Beijing's Grip on Rare Earths: How China Is Securing Global Dominance
China's Expanding Grip on Rare Minerals Threatens Global Technology Supply Chains
Editorial Team (ET)May 8, 2025
In today’s technology-driven world, rare minerals are the backbone of some of the most advanced devices, from smartphones to military hardware. China, already the world's dominant producer of these essential materials, is tightening its grip even further. With new regulations and expanded control over state-owned companies, Beijing has solidified its position as a global powerhouse in the rare minerals industry, sparking concerns about supply chain security and technological innovation worldwide.
China's Dominance in Rare Earths
China is not only the leading producer but also the largest exporter of rare earth elements (REEs). These minerals, which include neodymium, dysprosium, and praseodymium, are essential components in everything from electric vehicles to fighter jets. Currently, China produces nearly 90% of the world’s rare earths, making the global economy deeply reliant on its supplies. Without these minerals, many of the technologies we rely on daily would grind to a halt.
Recent Policy Shifts: Tightening Control
In recent weeks, China has made several moves to reinforce its stranglehold on the rare minerals market. As of October 1st, new export restrictions came into effect that require foreign companies to submit detailed reports on how they use these rare earth materials in their supply chains. This gives Beijing unprecedented control over which companies receive these critical supplies, amplifying its already considerable market dominance.
Key Minerals Affected by the New Restrictions
China's restrictions are not limited to just one or two minerals. Recent export controls target a variety of elements, including antimony, gallium, and germanium. These obscure but vital materials play critical roles in semiconductor manufacturing, military weaponry, and other high-tech applications. By controlling access to these elements, China has strengthened its leverage over industries that are vital for both economic stability and national security.
The Global Semiconductor Industry’s Dependency
The semiconductor industry is particularly vulnerable to China’s latest moves. Rare earth minerals are essential for the production of semiconductors, which power everything from AI systems to household electronics. As China tightens its export controls, chip manufacturers worldwide are scrambling to secure alternative sources. With Beijing commanding such a large share of the market, finding replacements is proving to be an uphill battle.
China’s Increased Corporate Ownership
China’s dominance in rare earth production isn’t just about government policy—it’s also about ownership. Recently, the last two foreign-owned rare earth refineries in China were acquired by a state-owned enterprise. This move has consolidated China’s control over the entire supply chain, from extraction to refinement, leaving little room for foreign competitors to operate.
National Security and Rare Earths
Beijing’s latest moves are also driven by national security concerns. Rare earth mining and refining have been classified as state secrets, and China is closely guarding its intellectual property in this area. Earlier this year, two managers in the rare earth industry were sentenced to prison for leaking sensitive information to foreign entities. This crackdown signals that China views its dominance in rare earths as not just an economic advantage, but a critical element of national security.
The Global Response to China's Moves
The world is taking notice of China’s tightening grip on rare minerals. The U.S., Europe, and Australia have all ramped up efforts to reduce their dependence on Chinese supplies. Countries are exploring new mining projects and investing in alternative refining technologies, but these efforts face significant challenges, including high costs and long lead times.
Case Study: Dysprosium and Its Growing Importance
Dysprosium, a rare earth element, is quickly becoming one of the most sought-after materials in the tech world. Previously used in powerful magnets, dysprosium is now critical in advanced semiconductors. The heat-resistant properties of dysprosium make it an essential component in the capacitors used in computer chips. Unfortunately for the rest of the world, China produces nearly 100% of the global supply of this valuable mineral.
Impact on Global Technology Companies
The tightening of China's grip on rare earths is already sending shockwaves through the technology sector. Companies like Nvidia, which rely heavily on rare minerals like dysprosium, are facing potential supply chain disruptions. The shortage of these materials could slow down the production of AI chips and other cutting-edge technologies, hampering innovation in critical industries.
Economic and Geopolitical Implications
China’s dominance in rare earths has far-reaching implications for the global economy and geopolitics. Western nations are increasingly concerned that their reliance on Chinese minerals could pose a threat to national security. As tensions between China and the U.S. escalate, rare earths are becoming a focal point in the broader struggle for technological supremacy.
Challenges in Creating Non-Chinese Supply Chains
Countries around the world are racing to develop alternative supply chains for rare earths, but the road ahead is fraught with obstacles. Establishing new mines and refineries is a costly and time-consuming process, and few nations have the technical expertise to refine rare earths at the level that China does. While efforts are underway to create new supply chains in countries like the U.S., Australia, and Europe, progress has been slow.
Future Outlook: The Race for Rare Earths
Looking ahead, the global race for rare earths is expected to intensify. As demand for these minerals grows, particularly in clean energy technologies like wind turbines and electric vehicles, countries will continue to explore alternative sources. However, given China’s deep-rooted dominance, breaking free from its supply chains will be a monumental challenge.
China’s Strategic Moves Beyond Rare Earths
In addition to its dominance in rare earths, China is also making strategic investments in rare mineral assets around the world. Chinese companies have been buying stakes in mines in Tanzania, Greenland, and Australia, ensuring that they have access to critical resources for years to come. This long-term strategy underscores China’s commitment to maintaining its position at the top of the rare minerals market.
Conclusion
China’s control over the global supply of rare minerals is only growing stronger, and its recent moves to tighten export restrictions have raised alarm bells worldwide. As nations scramble to diversify their supply chains, they face significant challenges in reducing their reliance on Chinese rare earths. The global race for rare minerals is heating up, and its outcome will have far-reaching implications for technology, national security, and the global economy.
