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When China announced new restrictions on rare-earth exports in October 2025, it sent ripples through defence and technology sectors worldwide. The rare-earth market is small in volume but vast in influence: the metals underpin everything from precision-guided missiles and jet engines to electric vehicles and smartphones.
By tightening export licences for mining, processing, and magnet production, Beijing is asserting control over an industry that it already dominates—raising concern among nations dependent on Chinese materials for their most advanced systems.
Why Rare Earths Matter to Defence and Technology
Rare-earth elements (REEs)—a group of 17 metallic elements including neodymium, dysprosium, and terbium—are essential in the production of high-performance magnets, guidance systems, sensors, and stealth coatings.
China’s Path to Dominance
China’s current position stems from decades of deliberate industrial strategy. Beginning in the 1980s, Beijing invested heavily in rare-earth mining and refining, tolerating environmental costs that drove Western competitors out of the market.
Today, China mines roughly 60 – 70 percent of the world’s rare-earth ore but controls over 90 percent of global processing and magnet manufacturing capacity. The critical bottleneck is not extraction, but separation—the complex chemical process that transforms raw ore into usable oxides.
Beijing has since consolidated its industry into a handful of state-supervised conglomerates, creating an integrated national system that can coordinate production, pricing, and export policy. That structure gives China the ability to tighten or relax global supply at will.
What Has Changed in 2025
Under the new measures announced in October, China’s Ministry of Commerce expanded the range of restricted exports and imposed stricter licensing rules.
Implications for Global Supply Chains
The rare-earth tightening highlights a growing vulnerability in global manufacturing. Nations heavily reliant on Chinese processing—particularly in defence, aerospace, and high-tech industries—face renewed exposure to geopolitical risk.
Prices for certain oxides rose sharply in the days following the announcement, and analysts warn that even minor licensing delays could cascade through downstream production. Defence contractors in the United States, Japan, and Europe are already re-evaluating their sourcing strategies and stockpiles.
While other countries such as Australia, the United States, and Canada hold rare-earth deposits, most lack large-scale separation and magnet-making infrastructure. Building that capacity could take years, and even then, environmental permitting and economic viability remain hurdles.
The episode illustrates a structural asymmetry: although the global economy depends on rare-earth materials, the processing capability is overwhelmingly concentrated in one country.
A Strategic Resource in an Uncertain Era
China’s new export controls mark a calculated use of industrial power as a geopolitical instrument. They reaffirm Beijing’s command of a supply chain that underpins both the digital and defence revolutions of the 21st century.
For now, the world’s most advanced weapons, satellites, and clean-energy technologies still run through China’s refining plants. The question is not merely whether supply can be replaced, but whether it can be done quickly enough to avoid strategic dependency when tensions rise.
Sources:
Reuters, China Tightens Rare Earth Export Controls (9 Oct 2025); The Guardian, China Steps Up Control of Rare-Earth Exports (9 Oct 2025); AP News, China Outlines More Controls on Rare-Earths and Technology (2025); U.S. Department of Defense; Carnegie Endowment for International Peace; CSIS.
By tightening export licences for mining, processing, and magnet production, Beijing is asserting control over an industry that it already dominates—raising concern among nations dependent on Chinese materials for their most advanced systems.
Rare-earth elements (REEs)—a group of 17 metallic elements including neodymium, dysprosium, and terbium—are essential in the production of high-performance magnets, guidance systems, sensors, and stealth coatings.
- Precision Guidance and Actuation: Neodymium and samarium are used in compact, high-strength magnets that power the servo systems inside missiles, aircraft, and drones.
- Radar, Optics, and Communications: Europium, yttrium, and terbium play roles in laser targeting, sonar, and advanced optics.
- Aerospace and Energy Systems: Dysprosium and terbium improve heat tolerance in alloys used in engines and turbines.
China’s current position stems from decades of deliberate industrial strategy. Beginning in the 1980s, Beijing invested heavily in rare-earth mining and refining, tolerating environmental costs that drove Western competitors out of the market.
Today, China mines roughly 60 – 70 percent of the world’s rare-earth ore but controls over 90 percent of global processing and magnet manufacturing capacity. The critical bottleneck is not extraction, but separation—the complex chemical process that transforms raw ore into usable oxides.
Beijing has since consolidated its industry into a handful of state-supervised conglomerates, creating an integrated national system that can coordinate production, pricing, and export policy. That structure gives China the ability to tighten or relax global supply at will.
Under the new measures announced in October, China’s Ministry of Commerce expanded the range of restricted exports and imposed stricter licensing rules.
- Defence and semiconductor applications will now require specific government approval.
- Five additional elements—holmium, erbium, thulium, europium, and ytterbium—were added to the controlled list.
- Export licences may be time-limited, with some reports indicating six-month authorisations for selected foreign firms.
- Collaboration agreements between Chinese and overseas companies involving rare-earth technology will face new scrutiny.
The rare-earth tightening highlights a growing vulnerability in global manufacturing. Nations heavily reliant on Chinese processing—particularly in defence, aerospace, and high-tech industries—face renewed exposure to geopolitical risk.
Prices for certain oxides rose sharply in the days following the announcement, and analysts warn that even minor licensing delays could cascade through downstream production. Defence contractors in the United States, Japan, and Europe are already re-evaluating their sourcing strategies and stockpiles.
While other countries such as Australia, the United States, and Canada hold rare-earth deposits, most lack large-scale separation and magnet-making infrastructure. Building that capacity could take years, and even then, environmental permitting and economic viability remain hurdles.
The episode illustrates a structural asymmetry: although the global economy depends on rare-earth materials, the processing capability is overwhelmingly concentrated in one country.
China’s new export controls mark a calculated use of industrial power as a geopolitical instrument. They reaffirm Beijing’s command of a supply chain that underpins both the digital and defence revolutions of the 21st century.
For now, the world’s most advanced weapons, satellites, and clean-energy technologies still run through China’s refining plants. The question is not merely whether supply can be replaced, but whether it can be done quickly enough to avoid strategic dependency when tensions rise.
Reuters, China Tightens Rare Earth Export Controls (9 Oct 2025); The Guardian, China Steps Up Control of Rare-Earth Exports (9 Oct 2025); AP News, China Outlines More Controls on Rare-Earths and Technology (2025); U.S. Department of Defense; Carnegie Endowment for International Peace; CSIS.