As global competition for critical minerals intensifies, Iran may be sitting on an opportunity that could reshape part of its mining sector. Experts say the country possesses promising geological potential for rare earth elements, but success will depend on exploration, processing technology and integration into global value chains.
Rare earth elements have become increasingly important in recent years as countries compete to secure supplies for electric vehicles, wind turbines, semiconductors, defense systems and other advanced technologies. Although they are not particularly rare in geological terms, their strategic importance has earned them a reputation as the “oil of the 21st century.” The growing rivalry between China and the United States has further elevated their importance, turning control of rare earth supply chains into a major geopolitical and economic issue.
According to a recent report by the Iran Chamber of Commerce Research Center, China dominates the global rare earth market. The country holds nearly half of the world’s known reserves and produces about 68.5% of global output. More importantly, China controls more than 90% of global processing capacity, giving it a commanding position in the supply chain. The report argues that China’s advantage is not simply a result of its mineral reserves. Rather, it stems from decades of investment in processing technology, industrial infrastructure and downstream manufacturing.
This distinction is particularly important for countries such as Iran. The report notes that Brazil and Vietnam together possess rare earth reserves approaching China’s level, yet their contribution to global production remains limited. The experience of these countries demonstrates that large reserves alone do not guarantee economic influence. The real value lies in the ability to process rare earth minerals and convert them into products used by advanced industries.
Significant Potential
Iran’s geological position suggests significant potential. Located within the Alpine-Himalayan metallogenic belt, the country contains a variety of geological formations favorable for rare earth deposits. Studies conducted in the Marvast region of Yazd Province have identified promising concentrations of rare earth elements, particularly within phosphate and apatite-bearing minerals. However, experts caution that the gap between identifying geological potential and building a competitive industry remains substantial.
“Studies on rare earth elements in Iran are still at an early stage,” said Mehdi Karbasian, former head of the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO), in an interview with Donya-e-Eqtesad. “We have fallen behind in exploration of these strategic minerals and cannot yet make definitive statements about the size of reserves or their economic viability.”
Karbasian believes decades of sanctions and limited access to advanced mining technologies have slowed exploration efforts.
As a result, Iran still lacks comprehensive geological data and a clear picture of its economically recoverable rare earth resources. He noted that a pilot project launched in 2017 successfully extracted rare earth elements such as cerium, lanthanum and neodymium under laboratory conditions. While the project produced encouraging results, it was eventually discontinued before reaching a larger scale.
Missing Pieces
The former IMIDRO chief argues that technology and processing capacity represent the most important missing pieces. “The greatest risk is that we simply do not enter this field,” he said. “Another danger is becoming merely a supplier of raw materials without participating in the value chain.” He added that China’s experience demonstrates the importance of viewing the industry as an integrated chain stretching from exploration and extraction to advanced manufacturing and knowledge-based products.
Potential political and economic openings could also influence the sector’s future. Karbasian noted that mining development depends on broader investment conditions across the economy. Recent discussions surrounding possible diplomatic progress between Iran and the United States have raised expectations regarding foreign investment. If meaningful capital inflows materialize, sectors such as mining could gain access to the financing and technology needed for long-term development.
Still, he warned against unrealistic expectations. Geological potential alone does not guarantee commercial success. Extensive exploration, scientific research and targeted investment remain necessary before Iran can determine the true scale of its opportunity. In the near term, exploration and processing technologies are likely to offer the greatest investment potential. Over the longer run, however, the highest value creation will come from advanced refining and downstream manufacturing.
For now, Iran’s rare earth sector remains largely an untapped opportunity. Yet as global demand for critical minerals continues to grow, the country faces a strategic choice. With sustained investment, technological development and a focus on value-added production, rare earths could become Iran’s next mining frontier.
