Rare earth elements are essential for the green transition. Rare earth magnets are used in a wide range of green technologies, including wind turbines and electric vehicles (EVs). But their extraction and processing also have significant environmental impacts, including toxic waste, water pollution and ecosystem destruction.
In the global race to secure rare earth elements and reduce dependence on China’s dominance in mining, refining and magnet production, countries are increasingly turning to more remote and technically challenging frontiers. Nothing illustrates this more vividly than Japan’s latest feat of extracting rare earth-rich seabed mud from the Pacific Ocean – 5,700 metres below the surface. It’s the world’s first attempt to raise rare earths from such extreme ocean depths.
But attention is also turning to land-based deposits in remote and ecologically sensitive regions such as the Amazon in Brazil. The Amazon has an estimated 21 billion tonnes of rare earth reserves, the second-largest reserves after China, according to the US Geological Survey. But the region is also home to some of the world’s richest biodiversity that play a critical role in regulating the global climate, and located on or nearby Indigenous community territories.
Other ecologically sensitive regions where rare earth exploration is advancing include Greenland, the grasslands of Mongolia, and the biodiverse island ecosystems of Madagascar.
As rare earth exploration expands into these new frontiers, it highlights a growing tension between the geopolitically driven need to secure rare earth supply chains and the arguably more important need to protect the planet’s most vulnerable ecosystems.
It also raises a fundamental question: are efforts to secure these materials worth the risk of creating a new generation of environmental legacies?
Every tonne of rare earth mined generates up to 2,000 tonnes of toxic waste, including radioactive waste. It also generates millions of tonnes of wastewater annually. Exposure to rare earth elements has been linked to severe health impacts, including lung diseases, neurological damage, cardiovascular dysfunction, reproductive harm, and increased risks of cancer and genetic damage.
China’s toxic rare earths legacy
The severe environmental damage caused by decades of rare earth extraction in China offers a stark cautionary lesson for countries now seeking to develop their own supplies.
Ganzhou in Jiangxi Province – also known as the Rare Earth Kingdom – is a major global hub for so-called in-situ leaching of rare earth elements that causes severe soil acidification and water contamination. As far back as 2011, estimates by China’s Ministry of Industry and Information Technology highlighted ¥38 billion (approx. $5.5 billion) worth of environmental damage, which has since multiplied.
In China’s Inner Mongolia province, the Bayan Obo mining sites have caused severe environmental degradation. For decades, rare earth processing facilities in the region discharged large volumes of chemically contaminated waste into tailings reservoirs, most notably the Weikuang Dam. These waste streams contain a mixture of toxic chemicals used in processing, as well as heavy metals and radioactive elements such as thorium. Over time, pollutants have seeped into surrounding soils and groundwater, affecting agricultural land, causing social disruptions for local herder communities, and raising concerns about long-term ecosystem and human health impacts.
What can be done to mitigate environmental risks?
As countries seek to diversify rare earth supply chains away from China, there are options for how to do this without repeating the same toxic legacies.
Mitigating the environmental impacts of rare earth mining must begin well before extraction starts. Pre-mining processes are critical, particularly meaningful community consultation and engagement with Indigenous peoples in line with the principle of Free, Prior and Informed Consent (FPIC) as articulated in the UN Declaration on the Rights of Indigenous Peoples. For companies and governments alike, embedding robust consultation frameworks at the outset is a prerequisite for long-term project stability and social licence to operate. It also reduces the risk of social conflict delaying or derailing projects.
Tailings and chemical management represent some of the most significant environmental risks. While industry standards exist, notably the Global Industry Standard on Tailings Management, compliance is lacking. According to Benchmark’s rare earth ESG assessment from 2024, only 17 per cent of rare earth producers currently comply with the standard. This gap highlights the need for stronger enforcement and alignment of public financing and offtake agreements with internationally recognized standards.
Radioactive waste management is another defining challenge in rare earth value chains. Certain rare earth ores contain thorium and uranium, requiring secure, long-term storage solutions to prevent contamination. The only reliable way to avoid radioactive leakage is through properly engineered, monitored, and permanently managed storage facilities in line with safety standards issued by the International Atomic Energy Agency (IAEA).
The creation of a new international pricing system which incorporates environmental costs into rare earth prices is gaining momentum and is actively being explored by the G7 and other governments. This would ensure prices more accurately reflect the true cost of responsible production while incentivizing mining and refining companies to apply the highest environmental standards.
An international price floor system for rare earth elements is another option discussed by policymakers and industry actors. During the recent Critical Minerals Ministerial in Washington, D.C., the US announced its intention to create a preferential trade zone that would maintain an international price floor for critical minerals. Linking it to verified environmental performance would help reduce environmental impacts and costs that were previously externalized, ensuring that future rare earth supply chains are not only more secure but also less destructive.