Rare earths form the central building blocks of our modern world — they're used to manufacture smartphones, construct fighter jets and develop cancer treatments.

Key points: Rare-earth minerals are actually abundant, but are difficult to refine and to duplicate

Rare-earth minerals are actually abundant, but are difficult to refine and to duplicate China is the world's most dominant producer of rare earths essential to tech devices

China is the world's most dominant producer of rare earths essential to tech devices Beijing has threatened to restrict their production in retaliation over US tariffs

But now, China — the world's dominant producer of rare earths — is threatening to strangle global supplies in retaliation for tariffs imposed on imports into the United States amid its escalating trade war with President Donald Trump.

Last week, after President Xi Jinping visited a rare-earth mineral processing facility, China's National Development and Reform Commission — Beijing's guiding economic agency — quoted an unnamed official questioning whether the trade could be China's "counter-weapon" against the US.

"What I can tell you is that if anyone wants to use products made from China's rare earth to curb the development of China, then the people of China will not be happy," he said.

China was responsible for 70 per cent of 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)

But despite their ubiquity in our everyday lives and devices, not many of us know what rare earths are and why we rely on them so heavily — here we answer some questions:

What are rare earths and why are they important?

A total of 17 elements are classified as rare earths, all of which have metallic properties.

Despite the "rare" name they're actually found in abundance in deposits all across the earth's crust. One element, cerium, which is used to polish smartphone touchscreens, is 15,000 times more abundant than gold.

The elements are considered rare, however, because there are no credible artificial substitutes. In addition, supply of rare earths is vulnerable, as production is concentrated in a small handful of countries.

A wide array of rare earth elements are needed to create contemporary phones. ( ABC News: Jarrod Fankhauser )

Gavin Mudd, associate professor in chemical and environmental engineering at RMIT University, explained that 15 of the elements, known as lanthanides, make their way into most technological devices.

"Aside from smartphones, these metals are absolutely fundamental to things like permanent magnets that are used in wind turbines or the magnets in electric vehicles," Dr Mudd said.

He said some other crucial elements in the group included dysprosium, which has the one of the world's strongest magnetic strengths and is used in lasers and computer hard drives, as well as samarium, a metal used in cancer radiation therapies.

Another element, neodymium, straddles the worlds of consumers and the US military — in smartphones, it's used to create the tiny, but powerful, magnets that trigger vibrations and power the phone's external speakers, however neodymium is also crucial to the navigation controls of ballistic missiles.

Why has China become the world's main producer?

The Baiyun Ebo mine in China's Inner Mongolia region is the site of almost half the world's rare earth production. ( Supplied: NASA )

Rare earths production has been overwhelmingly been left to China, as it has historically been unburdened by stringent labour and environmental protections that drive the rare earths' final price up, which is the case for producers in Australia and the United States.

This meant that China quickly became the world's main supplier of these resources— responsible for 85 to 95 per cent of global production since the 1990s — as it has been able to sell the commodities at much lower prices than other countries as a result of its less stringent environmental and health safety regulations, and lower labour costs.

In 2018, China produced about 120,000 tonnes, while the totals of the next two leading producers — Australia and the United States — were 20,000 and 15,000 respectively.

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

Unlike resources such as gold, rare earths can't simply be dug out of the ground and immediately processed as 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.

One way to do this, Dr Mudd said, is through "hundreds and hundreds" of leaching cycles, which involves acid being used to separate minerals contained in rocks or sediment — an incredibly hazardous task for humans.

One rare earths mining town in northern China, Baotou — home to a large acid-mining tailings dam — has been dubbed "the worst place on earth", due to its levels of toxicity.

Some have argued that 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.

What could happen if China really cuts global supplies?

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In the days since China raised the spectre of weaponising its rare earths supply, prices for some minerals have jumped significantly — but in the long-term, finding rare earth alternatives in advanced manufacturing could take years of development.

If China does suddenly reduce its supply, prices for some smartphones and other products would rise in the months afterwards, as manufacturers would have to scramble to find new suppliers in the short-term, while resource scarcity could also drive up prices of rare earths.

Rare earths power many of the global economy's products. ( ABC News: Graphic by Jarrod Fankhauser )

This would have a profound effect on the US, according to Dr Jeffrey Wilson, international resource expert and research director at the Perth USAsia Centre.

"If [supply was to constrict] it will cause chaos and mayhem in the US industrial ecosystem, similar in scale to the Huawei bans," Dr Wilson said, referring to the US trade embargo on the Chinese tech giant.

But Dr Wilson also noted that the "perverse" effect of a rare earths trade slowdown would "be a significant boost" for Australian producers.

Australia was the second-largest producer of rare earths in 2018, and the local mining industry has touted them as the next potential trigger of a mining boom.

When China announced the threat, Australian rare earths miner Lynas — the only major producer outside China — saw its share price surge to its highest value in more than five years.

Olympic Dam in South Australia has been touted as a rare earths mining site. ( Supplied: BHP Billiton )

But despite the positive signs, scaling up Australia's rare earths industry to the size of China's won't happen overnight, and it could take years to build up the domestic industry's capacity.

China's total rare earths processing capacity stands at 220,000 tonnes, and for Australia to match China's 2018 rare earths production, it would need to increase production by 500 per cent.

A number of other sites around Australia have the potential to produce rare earths, but none are in the position to supply on a mass scale.

For now, it remains unclear whether Beijing's leaders will follow through with threats to weaponise its rare earths production, but there doesn't seem to be any hint of a reprieve in tensions between China and the United States on the horizon.

For Dr Wilson, this unfolding situation serves as an opportune reminder about the need for countries and manufacturers to get "real" about their economies and diversifying their resource suppliers.