China Expands Rare Earth Export Curb Prior to Trump-Xi Meeting

Chinese Bargaining Chip: Rare-Earth Minerals

China announced broad export controls on rare-earth-related technologies and materials, requiring foreign companies to get Beijing’s approval to export magnets or products containing even trace amounts of Chinese-origin rare earths or made using Chinese extraction/refining methods. The rules — framed as protecting national security and to be phased in from Dec. 1 with military exports denied — mirror U.S.-style export controls and come ahead of an expected Trump–Xi meeting in Gyeongju. The move strengthens China’s leverage over critical minerals (rare earths and battery materials), risks disrupting global supply chains for EVs, smartphones, semiconductors and defense systems, and has prompted market moves and calls in the U.S. and allied countries to bolster non-China supply chains.

Key points

• New licensing regime covers foreign-made rare-earth magnets and certain semiconductor materials if they contain ≥0.1% Chinese-origin heavy rare earths or were produced with Chinese methods; military-related exports will be denied.
• Beijing says measures protect national security and prevent misuse of Chinese-origin materials/technology for military purposes; experts view the timing as strategic for negotiations with the U.S.
• China dominates rare-earth mining, processing and magnet manufacturing (estimates up to ~70–93%), giving it strong leverage; the announcement lifted shares of major Chinese rare-earth firms.
• The rules mirror the U.S. foreign direct product-style controls and also expand export curbs on battery materials (anodes, cathodes, precursors), prompting U.S. and allies to push diversifying and supporting alternative supply chains.

Our View:

How tightly Beijing implements the licensing regime, and how quickly other countries respond with industrial policy and diplomatic initiatives, will determine whether this becomes a transient negotiating lever or the start of a more sustained reordering of critical-material supply chains.

We believe that China will use this as a strong bargaining chip in the upcoming Trump-Xi Meeting in South Korea. China is mostly seeking relaxation on high-end semiconductor chips and a softer stance on Taiwan by the Trump adminsitration.

Addional Minerals Added to Ban

China has expanded export controls on a range of minerals, rare‑earth elements and related technologies to tighten its grip on critical materials used in clean energy, defense and high‑tech industries. New additions (effective November 8) include five medium‑heavy rare‑earth elements and more graphite and lithium‑battery related items; Beijing has earlier banned or restricted exports of gallium, germanium, antimony and imposed licensing on tungsten, indium, bismuth, tellurium, molybdenum and processing technologies.

Key points

• China added five medium‑heavy rare‑earth elements (holmium, erbium, thulium, europium, ytterbium) and related materials to export controls effective Nov. 8; these join 20 previously listed items.
• Controls now cover more equipment and machines used in mining/refining and expanded lithium‑battery production items; synthetic graphite materials were also added.
• Earlier measures (since 2023) include bans on exporting gallium, germanium and antimony to the U.S., and restrictions on technology for making rare‑earth magnets and battery/gallium processing.
• China dominates global supply and refining of many of these minerals (rare earths, gallium, germanium, graphite), giving it leverage in the energy transition and high‑tech supply chains.

Rare-Earth Minerals Background

China dominates global rare-earth production and refining, giving it strategic leverage in trade conflicts with the United States. Rare earths — 17 elements with critical magnetic, optical and catalytic properties — are essential across electronics, green technologies, defense and medical devices. Although relatively abundant in the crust, economically viable deposits and environmentally costly extraction concentrate production in a few places, notably China, which supplies ~70% of output. US efforts to ramp domestic production face long lead times and environmental challenges, while trade tensions have led China to impose export controls that disrupted US manufacturers and prompted policy responses from the Trump administration.

Key points

• What rare earths are: 17 metallic elements (e.g., neodymium, dysprosium, terbium, cerium) used for magnets, displays, catalysts, semiconductors, MRI machines and green tech (EVs, wind turbines).
• China’s dominance: China produces about 70% of rare-earth output, has ~44 million tonnes of reserves, and controls much refining capacity — enabling it to use export limits as leverage in disputes.
• Trade-war actions: China has previously restricted exports (2010 Japan dispute, 2019–2024 export controls), added permanent-magnet rare earths to controlled lists and required licenses, disrupting US companies and pressuring supply chains.
• US response and challenges: The Trump administration has pushed for increased domestic production (executive orders, financing, permitting acceleration, probes into supply-chain risks), but scaling mining and refining (e.g., Mountain Pass mine) is time-consuming, costly, and environmentally sensitive.
• Downstream bottlenecks: Even when ore is mined outside China, much of the processing (separation, refining, alloy and magnet production) remains concentrated in China. That means rare-earth concentrates shipped from other countries often end up being turned into finished products in Chinese facilities, perpetuating reliance on Chinese refining know‑how and industrial capacity.
• Environmental and regulatory hurdles: Rare-earth extraction and separation produce radioactive and toxic wastes (thorium and uranium coproducts, acidic effluents). Stringent environmental regulations, high remediation costs, and community opposition have delayed or blocked new projects in the U.S., Australia and elsewhere, increasing the time and capital needed to create diversified supply chains.
• Economic incentives and market dynamics: Low prices—partly the result of Chinese production scale and past subsidies—have discouraged investment in higher‑cost deposits abroad. When prices spike after supply disruptions, speculative investment can follow, but sustained capacity expansion requires predictable long‑term demand signals and policy support (e.g., offtake agreements, loan guarantees, tax incentives).
• Strategic stockpiles and alliances: To reduce vulnerability, the U.S. and allies have explored strategic reserves, cooperative procurement, and joint investment in non‑Chinese processing facilities. Programs include Department of Defense investments, partnerships with Australia, Canada and Japan, and research funding for alternative materials and recycling technologies.
• Substitutes and technology diversification: Research is ongoing into rare‑earth substitutes, reduced‑rare‑earth magnet designs, and next‑generation materials (e.g., ferrite, Alnico variants, and advanced composites). While promising for some applications, substitutes often trade off performance — particularly for high‑energy permanent magnets used in defense systems and high-efficiency EV motors — so complete replacement at scale remains unlikely in the near term.

Summary

Rare earths are not geopolitically rare in geological terms, but the industrial concentration of production and processing has created a strategic chokepoint. Addressing that vulnerability requires coordinated policy, investment, and technological innovation spanning mining, processing, manufacturing and recycling. Progress is underway but will take years and substantial public‑private collaboration to achieve resilient, diversified supply chains that protect both economic and national‑security interests.