare earth metals will determine technological leadership, as national security resilience relies heavily on them. This is because economies are moving more toward electrification, renewable energy, advanced computing and aerospace technologies, making these minerals not just commodities but structural and strategic inputs of the modern state.
The Chinese are pioneers in this arena because, over the past three decades, they have built a vertically integrated rare earth industry through sustained government facilitation, regulatory tolerance, and disregard for environmental consequences, as well as uncompromising downstream investment. Although China mines more than 60 per cent of the world’s rare earth ore, its real strength lies in the supply chain. They have a monopoly over 90 per cent of the global large-scale refining capacity. The world’s most sought-after high-performance magnet is manufactured in China. The recent US-China tariff wars showed that even in the US, rare earths are frequently shipped to Chinese facilities for processing before they can be utilised in a usable form.
Diversifying rare-earth supply chains is far more complex, requiring years of investment, technical expertise, a skilled workforce and environmental permitting. This diversification and concentration have created a strategic vulnerability amongst these industrialised economies. This was evident during recent US-China trade tensions, retaliatory measures, and export controls, which revealed that supply disruptions of these rare earths have abruptly affected defence production lines and clean-energy manufacturing.
The current global situation and new tariff negotiations have forced the US regime to respond by treating these minerals as a matter of national security priority. The defence department and Pentagon-backed investments and partnerships with Australia and Canada are intended to reduce dependence on a single outside supplier – China. Despite these initiatives and favourable conditions, building end-to-end capacity outside China will take considerable time, perhaps almost a decade. This is because the processing expertise remains the most significant constraint in this industry.
We have always heard that Pakistan is strategically located, and perhaps this strategic location has brought us back into the limelight. Our geological endowment assumes new relevance. Pakistan lies over a complex tectonic system – the Chagai arc, the Tethyan metallogenic belt and ophiolitic zones such as Muslim Bagh, where we have copper, gold, lithium, cobalt and associated rare-earth minerals. This is a trillion-dollar territory and its substantive potential has been verified by experts and early explorations. The trillion-dollar valuation can only become a reality if these resources are developed across the value chain rather than exported raw, and this is where foreign direct investment is particularly relevant.
What are the challenges we are facing for FDI? Our institutional weaknesses, regulatory uncertainty, security concerns and a fragmented governance structure among federal and provincial authorities, especially in Balochistan and Khyber Pakhtunkhwa, are key issues. Above all, the principal reason for discouraging sustained foreign investment is the absence of modern alternative dispute resolution (ADR) mechanisms. Processing capacity is another limitation, while environmental oversight remains underdeveloped for this specialised industry, which is chemically intensive and politically sensitive. These are the crucial constraints, as mineral refining produces toxic and sometimes radioactive byproducts. A high water demand and careful waste management are also critical to the ecosystem of this industry.
We must realise that we are not reinventing the wheel, as many countries that failed to manage these risks left the industry decades ago, with serious repercussions. Mining and refining rare earths are as much a governance and environmental challenge as a geological opportunity.
Rather than ambitious extraction targets, our primary focus must be on geological verification, regulatory consolidation and investor de-risking – reducing the perceived and actual risks faced by investors. The next priority should be given to a comprehensive international standards resource mapping of these territories. After that, we must integrate federal-provincial licensing structures, with a consensus-based, limited number of bankable pilot projects.
The core focus must be on processing feasibility – the same approach ARAMCO in Saudi Arabia used decades ago. Large-scale mining and downstream integration should be allowed if the processing feasibility is demonstrated and in line with industry standards. If we bypass processing and proceed directly from exploration to export, we will be restricted to low-value extraction. This will certainly forfeit our strategic leverage, as cheap extraction without processing or safeguards would generate limited revenue while potentially imposing long-term environmental and political liabilities.
In this context, the SIFC can play a decisive role – coordinating amongst provinces, negotiating international partnerships, enforcing environmental standards and aligning security arrangements for strategic assets. In the FDI context, institutional clarity is very important and if multiple ministries or bodies or task forces are dispersed in the governance structure, an effective strategy cannot be formulated. The role of a state must be limited to a regulator, guarantor and strategic partner – definitely not an operator. The provincial governments must preserve revenue participation and land governance under a harmonised framework. These guidelines will certainly attract foreign direct investment.
We must also be realistic that this whole activity requires $500 million to $1 billion in initial capital, with development timelines of 7-10 years from exploration to full production. This requires FDI, and if Pakistan is to access Western markets and ESG-linked financing, then environmental safeguards, waste handling and water management are unavoidable. We must also be very careful and avoid being a proxy for anyone. The global landscape of rare earth minerals is much more complex than a simple rivalry between China and the US. Japan’s response to the 2010 export restrictions, Europe’s Critical Raw Materials Act, India’s renewed focus on strategic minerals and Africa’s growing role as an upstream supplier all point towards a competitive, multi-aligned market. Pakistan’s advantage lies in its flexibility: we can integrate into multiple supply chains without becoming dependent on any single bloc. Our choices will determine what happens next: whether these rare earth metals will become another buried promise or the foundation of our enduring national power.
A long time ago, oil decided who could industrialise, shape the global market and project force. Now comes a rare earth, and this must not be confused with any other commodity cycle. Perhaps this will define technological sovereignty and the architecture of future power. Pakistan has a stark choice: it can either be a supplier of raw potential or it can build the institutions, environmental credibility and downstream capacity to participate in the industries that will define the next half-century.
The writer is a political economist, public policy commentator and advocate for principled leadership and regional cooperation across the Muslim world.
