The escalating US-China trade war took a new turn this month, when Beijing imposed sweeping export restrictions on rare earth elements — minerals vital to everything from smartphones and wind turbines to advanced military systems.
Nicknamed the “seeds of technology,” rare earths underpin nearly every modern innovation. They enable the miniaturization of electronics, the development of green and medical technologies, and the functionality of telecommunications, transportation, and defense systems.
Now, control over these minerals is at the heart of a geopolitical race for technological dominance — and China holds a dominating lead.
According to the US Geological Survey’s 2024 data, China produces 69% of the world’s rare earths and controls nearly half of global reserves. It also dominates 90% of refining capacity — the crucial step that turns mined minerals into usable materials.
With its supply chain vulnerable, the US has ramped up efforts to secure alternatives. Backed by the Inflation Reduction Act and the CHIPS Act, domestic mining is getting more investment. Companies like MP Materials and Lynas Rare Earths are receiving government support to build the country’s first rare earth separation and processing facilities.
But experts say breaking China’s monopoly will require more than just digging new mines.
- A national security vulnerability
The US currently imports over half of its critical minerals. Given China’s overwhelming dominance in both reserves and processing, that reliance poses serious strategic risks.
“While countries like the US and Australia have reopened mines (e.g., Mountain Pass in California), they remain dependent on China for refining due to its cost-efficient processing capabilities,” said energy strategist Umud Shokri, a senior visiting fellow at George Mason University.
Shokri told Anadolu that newer entrants to the rare earth market — including Madagascar and Uganda — face steep technical, environmental, and infrastructure hurdles that limit their ability to compete.
Any disruption to the rare earth supply chain, Shokri warned, sends shockwaves through industries that depend on them. That includes the US defense sector, which relies heavily on rare earths for critical hardware such as F-35 fighter jets, Virginia- and Columbia-class submarines, Tomahawk missiles, radar systems, Predator drones, and JDAM smart bombs.
To hedge against that risk, Shokri pointed to projects like the Sheep Creek deposit in Montana — a site with rare earth concentrations 18 times higher than typical Chinese sources. This, Shokri says, “could meet 25–50% of US demand,” though timelines for completion remain uncertain.
With global demand rising sharply, those projects may need to be fast-tracked to make a meaningful impact.
- China’s latest move
Beijing’s latest move restricts the export of seven rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These are used in both civilian and military applications — making them subject to “dual-use” export controls under international trade rules.
Exports have reportedly come to a halt as companies have been required to obtain licenses from China’s Commerce Ministry as of April 4. This new system applies to all stages of the supply chain, from raw materials to finished products, though details on how the approval process will work remain unclear.
It also expanded its “unreliable entity list,” banning exports of dual-use items to 16 US companies and adding 11 more firms to the list, according to China’s Commerce Ministry.
For US manufacturers dependent on Chinese rare earths, the latest restrictions introduce fresh uncertainty — and could further disrupt already strained global supply chains.
- Reshaping the mining landscape
According to Shokri, the trade war between the US and China — now intensified during US President Donald Trump’s second term — is already reshaping the global mining landscape.
“Tariffs imposed by both nations have disrupted supply chains and altered demand for key commodities,” he said.
“For example, China’s recent ban on exporting critical minerals such as gallium, germanium, antimony, and graphite to the United States has raised concerns about supply chain stability for industries reliant on these resources, including clean energy and semiconductors,” Shokri said.
Looking abroad, the US has explored new strategic mineral partnerships — most notably with Ukraine.
“In the 1990s, the US started offshoring a lot of our mining and a lot of our processing. So, a lot of that went to China,” said Barbara Arnold, a mining engineering professor at Penn State University. “There's no reason why we can’t process those minerals here at home.”
That ambition helped drive negotiations on a proposed $1 trillion mineral deal between the US and Ukraine. Ukraine boasts substantial reserves of titanium and rare earth elements — particularly in state-owned deposits that could boost US supply chains.
The plan involves a joint Reconstruction Investment Fund, with Ukraine contributing 50% of proceeds from its state-owned mineral, oil, and gas resources.
Trump has pitched the deal as a way for American taxpayers to recoup some of their contributions to Ukraine’s defense. But the situation is complicated.
“The ongoing conflict with Russia, infrastructure damage, and the fact that much of Ukraine’s mineral wealth lies in Russian-occupied areas pose serious challenges,” says Shokri.
Greenland, which holds the world’s eighth-largest rare earth reserves, is also seen as a potential alternative source. But analysts say the confrontational tone Trump has taken with both Ukraine and Greenland may complicate efforts to build new partnerships.
Despite recent investments, the US remains years away from developing a self-sufficient supply chain for rare earths.
By Efe Ozkan
Anadolu Agency
energy@aa.com.tr