China's rare earth export ban exposes global industry’s dangerous dependence

Although the United States, Australia, and Myanmar mine some rare earths, China dominates the refining process—handling up to 90% of global output.

Since April 4, China has suspended almost all exports of seven heavy rare earth elements—dysprosium, gadolinium, lutetium, samarium, scandium, terbium, and yttrium—as well as high-performance magnets made from them. These materials are vital for industries ranging from electric vehicles and smartphones to military guidance systems and wind turbines. The sudden halt has begun causing severe shortages, forcing companies like Ford to pause production and pushing European factories to the brink of closure, the New York Times reported.

Why these metals matter
Rare earths are not geologically scarce, but extracting and refining them is chemically complex and environmentally taxing. Among these, heavy rare earths like terbium and dysprosium are crucial to producing magnets that can withstand high temperatures—used extensively in car motors, semiconductors, and military equipment. A luxury car seat can contain up to 12 rare earth magnets, while an F-35 fighter jet uses about 25 pounds of rare earth components, including heat-resistant samarium-cobalt magnets.

Although the United States, Australia, and Myanmar mine some rare earths, China dominates the refining process—handling up to 90% of global output. Nearly all of the world’s supply of dysprosium and terbium originates from Chinese or Myanmar mines and is refined in Chinese facilities, especially in Longnan, Jiangxi Province, a valley known for its high-quality ore and once controlled by organized crime before being seized by Chinese authorities in 2010.

A geopolitical flashpoint
China has stated that the ban is rooted in national security, noting that rare earths are “dual-use” items for civilian and military purposes. Samarium is essential for missile guidance, while yttrium is used in lasers and range finders. Scandium, when combined with aluminium, helps create light but strong aircraft parts.
However, the move came just days after the Trump administration imposed sweeping new tariffs on Chinese goods and tightened chip restrictions on Huawei. While China’s commerce ministry insists the export controls apply globally, U.S. officials see the move as part of escalating trade tensions.

Industries feel the heat
China’s export ban affects both ends of the supply chain. Automakers in Detroit were cleared for limited shipments last week, but many companies in Europe and South Korea are running short. The supply disruption is particularly critical for electric vehicle manufacturers, whose motors rely heavily on rare earth magnets. Without dysprosium or terbium, magnets can degrade under heat or strong electromagnetic fields—making them unsuitable for vehicle or defence use.
Japan, having faced a rare earth embargo in 2010, began stockpiling years ago and investing in alternatives. Some Japanese automakers have even adopted more expensive magnet technologies that don’t require heavy rare earths. But such preparedness is not universal. South Korea, for instance, began bulk importing dysprosium only in early 2025 after China signalled potential restrictions.

What happens next
Although China agreed in Geneva last month to reduce tariffs and suspend some retaliatory measures, it has not clarified if rare earth export restrictions fall under those commitments. The country’s licensing system is opaque, requiring paperwork for every shipment. Western companies are urging Beijing to adopt longer-term licensing to ease the backlog.

Meanwhile, the US and Europe face difficult choices. They could fast-track domestic rare earth processing, invest in alternative magnet technologies, or increase stockpiles. But environmental concerns, high labour costs, and lack of specialized expertise remain major barriers.

For now, China’s move has laid bare a strategic vulnerability in the West’s supply chain. The world’s industries—and their political leaders—must now decide whether to adapt, retaliate, or wait for Beijing to ease its grip.