Despite their name, rare metals are not very rare. What they are is essential to the world economy, underpinning the development of superconductors, magnets, and high-performance optics and lasers. Supply is constrained because rare metals are hard to mine profitably except when using environmentally hazardous chemicals. Crucially, China controls the rare metals market. As the Sino-American standoff intensifies, and the technological transformation of the world increases demand for rare metals, the rare earth metals market is set to boom.
Chinese Control
According to the U.S. Geological Survey, China produced 60% of rare earths, including 78% of U.S. import demand.  

Source: Investment Monitor

China does not face the same constraints that its rivals do. Rare earths are in abundance, but they occur in composites, making it costly to separate them, and extract the most valuable rare earths, such as terbium, from less valuable ones, such as lanthanum. Secondly, they occur in deposits with thorium, whose low radioactivity can cause lung or pancreatic cancer. Western countries have regulatory constraints that prevent them from mining rare earths while skirting these two challenges. By 2002, it was clear that, faced with environmental challenges, firms started to outsource production to China, and the United States went from being the largest rare earths producer in the world, to heavily reliant on CHinese production. 

The Russo-Ukrainian war has highlighted the fragility of supply chains and the likelihood that at some point in the future, a Sino-American war could fracture supply. This, added to rising prices of rare earth, may eventually force businesses to seek alternatives, either in the form of supply, or in new materials. 

Chinese controls on exports have placed added pressure on the price, and those controls are likely to tighten. Current legislation carries the potential for a complete ban on exports. 
Demand is Rising
Rare earths are extremely effective as alloys and coatings and so, underpin much of the world’s tech industry. Although they do not make up a lot of a finished product, just a kilogram of rare earths in an automobile is the difference between that car being produced or not. Even if production without rare earths was possible, it would result in less effective and much heavier products. 

As has been extensively discussed in the Rare Metal Blog, rare earths are extremely vital to the functioning of the world economy. For instance, optical fiber with europium gains massively in terms of bandwidth, and is the best option we have for amplifying various incoming data channels.

As demand for semiconductors and for electric vehicles, and other new technologies increases, the world is increasingly reliant on rare earths.
A Boom Is Likely
The combination of supply and demand factors is likely to lead to a rare earths boom. With relations with China worsening, and rare earths environmental legislation still in place, the world does not have a viable alternative to China. Although production could shift from China, other countries do not yet have the refining capacity that China has, so in the short-term, any disruption to supply will be devastating. 

Author's Bio: 

Jeremiah Owyang is an entreprneur with 15 years experience in the sector advising firms on their growth potential.