Reports are emerging that China is considering the restriction of the export of rare earth minerals, as a result of tensions with the U.S. Given China controls around 80% of global supply it would have severe consequences for not just advanced military applications (the presumed primary target) but also clean energy technologies like EVs and wind turbines. However, if the threat is carried out, Lukas Trakimavičius explains how this could backfire on China. Firstly, “rare earth” minerals are not particularly rare. They’re called “rare” because of their atomic properties. Though difficult to mine and process, relatively large deposits are found in countries as varied as India, Brazil, Vietnam, Australia and the U.S. These and other regions would be incentivised to ramp up production should supplies be threatened. Trakimavičius provides examples of how the EU and the U.S. are already exploring ways to reduce their dependence on China, ranging from new sources to the recycling of rare earths.
Last week reports surfaced that China is eyeing export controls for rare earth materials. This step is generally seen by the industry as Beijing’s latest response to the ongoing tensions with the United States, as it would predominantly affect the US defense industry. Yet, while there are few doubts that export controls could provide a temporary blow to a number of US companies, in the long run, such a decision would likely do China more harm than good.
According to the Financial Times, last month China’s Ministry of Industry and Information Technology proposed draft controls on the production and export of 17 rare earth minerals. Beijing’s officials had also asked industry executives to estimate how badly companies in the US and Europe would be affected if China restricted rare earth exports during a bilateral dispute.
China’s control of the rare earths global supply
This news was met with concern both in the US and the European Union. After all, China controls up to 80 percent of the rare earths global supply and these materials play an indispensable role in the production of advanced military and clean energy technologies. These include specialised magnets for motors in electric vehicles, generators in wind turbines and missile-guidance systems, among other things.
This is not the first time China has treated rare earths as a “strategic resource” that could be used to advance its foreign policy goals. Back in 2010, it raised the prospects of halting rare earth exports to Japan due to the territorial dispute over the Senkaku/Diaoyu Islands. More recently, it also threatened to cut rare earth exports to the US over issues such trade and Taiwan.
Though it is difficult to estimate if this time China will follow through with its plan to impose export controls, such a policy step would most definitely do more damage to China’s long term interests than Beijing would like to admit.
“Rare earth metals” are not actually rare
Despite their name, rare earths are anything but rare. Relatively large deposits of rare earths can be found in countries as varied as India, Brazil, Vietnam, Australia and the US, just to name a few. By and large, it has been economic wits and a high tolerance for the toxic and sometimes even radioactive process of mining and extracting, not geological luck that has given China its near monopoly on these elements. In fact, up until a major facility in Mountain Pass, California was shut down in the early 2000s, the US was one of the world’s largest suppliers of rare earths.
If China were to curb its rare earth exports, it could result in serious supply shortages to a number of companies, but it would also motivate other countries to ramp up their own production capabilities.
As a matter of fact, there is already a precedent for that. In the immediate aftermath of the 2010 rare earth crisis, Japan invested in Lynas, an Australian rare earths mining company that also has a processing plant in Malaysia. Over the years, these investments have paid off handsomely and helped cut Japan’s rare earth reliance on China by a third.

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EU, US exploring new sources
Fast forward to the present, it seems that both the EU and the US are following in Japan’s footsteps and are already actively exploring ways to reduce their dependence on China.
In 2020, for example, the European Commission (EC) launched a new strategy to strengthen the sourcing of raw materials from within the EU and diversify imports from third countries. According to the strategy, the EC would work with the member states to identify mining and processing projects in the EU that could already start work by 2025. Moreover, the EU plans to double down on its existing efforts of scaling up the reuse, repair and the recycling of rare earths from used products.
The US is also on a similar path. Last year, Washington passed the pandemic aid and spending package, which includes more than $800 million to fund rare earths and strategic minerals research. Furthermore, the US has invested in a number of companies such MP Minerals and Lynas in a bid to boost the country’s domestic rare earths production capacity. On top of that, a company called USA Rare Earth is currently eyeing an initial public offering to raise funds for its Texas mine and processing facility that could be in operation by 2023.
In the end, if China were to pull the trigger and activate export controls for rare earth materials, it could create serious supply shortages and result in a crisis much greater than that in 2010. However, this step would likely spell the end of its dominance over the rare earth market, as, over time, other producers would be more than happy to fill the void.
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Lukas Trakimavičius works at the Research and Lessons Learned Division of the NATO Energy Security Centre of Excellence. Previously he worked at NATO and the Lithuanian Ministry of Foreign Affairs. The views expressed in this article are the author’s own and are contributed in a purely personal capacity.
Critical relevance to the future of digital technology development.
China should ban export. Please EU & US should make their own product at their region & don’t do pollution at others regions. All the best. 🤭