A select group of minerals power our modern world.

Key points: China produces the lion's share of rare earths, which power the modern world

China produces the lion's share of rare earths, which power the modern world Australia and the US will now collaborate on critical mineral production

Australia and the US will now collaborate on critical mineral production Extracting these mineral types is hazardous for health and the environment

Some of these include minerals such as lithium, which form the backbone of rechargeable batteries found in everything from electric cars to your laptop.

Other minerals are largely found within a group known as "rare earths" sporting names you may have never come across.

These are found within our smartphones, computers, medicines and even in some defence weapons systems.

Cerium, for example, is a rare earth element mined from the earth's crust that is used to polish smartphone touchscreens.

Another, dysprosium, is used in lasers and computer hard drives because of its unmatched magnetic power.

To understand rare earths, you need to start with a paradox: they're not as "rare" as its name suggests — cerium is about 15,000 times more abundant than gold.

They're rare because they aren't able to be easily reproduced artificially, as is the case with other resources such as rubber or cotton.

Because of this, the countries that hold the means of rare earth production hold a lot of clout — today, that is China.

That has the United States and its allies worried.

Just how important is China to the critical minerals trade?

Rare earth minerals form part of the contemporary world's vital products. ( ABC News: Jarrod Fankhauser )

The world's second-largest economy was responsible for 70 per cent of rare earths global production last year, despite only holding 36 per cent of the world's total known reserves, according to the United States Geological Survey (USGS).

China's total production — 120,000 tonnes — far outweighed the totals of the next two leading producers, Australia and the United States, which sat at 20,000 and 15,000 tonnes respectively.

This concentration of rare earth production power in China has spooked governments in Australia and the US — a concern which was thrust into the spotlight after Beijing threatened to restrict the rare earth trade in July in an escalation of its trade war with Washington.

"It's very difficult to be competitive with China. China has some resources, but it has outstanding technology," Dudley King, a professor at the Western Australian School of Mines, told ABC Radio National Breakfast.

"Now the major companies that use rare earths recognise their dependence upon China is unhealthy."

Given this context, Australia and the US have been investigating ways to get around this, and after a 12-month process, the countries have proposed a plan.

Today, both Canberra and Washington announced a new partnership designed to shore up their ability to develop "critical mineral assets", known as the Action Plan for Critical Minerals.

Dysprosium is a rare earth element used in magnets because of its ability to withstand high temperatures. ( Supplied: Northern Minerals )

This will see Australian and American scientists and companies collaborate to find what minerals exist and where, in addition to mining data to model what minerals the market wants.

When contacted by the ABC about the partnership, a spokesperson for Australian Resources Minister Matt Canavan said it "makes sense to encourage a more diverse supply" of rare earths.

"To date, the explosion in demand for rare earth commodities has not led to a greater diversity in supply sources," the spokesperson said.

"The concentrated nature of these markets also creates barriers to entry, with new suppliers facing the potential challenge of strategic behaviour by existing dominant suppliers."

Given the partnership's infancy, it is unclear what this might look like for producers and consumers.

Getting critical minerals involves dirty work

The Baiyun Ebo mine north of Baotou is the site of almost half the world's rare earths production ( NASA )

Officially, Australia has large reserves of critical minerals, including the world's third-largest deposits of lithium.

It's ranked sixth in the world for its rare earth deposits, according to Geoscience Australia.

But what's stopped Australia from gaining ground on China has been the steep environmental and financial costs of rare earth production.

Unlike resources such as gold, rare earths can't simply be dug out of the ground and immediately processed. That's because they're found inside other, non-rare-earth deposits.

The materials that are dug up need to be broken down in order to isolate the rare earths, which involves acid being used to separate minerals contained in rocks or sediment — an incredibly hazardous task for humans.

Producing rare earths creates toxic waste water, gases and tailings — left-over materials that aren't sellable — which includes ammonia and thorium that can severely damage the lungs and liver.

In 2013, China acknowledged it had more than 247 "cancer villages" as a result of environmental pollution.

Baotou, in China's province of Inner Mongolia, has suffered considerable environmental degradation due to rare earth mining operations. ( Reuters: David Gray )

"The cost of the chemicals and labour and the cost of complying with environmental legislation is significant," Professor King said.

He added China's relatively weak environmental regulation and low prices for chemicals and labour had given its rare earth producers a competitive edge.

One rare earths mining town in northern China, Baotou, is home to what has been dubbed a "nightmarish toxic lake" due to its pollutant levels.

Others have argued China has become the world's largest producer simply because Western nations don't want to do the dirty work that is required to produce rare earths.

Is there a 'cleaner, greener' way to get rare earths?

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Efforts are underway to extract critical minerals without causing profound environmental destruction.

The CSIRO said it was working with companies to make critical minerals production cheaper and easier to process — but this has not appeared at a commercially applicable scale.

"Rare earths are notoriously tricky, but they don't have to be quite as tricky as they're often made out," Chris Vernon, program director of the CSIRO's mineral resources processing, told RN Breakfast.

He added that the CSIRO was working with companies to "discover cleaner, greener ways of extracting the metal from the ore".

For now, those seeking to capitalise on Australia's desire to boost rare earth extraction and production will be able to tap into financial aid from Export Finance Australia, and from January 2020, a new Australian Critical Minerals Facilitation Office will help rare earth companies find investment and markets.

South Australia's Olympic Dam has been touted as a rare earth production site. ( Supplied: BHP Billiton )

While it remains to be seen if this Australian-American partnership may one day wrest away some of China's dominance of the rare earth trade, Mr Vernon hopes the announcement isn't just another flash in the pan.

He said he saw promises made about rare earth development in 2011 and 2012 emerge from a similar trade scare, which then "kind of fizzled".

"It's a shame it comes to a trade war to awaken us to an opportunity like this," he said.

"It's an opportunity that will come for Australia and for many other parts of the world … I really do hope that people take notice this time and actually do something."