In April 2025, China added seven rare earth elements to its export-control list, and for a few months this year the machinery of modern industry got a scare. Automakers warned of stalled EV lines; defense planners recalculated how many magnets they could source without Beijing's sign-off. Then, after a meeting between the Chinese and U.S. presidents in Busan on 30 October 2025, the two sides announced a truce, and China suspended its newest restrictions for a year [source: Bloomberg, 2025]. If you only read the headlines, you might think the crisis is over. It is not — and understanding why is the best way to make sense of a story that will shape the next decade of trade, technology, and clean energy.
This is not really a story about running out of rocks. The Earth is not short on rare earths, gallium, or graphite. It is a story about who can process them, and about how a handful of narrow chokepoints became instruments of statecraft. Below, the mechanics of that leverage, the four-year escalation that built it, the West's scramble to respond, and the reasons for caution on all sides.
A quick map of what follows:
- What "critical minerals" are, and why refining — not mining — is the real chokepoint
- A four-year timeline of China's export controls
- How the United States, Europe, Japan, and Australia are responding
- The case for caution: cost, pollution, and the boom-bust trap
- What to watch next
What counts as a "critical mineral" — and why refining is the real chokepoint
"Critical minerals" is a policy label, not a chemistry term: it describes materials a government considers essential to its economy and security but vulnerable to supply disruption. Each government keeps its own list; the U.S. Geological Survey maintains the American one [source: USGS, 2025]. Rare earths are a prominent subset — 17 elements (the 15 lanthanides plus scandium and yttrium) that are not actually geologically rare, but are difficult and dirty to separate. Two of them, neodymium and praseodymium, are combined into "NdPr" to make the permanent magnets inside electric-vehicle motors, wind turbines, smartphones, and guided weapons [source: USGS, 2025; IEA, 2025].
Mining is spread out; refining is concentrated
Here is the distinction that most headlines blur. Mining rare earth ore is comparatively diversified: in 2024 the world mined roughly 390,000 tonnes of rare-earth-oxide equivalent, of which China produced about 270,000 tonnes — close to 70% [source: USGS Mineral Commodity Summaries, 2025]. That is a large share, but the United States, Australia, and others mine meaningful volumes too.
The bottleneck is the next step. Turning mixed ore into separated, purified oxides, then into metals and magnets, is where China's dominance becomes near-total. The International Energy Agency estimates China refined more than 90% of the world's rare earths in 2023, easing to about 85% in 2025 as new plants opened in the United States and Malaysia [source: IEA Global Critical Minerals Outlook, 2025]. Refining concentration is not unique to rare earths: the IEA finds China is the leading refiner for 19 of 20 strategic minerals, with an average market share of roughly 70% [source: IEA Global Critical Minerals Outlook, 2025]. For some inputs the grip is tighter still — China accounts for an estimated 98–99% of the world's primary gallium and about 68% of germanium, both essential to chips and fiber optics [source: USGS, 2024/2025]. So when analysts say "China controls rare earths," the accurate version is: China controls the processing of them, and of much else besides.
A four-year escalation: the export-control timeline
China's use of mineral processing as leverage did not arrive all at once. It built up in steps, each a verified official action with a dated effect:
- July 2023 — gallium and germanium. On 3 July 2023, China's Ministry of Commerce (MOFCOM) announced licensing controls on gallium and germanium, effective 1 August 2023 [source: China MOFCOM / Global Trade Alert, 2023].
- October 2023 — graphite. Licensing requirements for graphite, a key battery-anode material, were announced on 20 October 2023 and took effect that December [source: China MOFCOM, 2023].
- August 2024 — antimony. Dual-use export restrictions on antimony (used in flame retardants and munitions) were announced on 15 August 2024, effective 15 September 2024 [source: China MOFCOM, 2024].
- December 2024 — a ban aimed at the U.S. On 3 December 2024, MOFCOM moved from licensing to an outright ban on exports of gallium, germanium, antimony, and superhard materials to the United States, with tighter checks on graphite [source: China MOFCOM Notice 2024 No. 46 / CSET, 2024].
- April 2025 — rare earths. On 4 April 2025, China placed seven medium and heavy rare earths — samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium — plus permanent magnets under global export licensing, effective immediately [source: China MOFCOM / CSET, 2025].
- October 2025 — the reach widens. On 9 October 2025, China expanded the rules with a "0.1% threshold" — any product containing more than 0.1% of controlled rare earths would need a license — and an extraterritorial provision requiring a Chinese license even for shipments between two other countries [source: China MOFCOM, 2025].
That October escalation is what the November truce rolled back. Following the Busan summit, China formally suspended the October 2025 measures for one year, through 10 November 2026 [source: Bloomberg, 2025; CNBC, 2025]. But the suspension is narrower than it sounds. The April 2025 licensing regime — the one covering the seven rare earths most important to magnets — was never suspended. Analysts describe the truce as a tactical pause, not a policy rollback, and note that even with exports resumed, flows have been volatile: U.S. imports of rare earths have not returned to their pre-restriction 2024 levels, even as European imports rebounded [source: CSIS, 2025/2026]. The leverage, in other words, remains switched on.
The Western response: diversify, reshore, stockpile
The controls turned a slow-burning policy debate into an emergency, and governments and companies have responded with money, mandates, and stockpiling plans. The important discipline here is to separate what has actually happened from what has merely been announced.
The United States bets on price floors and equity
The most striking move is in the United States, where the Department of Defense took a direct stake in MP Materials, operator of the Mountain Pass mine in California. Announced on 10 July 2025, the deal includes a 10-year price floor of $110 per kilogram for MP's NdPr output, a $400 million purchase of convertible preferred stock (with a commitment for up to $350 million more), a $150 million loan to build out heavy-rare-earth separation, and warrants that could bring the DoD to roughly a 15% stake [source: MP Materials, 2025]. It is an unusually interventionist arrangement for Washington — closer to industrial policy than to a normal procurement contract. Part of the package, a new "10X" magnet facility with a decade of guaranteed offtake, is still a plan rather than a running plant, and should be read as a target [source: MP Materials, 2025]. The market noticed regardless: after MP stopped shipping concentrate to China in 2025, rare earth prices hit a two-year high [source: Bloomberg, 2025].
Europe, Japan, and Australia
Outside the United States, the clearest single milestone came from Australia's Lynas Rare Earths. On 16 May 2025 Lynas produced dysprosium oxide at its Malaysian plant, becoming the first commercial producer of heavy rare earths outside China, with terbium to follow [source: Lynas Rare Earths, 2025]. That is a genuine break in China's monopoly on the hardest part of the chain — though Lynas's heavy-rare-earth circuits are sized at about 1,500 tonnes a year, and its larger U.S. facility in Texas, targeting 5,000 tonnes of magnet-grade NdPr annually, is still under construction [source: Lynas Rare Earths, 2025].
Europe's approach is regulatory. The EU's Critical Raw Materials Act, adopted in April 2024, sets 2030 benchmarks: at least 10% of the bloc's annual consumption of each strategic raw material mined domestically, at least 40% processed domestically, at least 25% from recycling, and no more than 65% of any single material sourced from one third country [source: European Commission, 2024]. These are targets, not current reality, and Europe starts far below several of them — a reminder that policy benchmarks and industrial capacity are different things. The IEA, for its part, has urged governments to build strategic stockpiles as a buffer while new capacity ramps [source: IEA Global Critical Minerals Outlook, 2025].
The case for caution: cost, pollution, and the boom-bust trap
It would be easy to frame all of this as a straightforward race for self-reliance. The reality is contested, and several counter-currents deserve equal weight.
The first is cost, and it is why the MP Materials deal needed a price floor at all. Rare earth prices are volatile: driven by oversupply, NdPr fell to a roughly four-year low in early 2024 before surging more than 40% over 2025 [source: Benchmark Mineral Intelligence, 2025]. Western producers struggle to compete with Chinese output at spot prices, which is precisely why governments are guaranteeing floors and taking equity. That support can look less like a temporary bridge and more like permanent subsidy — and it raises the risk of a classic boom-bust: capacity gets built during a scare, China can raise output to push prices down, and marginal Western projects fail. A telling sign of the bifurcation is that Benchmark Mineral Intelligence has begun publishing separate "ex-China" prices; as of March 2026 neodymium oxide traded around $113/kg inside China versus about $184/kg for material shipped from China — a roughly 63% security premium that Western buyers are paying [source: Benchmark Mineral Intelligence, 2026].
The second is the environment. Rare earth refining is chemically brutal: separating the elements uses strong acids and generates radioactive waste, because the ores contain thorium and uranium. One widely cited estimate puts the radioactive residue at about 1.4 tonnes for every tonne of rare earth oxide produced [source: academic (ScienceDirect), 2023]. This is a reason China's dominance grew in the first place — it absorbed the pollution others preferred to avoid — and it is a live obstacle for Western entrants, who market themselves as cleaner but must still solve waste storage [source: Chatham House, 2026]. Some governments, including the G7, are exploring pricing systems that would bake environmental costs into the market, effectively rewarding a "sustainable premium" [source: Chatham House, 2026].
The third is the broader cost of fragmentation. Duplicating an entire mine-to-magnet supply chain in multiple regions is expensive and, from a pure efficiency standpoint, wasteful; economists warn that a world of parallel, subsidized supply chains means higher prices for the clean-energy and electronics goods that depend on these inputs. Set against that is the security argument — that resilience is worth paying for when a single supplier has shown it will use its position as leverage [source: CSIS, 2025/2026]. Both claims can be true at once, which is why this is a genuine policy dilemma rather than a simple morality tale.
What to watch
The next signposts are concrete. Watch whether China's suspension of the October 2025 controls actually holds through its November 2026 expiry, and whether the untouched April 2025 licensing regime is enforced loosely or tightly — that, more than any headline, determines real-world availability [source: CSIS, 2025/2026]. Watch whether Western projects hit their timelines: MP's 10X magnet plant and Lynas's Texas facility are promises today, and delivery is what will move China's refining share below the IEA's projected 70% by 2035 [source: IEA Global Critical Minerals Outlook, 2025; Lynas Rare Earths, 2025]. Watch prices and the ex-China spread: a persistent premium means diversification is being paid for; a collapse would signal that Chinese oversupply is squeezing new entrants out [source: Benchmark Mineral Intelligence, 2026]. And watch whether recycling and material substitution — the least glamorous levers — start to bend demand.
None of this resolves quickly. The uncomfortable truth is that building a refinery, an environmental permit, and a skilled workforce takes years, while an export license can be revised overnight. For now, the world is discovering that the most decisive supply chains are not the ones that mine the most, but the ones that can turn ore into the finished magnet — and that this quiet, chemical middle step has become one of the defining leverage points of the decade.
This article is for general information and is not investment advice.