China doesn’t hold a monopoly on rare earths. It holds a monopoly on getting things done.

I'm scrolling through TikToks yesterday as I often do when I just can’t code, read or write anymore. And I come across this guy who gives an interesting perspective on the rare earths struggle that is going on, specifically between the US and China, but I guess the same goes for the EU and China.

What are rare earths? They’re called "rare" not because they’re scarce, but because they’re hard to extract economically. Dispersed, mixed with other elements, and therefore costly to refine.

What’s most interesting in the context of AI is their use in sub-2nm chipmaking tools like ASML’s EUV machines. China dominates with 80% of global supply. No REEs → no advanced chipmaking → no next-gen AI hardware. Leverage over the entire AI supply chain.

If REEs are not scarce, why can only China extract them?

Because byproducts are so toxic, that many countries have strict regulations that make mining and processing economically impossible. And the regulations are strict for a reason, as disasters such as the 2012 Ganzhou Rare Earth Spill shows. When a dam burst, contaminating waterways and countryside for decades.

Same goes for another product, aluminium.

China is the world’s largest producer of aluminium. By far. Totally dwarfs production anywhere else in the world. And again, because in China, regulations allow it. At scale.

A byproduct of the production process is a very toxic material known as red mud. And because China produces so much aluminium, it’s sitting on vast pools of the stuff. Which is a huge problem even in China.

Unless you can turn a problem into an asset. And that’s exactly what China is planning to do.

Red mud contains a number of REEs. Now, it’s not in great numbers, and won’t replace processing mined ore. But it’s still significant enough for Chinese companies to invest in.

For example, their research shows that red mud can contain significant amounts of scandium and yttrium. Especially yttrium is interesting because of its use in superconductors. Others include cerium, lanthanum, and neodymium, which are three of the most important rare earth elements. Essential for EV batteries , and lasers, such as are used in chipmaking tools like the EUV machines I mentioned earlier.

China is investing in cutting edge technology at an unprecedented rate. Harvesting REEs from red mud is just one of the areas where they are moving ahead quickly. For example, they are already producing more sustainable energy than the rest of the world combined. While we talk, they do.

For many industries, they hold the complete supply chain, from extracting raw materials to the finished product: solar panels, wind turbines, EVs, microprocessors and data centres.

Cities like Shenzhen are hi-tech wonders. The stunningly capable AI model DeepSeek came into the spotlight this January and we were surprised.

We wouldn’t have been if we were paying more attention to China.