By: Salman Rafi Sheikh
A new mineral Cold War is taking shape on Pakistan’s turbulent horizon, one that its ruling elite seems eager to join but ill-equipped to navigate. Washington’s renewed courtship of Islamabad, from eyeing Pakistan’s rare earth riches to exploring a seaport a few miles from China’s massive Gwadar multi-billion dollar port development, marks the quiet revival of great-power rivalry in South Asia.
As the US weighs a potential – but unlikely – return to Afghanistan’s Bagram airbase to contain Beijing, Pakistan once again finds itself at the fault line of competing super-powers. For China, stabilizing Afghanistan through closer ties between Islamabad and Kabul is vital to securing its western flank and Belt and Road corridors. For Washington, Afghanistan’s geography and mineral wealth remain too strategic to ignore.
The Taliban’s recent border clashes with Pakistan may therefore be more than a local skirmish. In fact, they could be the first tremors of a new regional realignment, with Islamabad once again clearing the ground for America’s comeback, including – improbably – vainly recommending Trump for the Nobel Peace Prize, citing his “decisive diplomatic intervention” following a spike in violence between India and Pakistan earlier this year.
These developments follow Pakistan’s attempts to strategically reposition itself in the region in its attempt to outmaneuver India. For years, Pakistan courted China for investing in Pakistan’s minerals sector. China itself was more than keen to exploit the opportunities to tighten its grip over the global supply of rare earth materials to keep its dominance.
When Pakistan’s PM visited China in 2024, a key point on the agenda was to expand cooperation in the mining industry. As reports indicate, Islamabad and Beijing agreed to promote investment by Chinese firms, and strengthen the planning of mining industry parks, including deep processing of ores. Pakistan’s moves at that time made sense because of its not-so-good ties with the US. In 2024, the US option didn’t exist. Pakistan has sought a reset,
Trump’s election, however, seems to have changed the equation dramatically, not only for Pakistan and China but more generally, despite Pakistan’s purchases of Chinese weaponry, including famously the J-10C jet fighter which reportedly downed several Indian aircraft, including French-made Rafales, during the recent India-Pakistan conflict.
Trump’s decision to impose tariffs on China was met with Chinese retaliation in the mineral sector. In April, China imposed restrictions on seven medium and heavy-rare-earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. Also, access to magnets using these materials became restricted.
Exports of REE-magnets and items containing them now require special export licenses. Some of the restrictions cover the entire supply chain – raw minerals, finished magnets, compounds, oxides, and alloys. Immediately afterward, US manufacturers reported sharp declines in supplies of magnets and heavy rare earth inputs.
For example, rare earth magnet exports to the US reportedly fell by a large margin after the April controls. Global supply chains for EVs, defense systems, and electronics have shown signs of strain: delayed shipments, difficulty in sourcing certain REEs, uncertainty over licensing, and increased costs. China’s steps were more than a wake-up call for Washington to shift its policy more aggressively towards expanding its direct reach to rare earth materials. Hence, Pakistan’s courting of the US. Now that Pakistan has signed MOUs with a US company and has also already sent the first shipment of its materials, Beijing is responding.
Last week, China’s Commerce Ministry issued sweeping new rules tightening its dominance over the global supply of rare earth materials that power everything from smartphones to missiles. The measures cover the entire value chain, from production and processing to separation technologies, effectively giving Beijing the ability to decide who gets access to the raw materials of the 21st century.
Under the new regime, overseas firms seeking Chinese extraction or separation technology must apply for export licenses, extending Beijing’s control far beyond its borders. In a coordinated move, China Customs and the Commerce Ministry released four complementary directives expanding restrictions on strategic materials, including synthetic diamond powders and single crystals to lithium-battery components and artificial graphite. Exports of middle and heavy rare earth metals, alloys, and oxides are now banned outright, while companies must also identify any “dual use” items and disclose detailed technical parameters.
The timing is no coincidence. These rules take effect on November 8, just two days before the current US-China trade truce expires. Coming on the heels of Pakistan’s rare earth MoU with a US firm, the message from Beijing is clear: in the new mineral Cold War, supply chains are the new front lines, and Pakistan’s minerals may soon be caught in the crossfire. What is becoming clear is that for China, any US foothold in Pakistan’s mineral corridors, particularly those adjacent to CPEC’s strategic arteries, is not just an economic intrusion but a geopolitical provocation.
Beijing has invested more than US$62 billion in CPEC projects that connect Xinjiang to the Arabian Sea via Gwadar, giving China its only direct access to warm Arabian Sea waters and a potential energy and trade lifeline outside the Malacca Strait. That route runs dangerously close to Pakistan’s mineral-rich belts, from the Reko Diq copper-gold reserves, among the world’s largest undeveloped deposits, to the Saindak project and newly identified rare earth veins in the Kohlu and Chagai districts of Balochistan. These are not peripheral resources; they lie along the same logistical and security corridors that underpin China’s regional ambitions.
A US partnership with Pakistan on critical minerals thus threatens to erode Beijing’s monopoly not only on rare earth supply chains but also on influence within Pakistan’s strategic geography. Pakistan’s deal with US Strategic Metals and the dispatch of the first rare earth shipment to the US signal a quiet but direct intrusion into what Beijing long regarded as its uncontested backyard.
For China, this is an encroachment with dual consequences: it undermines its economic primacy under CPEC and potentially exposes its infrastructure network — highways, fiber-optic links, and energy pipelines — to US observation and leverage.
Nowhere is this new tension clearer than in Pakistan’s proposal to host a US-funded seaport at Pasni, a coastal town barely 100 km east of China’s flagship project in Gwadar. If developed, Pasni would provide Washington a logistical foothold on the Arabian Sea, a counterweight to Gwadar’s Chinese-managed hub, and a direct route for exporting minerals from Balochistan’s interior. The proposal reportedly envisions a US$1.2 billion investment, coupled with a rail link connecting Pasni to Pakistan’s mineral heartland, potentially giving the US direct access to the same corridors that anchor China’s Belt and Road ambitions.
Islamabad insists the idea is only “exploratory,” but even the suggestion has set off alarms in Beijing. For China, Pasni represents more than just another development project; it signals the possible fracturing of its maritime monopoly in Balochistan and the erosion of its strategic depth on the Arabian coast.
For the US, Pasni offers something Gwadar never could: a non-Chinese port for mineral logistics and regional presence, without the baggage of military basing. The symbolism alone — a US-linked port operating in the same province as China’s flagship CPEC project — would mark a major geopolitical shift.
For Pakistan, this is both an opportunity and a peril. Desperate for foreign investment, Islamabad sees in Pasni and rare earth exports a chance to diversify its partnerships and reduce economic dependence on China. But in doing so, it risks inviting a new phase of competition that it may not be able to either effectively manage or contain. But if anything is increasingly getting clear is that the next phase of global rivalry will not only be fought in the South China Sea or the Taiwan Strait, but also in the mines of Balochistan, the refineries of Sindh, and the smelters of South Asia, where technology, access, and alignment will decide who controls the region’s most strategic resource: its minerals of the future.