In a significant development for global supply chains, China has tightened its grip on the rare earth metals market, imposing new export restrictions that could have far-reaching implications for the United States and its allies. The restrictions, announced on April 4, 2025, require special export licenses for six heavy rare earth metals and magnets, which are crucial for various industries including electronics and defense.
The Serra Verde mine in Minaçu, Goiás, Brazil, inaugurated in 2023 and financed by investors from the United States and the United Kingdom, has contracts to sell all its rare earth production to China until at least 2027. This mine is viewed as a potential alternative source for these critical materials, which are essential for technologies ranging from electric vehicles to military equipment. Despite its strategic location and potential, the Serra Verde mine's production is primarily destined for the Chinese market, highlighting the challenges of diversifying supply chains.
China currently dominates the global rare earth market, controlling approximately 75% to 80% of the production of heavy rare earth metals and 90% of the production of rare earth magnets. These materials are not only vital for consumer electronics but also for advanced military technologies. For instance, each F-35 fighter jet contains about 400 kilograms of rare earth materials, and some submarines require more than four tons.
The recent export restrictions come as a response to rising tensions with the United States over trade tariffs and geopolitical disputes. In 2010, China previously imposed an embargo on rare earth exports to Japan, which lasted only seven weeks but significantly altered the global supply chain dynamics. This historical context underscores the potential impact of China's current measures on U.S. defense and technology sectors.
Experts have expressed concern that the U.S. remains heavily dependent on China for the processing of rare earth metals. Milo McBride, a specialist in critical minerals at the Carnegie Endowment for International Peace, noted, "For 15 years, U.S. policymakers have done very little to address the risk of dependence on China for rare earths and specifically rare earth magnets." This lack of action has left American manufacturers vulnerable, particularly in the automotive and aerospace industries.
In response to the tightening of China's export controls, U.S. defense officials have sounded alarms about the implications for national security. Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, stated, "This decision is extremely significant for our national security." The potential for increased costs and supply chain disruptions could have immediate effects on U.S. defense contractors who rely on these materials.
Historically, the Mountain Pass mine in California was a leading source of rare earths, producing the majority of the world's supply from 1965 to 1995. However, it was closed in 2002, and although it has since reopened under the operation of MP Materials, it currently produces only about 15% of the global supply. Plans to ramp up production of rare earth magnets in Texas by the end of 2025 may not suffice to meet the growing demand.
China's decision to require special export licenses for rare earth metals is viewed as a strategic move to maintain its dominance in the market while exerting pressure on its global competitors. This situation has prompted U.S. policymakers to seek alternative sources and to invest in domestic production capabilities. However, the complexity and environmental challenges associated with rare earth mining make such efforts a long-term endeavor.
As the U.S. grapples with its reliance on Chinese rare earths, other countries are also looking to diversify their supply chains. Japan, for example, has successfully developed alternative sources of rare earths from Australia following the 2010 embargo. However, the U.S. has yet to achieve a similar level of self-sufficiency, raising concerns about the sustainability of its defense and technology industries.
The ramifications of China's export restrictions extend beyond immediate supply chain concerns. The U.S. defense industry, which has been stockpiling rare earths in anticipation of potential shortages, may find its reserves insufficient to sustain operations in the long term. Analysts warn that the Pentagon's reserves, while improved since 2010, are not enough to last indefinitely.
In light of these developments, experts are advocating for a comprehensive approach to secure the U.S. supply chain of critical minerals. Eric Fanning, president of the Aerospace Industries Association, emphasized the need for a resilient and secure supply chain, stating, "The global leadership of the U.S. in aerospace and defense depends on a secure supply chain — particularly for the critical minerals used in advanced aircraft technology production."
As the situation evolves, the U.S. faces a critical juncture in its approach to rare earth metals. The ongoing trade tensions with China and the recent export restrictions highlight the urgent need for strategic planning and investment in domestic production capabilities. Without a concerted effort to address these challenges, the U.S. risks falling further behind in the race for control over these essential materials.
In conclusion, China's tightening of rare earth metal exports serves as a stark reminder of the geopolitical complexities surrounding critical minerals. The U.S. must navigate these challenges carefully, balancing immediate needs with long-term strategies to secure its technological and defense industries against potential disruptions.
