China’s decision to tighten controls on rare earth mining, processing and exports marks another significant turn in the geopolitics of critical minerals. The new interim measures announced by Beijing on Friday extend oversight not only to domestic extraction but also to foreign raw material that enters China for refining. Companies will now have to comply with government-mandated quotas, seek official approval for transactions, and accurately report their dealings. The penalties for non-compliance are harsh: violators risk losing their quotas and facing legal action. For an industry as strategically vital as rare earths, the implications are vast, stretching well beyond commercial interests into the domain of global security and technology competition.
The 17 elements grouped as “rare earths” are paradoxically not rare in nature. Yet their economic concentration is limited, making mining costly and technically demanding. These minerals are indispensable for a host of high-tech and defence applications—ranging from smartphones and renewable energy technologies to electric vehicles and fighter jets. China’s tightening grip on this sector is not merely about protecting resources. It is part of a broader strategic play, responding to U.S. restrictions on access to advanced technologies and asserting its leverage in a world increasingly dependent on clean energy supply chains. In April, Beijing cited national security while adding more minerals such as samarium, dysprosium and scandium to its list of controlled exports. The timing was no accident: it followed Washington’s tariff hikes and new curbs on sensitive technologies. Over the past three decades, China has carefully built up dominance over the rare earth industry. Today it supplies nearly 90 per cent of the world’s refined rare earths, though it mines around 70 per cent of the ores. This supremacy is sustained not just by resource endowment but by technological control. The know-how for separating and smelting rare earths remains largely within China, and its export is banned. Even nations that import these materials from non-Chinese sources often rely indirectly on Chinese processing. According to the U.S. Geological Survey, in 2024 the United States sourced 70 per cent of its rare earths directly from China, with the rest largely coming from intermediaries that themselves depend on Chinese refiners. In effect, Beijing sits at the chokepoint of global supply. The new rules are best understood as a reaffirmation of this strategic posture. By centralising licensing, tightening environmental standards and ramping up oversight, Beijing is signalling that it will calibrate access according to its political and economic calculations. This is not unprecedented. In June, after receiving concessions from Washington on semiconductor design software and jet engines, China sped up export approvals for rare earths. A month later, its Ministry of State Security launched a crackdown on smuggling, citing national security. The message is clear: China can weaponise rare earths when it deems necessary, dialling supply up or down to extract concessions or signal displeasure. For countries that rely heavily on Chinese rare earths, this is a wake-up call. The United States, Japan and the European Union have all spoken of diversifying supply chains, but progress remains slow. Building alternative processing hubs in Australia, Canada or the U.S. itself requires massive investment, environmental clearances, and years of technological development. Meanwhile, manufacturers of electric vehicles, renewable energy systems and advanced weapons remain tethered to Chinese refiners. The risk is not of an outright embargo—Beijing still benefits from export revenues—but of uncertainty. Supply chain unpredictability alone can raise costs, discourage investment and weaken competitors.
The wider significance lies in the way critical minerals have become a theatre of global rivalry. Just as oil defined geopolitics in the 20th century, rare earths and battery metals are poised to shape strategic alignments in the 21st. By tightening its grip, China is reinforcing its status as an indispensable player in this space. For the U.S. and its partners, the challenge is to break free from this dependency without plunging into protectionism or trade wars that harm global growth. That will demand patient industrial policy, cross-border partnerships, and an honest reckoning with the environmental costs of alternative mining ventures. China’s rare earths gamble underscores a larger truth: technological competition is now inseparable from resource politics. If the world is to navigate the clean energy transition without sliding into supply crises and strategic blackmail, it must act decisively. Diversification, innovation and cooperation cannot be postponed. The minerals that power our digital devices and green technologies have become instruments of power. And unless nations prepare now, the leverage will remain firmly in Beijing’s hands.