China has restricted the export of several crucial rare earth minerals to the United States in response to President Donald Trump’s tariff increases.
The restrictions come up short of a total ban, but they will probably slow the delivery of minerals needed by defense, energy, and electronics companies.
The term “rare earth minerals” is sometimes used broadly to refer to all valuable or unusual minerals, but in fact it refers to a specific list of 17 metallic elements. Fifteen of them are lanthanides, meaning they occupy a specific region of the periodic table of the elements that begins with lanthanum (atomic number 57). The lanthanides all share similar atomic structure and chemical behavior, so the grouping is not arbitrary.
The other two rare earth minerals are scandium and yttrium. They are collectively known as “rare earths” simply because the scientists who first discovered them believed they must be rare in nature, as they were difficult to identify. For example, the name of lanthanum comes from a Greek word that means “hidden,” and it was discovered by a chemist who was studying strange impurities in another mineral.
Explorers over the past 150 years discovered that some of the “rare earths” can actually be found in abundance by digging into the Earth’s crust. Many of those abundant deposits are under the control of Communist China – affording China a near-monopoly on processing and refining these metals.
China directly controls about 30 percent of the planet’s known rare earth reserves, but 85 percent of the processing capacity. At the peak of its market dominance fifteen years ago, China was supplying about 97 percent of the world’s rare earth minerals.
There are several reasons for China’s dominant position, but one of the most important ones is environmental impact. China simply does not care about environmental regulations, while U.S. companies find it almost impossible to obtain the permits needed to build refineries. Until now, the cost of developing a domestic rare earth industry was far too high to make the endeavor profitable.
Refining is essential because rare earths are always found entwined with other minerals in nature — that is why the scientists who discovered them assumed they were “rare.” Ore must be mined, then the rare earths must be separated from other minerals, and the resulting oxides (that is, dust) must be processed back into pure metals.
Refining rare earths is a painstaking and expensive process, and during the long years when environmental regulations made it unprofitable for domestic refineries to spin up, Chinese engineers made important discoveries that helped them perfect an industry that was created in the United States.
Demand for these minerals has skyrocketed because they have important applications for high technology and alternative energy products which have flourished over the past few decades. Chinese leaders saw this demand building decades ago and moved aggressively to control the mineral supply. All the way back in 1987, Chinese President Deng Xiaoping declared: “The Middle East has oil. China has rare earths.”
The supply and demand curves for all 17 of the rare earths are not equal. China’s new trade restrictions focus on seven of them: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.
These are mostly “heavy” rare earth elements (HREEs), which means they are useful in high-temperature magnets — the type of magnet used extensively in electric vehicle (EV) motors, wind turbines, and military electronic systems.
China has a virtual monopoly on supplying all seven of them. The Chinese government carefully avoided slapping restrictions on the lighter rare earths because those are more easily procured from alternative suppliers.
The Wuhan coronavirus pandemic and its aftermath galvanized the U.S. Department of Defense (DOD) into realizing that total dependency upon America’s chief global strategic rival for vital minerals was not a good idea. DOD devised a plan in 2024 for building a domestic “mine to magnet” supply chain for rare earths, and has committed nearly half a billion dollars in funding to that project, but it will not be online until 2027 at the earliest.
At the moment, the only light rare earth mining and processing facility in the Western Hemisphere is located in Mountain Pass, California. It reached a new high in 2024 by producing 45,000 metric tons of rare earth oxides. China produced about 270,000 metric tons of oxide in the same year.
There are no heavy rare earths processing facilities in the United States, although the Mountain Pass facility is scheduled to gain that capability in the future, and other heavy rare earths processing plants are under development in Texas. The only existing heavy rare earths refinery outside of China is located in Vietnam, but it was shut down last year over a tax dispute.
China has not completely shut down rare earths exports to the United States, but it has paused exports while new restrictions and licensing requirements are put in place. Also, China placed a number of American defense companies on its “unreliable entity list” last week, ostensibly because they compromised Chinese national security by doing business with Taiwan. Those companies will probably have a great deal of trouble securing permits for rare earth supplies under the new restrictions.
China has used its rare earths monopoly as a weapon before, notably against Japan in 2010. In September of that year, the Japanese coast guard arrested the captain of a Chinese fishing boat that collided with Japanese ships off the cost of the disputed Senkaku Islands. China retaliated by choking off Japan’s supply of rare earth minerals. Japan quickly gave in and released the fishing boat captain, but it still suffered significant economic damage from the rare earths blacklist for years to come.
Japan learned from that incident, implementing an ambitious billion-dollar plan to reduce its reliance upon Chinese rare earths exports partly by finding ways to use less of the minerals in its manufacturing operations. It also built a huge stockpile of rare earths to make future embargoes less effective and began scouting for rare earth mines in other countries that Japanese companies could purchase.
According to industry analysts, Japan’s plan was highly effective — but it remains 60 percent dependent upon Chinese exports of rare earth minerals instead of 90 percent before its implementation.
