Technologies for synthesising substitutes or alloys could cut time required to secure critical materials to just a few years.
China captured the processing market by taking on significant environmental and health risks of a kind that Western nations shunned, allowing it to dominate the “dirty” and chemically hazardous end of the industry.
As strategic tensions have grown in recent years, China has imposed various targeted export bans and restrictions on certain heavy rare earth elements.
He said these technologies were already “smashing right into” mineral and hydrocarbon supply chains, adding that scientists could now use software to design alloys from plentiful materials, rather than having to rely on mining – something that was impossible just two years ago.
However, Wei Shen, a political economist and research fellow at the Institute of Development Studies in Britain, cautioned that there were hurdles to commercialising such discoveries, such as stability, scale and cost. A complete industrial ecosystem could not be “built overnight”, he added.
Shen said China’s dominance relied on an integrated industrial chain built through decades of investment and cost control. He added that even if laboratory substitutes succeeded, challenging a mature system with such established economies of scale remained “highly unrealistic in the short term”.
Yet the nation is also vying to shape the next phase of the industry, with analysts pointing to “digital mining” – the use of advanced digital technologies in the resources industry – as a key battleground.
Shen said that what the West really lacked was a coherent industrial policy, adding that technical advances alone would not be enough to offset China’s structural advantages.
Chris Berry, head of US-based commodities advisory firm House Mountain Partners, added that China’s speed of innovation remained “astounding”, with the country’s manufacturers likely “very advanced in using AI to create novel materials”.
He noted that the West had traditionally held an edge in the ability to innovate and create new materials. However, with China now having access to the same toolbox of technologies – thanks to years of heavy investment in AI, advanced computing and materials science – he expected “some exciting inventions” in the years ahead.
Berry cautioned that whoever controlled the underlying intellectual property and technology would control the supply chains, a fact with “very serious geopolitical and economic implications”.
“Traditionally, we had to find, mine and process materials,” Hidary said. By contrast, he added, the advent of quantum and generative AI – specifically, “new and novel AIs that understand physics, materials, energy and engineering” – had changed the game.
But Berry countered that much of the excitement rested on “hype and hope”.
He suggested that while AI would have an impact, it was still too early to see tangible results in the mining and materials industries.
Berry said that transitioning from alloy design to commercial scale took time. History showed that “when societies have innovated and tried to use less of a material, this has meant using more of something else – so we’re solving one problem and creating another”, he added.
Jack Lifton, co-chairman of the Critical Minerals Institute, a global industry group focused on critical mineral supply chains, dismissed AI as mere “high-speed computing”, arguing that it would be no substitute for human judgment and experience.
He said alloy metallurgy advanced through the work of seasoned engineers and scientists, and that China – by doggedly pursuing an industrial policy that prioritised scale and ability over short-term state profits – had leapfrogged to dominance in alloy production in general, and rare earth alloys in particular.
“The foundation of that dominance is a million man-years of experience, also known as trial and error,” Lifton said. “AI cannot compete with that.”
Lifton said this depth of expertise was the barrier non-Chinese competitors faced as they tried to restart industries such as rare earth permanent magnet manufacturing – sectors they once abandoned and nearly lost.
“Only the determined and experienced have any hope for success,” he added.
In any case, while large-scale substitution would eliminate China’s chokepoint in rare earth magnets, this would not necessarily be a problem for Beijing, he said.
Beijing has used rare earths in response to aggressive US export controls in areas where China remains technologically behind, such as aircraft engines and semiconductor manufacturing.
With China aiming for self-sufficiency in these areas by 2040, both the US technology and rare earth supply chains could lose their geopolitical significance and there would be no need for retaliatory action by either side.
“Even in a world where AI-driven substitution succeeds, its ultimate impact on China’s strategic position may end up being limited,” Xue said.