Rare Earth Metal Wars: The New Frontier

The size of these metals markets are small in comparison to industrial metals, but they remain huge in importance (used in chips, fibre optics, infrared sensors, etc.), and China produces the lion’s share of them. For context, China is responsible for 98.8% of refined gallium. When Beijing’s ban hit, gallium prices surged but so too did that of substitute metals. Antimony, for example, rose sharply in Europe as China squeezed exports.

These Chinese actions underscore a key point: Beijing is unafraid to use its critical minerals muscle as leverage. Each time Washington tightened the screws on high tech exports to China (such as automated design software for semiconductors), China answered by tightening its grip on strategic metals. As one commentator noted, “China has hit the American trade restrictions where it hurts”.

China’s extraterritorial play

China’s October 2025 package went further than simply placing restrictions on goods leaving its own borders. It flirted with something much more ambitious: control that follows the material (and the know how) even after it has left China.

Under the expanded framework announced in October 2025, the rules were drafted to require export licences for certain products made outside China if they contained Chinese origin rare earth inputs or were produced using Chinese rare earth technologies. In other words, a factory in Malaysia, Mexico, or Germany could have found itself pulled into China’s licensing net, simply because its upstream supply chain ran through China.

China framed the move as a way to stop its rare earths feeding overseas weapons manufacturing. But the bigger message is clear. This is not just about oxides and alloys. It is about controlling the machinery of advantage, the processing, the approvals, the chokepoints, especially where civilian supply chains start to blur into dual use tech.

The Busan Timeout: A One Year Window

After Trump and Xi met in Busan on 30 October 2025, China paused implementation for one year of the October 9 rare earth export control expansion, including the set of rules that stipulated licensing controls on extraterritorial provisions]. The suspension was subsequently confirmed as running until 10 November 2026.

However, this was not a full rollback. The pause applied to the October package, but earlier April 2025 licensing controls on a set of medium and heavy rare earths (and related products, including magnets) have remained a live constraint in practice, particularly outside the scope of any general licences granted to reduce friction for U.S. end users13.

Keep in mind also, a pause is not a change of mind. As of January 2026, there is no officially locked in, publicly announced next summit between the U.S. and China.

The Allies Strike Back: Diversifying Supply Chains

Realising their vulnerability, the U.S. and allied nations have mobilised to reduce reliance on Chinese minerals, but with mixed results so far. Few felt this urgency more than U.S. defence planners and tech manufacturers. The United States has historically imported around three quarters of its rare earths from China, a fact bemoaned in government and Pentagon linked reports for years. At one point, America’s only rare earth mine (Mountain Pass in California) was shipping its ore to China for refining, and paying a 25% tariff to do so, thanks to the trade war. U.S. officials likened this dependency to a strategic Achilles heel, and since 2019 have launched efforts to bolster domestic production.

Key U.S. responses include:

• Federal investments and incentives: The Pentagon and Department of Energy have given grants to companies like Lynas (Australia) and MP Materials (USA) to build new processing plants on U.S. soil. For instance, a Lynas rare earth separation facility in Texas has been backed by U.S. defence funding, aiming to supply heavy rare earths for military use. Then there is the 10 year Neodymium Praseodymium price floor that the U.S. Department of Defence has agreed with MP Materials to support a full mine to magnet supply chain on home soil14.
• Stockpiling and trade agreements: The U.S. has added certain rare earths and strategic metals to its national stockpile again, and is coordinating with allies to source from each other. U.S. negotiations with China have focused on securing Chinese rare earth magnet exports in exchange for other concessions, with rare earth shipments explicitly featuring in trade talks and announcements]. Longer term, American officials are forging partnerships with other nations. For example, the U.S. and Australia have formalised critical minerals cooperation, while Washington has also pushed for more allied sourcing across countries like Canada and others with resource potential. The catch is, new mines take years and billions of dollars to come online.
• Friend shoring supply chains: Instead of solely domestic mining, the U.S. and Europe are investing in allied countries’ projects. Canada, for instance, is being tapped as a future supplier of critical minerals, with new investment and policy attention following U.S. moves into North American projects.

Beyond the U.S. other countries are fighting back to:

• Japan learned this lesson the hard way in 2010. Since then it has diversified supply, expanded recycling, and built strategic stockpiles, cutting China’s share of Japan’s rare earth imports from roughly 90% to around 70% and giving it a buffer measured in months. But it is still exposed, as Japanese firms have been pressing Beijing for reassurance that civilian trade will not get dragged into export controls15, while Japan continues scouting new sources, including deep sea rare earth mud trials it funded in 2023.
• Europe is far more cornered. As it stands, the EU relies heavily on China for rare earth supply, including all of its heavy rare earth elements and about 98% of rare earth magnets used across EVs, wind turbines and defence3. When China tightened controls in April 2025, the pinch showed up quickly in automotive supply chains, with magnet shortages stalling assembly lines. The European Association of Automotive Suppliers reported production stoppages in mid 20257 and Suzuki temporarily suspended Swift output in Hungary.
• Australian rare earth mining has the potential to be a critical part of the escape route. It hosts the largest rare earth mine outside China (Lynas’s Mt Weld) and is one of the few credible non-Chinese sources of NdPr at scale. The weak link, however, has been downstream. Parts of the value chain have historically still flowed through Chinese refining, which is noted repeatedly in allied supply chain discussions. Australia is now pushing to move up the supply chain, backing more local processing and aligning with the U.S. and Japan on supply security.
• Canada has strong geology and political alignment with the U.S. and EU, but is still early in building a full rare earth ecosystem. The opportunity is to become a dependable upstream supplier (and potentially a processor) inside a friendly regulatory framework, which is why allied strategies increasingly point to partnerships with Canada. The U.S. government recently took a 10% stake in the Canadian developer, Trilogy Metals16.

All these efforts show progress, but in the short term, China remains lightyears ahead in its rare earth capabilities. It takes years to build a new mine or separation plant, and Western companies must overcome cost and environmental hurdles. Beijing is certainly aware of this timeline, which is why, for now, it can swagger. But the rare earth wars have sparked a global rush to build a non Chinese supply chain that simply did not exist ten years ago. As one industry CEO put it, “It is fantasy to suggest another country can replace China in the short or medium term… but if we don’t start now, we’ll be saying the same thing 10 years on”. The race is on, and investors are taking note.