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Home Business & Finance

What Does China’s Rare Earth Export Controls Mean for the US and Europe?

Somto NwanoluebySomto Nwanolue
October 9, 2025
in Business & Finance
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What Does China's Rare Earth Export Controls Mean for the US and Europe?
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The new, stringent Chinese export controls on rare earths, graphite, and lithium battery materials are a direct, strategic shot across the bow in the escalating techno-economic war with the US and Europe. By formalising restrictions on everything from rare earth-containing products to the core processing technology and magnet manufacturing equipment, Beijing is wielding its near-monopoly (which includes 92% of global rare earth processing) as a potent geopolitical weapon.

This is a deliberate move, mirroring the US’s own moves against China’s chip industry, and it demands an aggressive, sovereign industrial policy from Western nations to secure their critical mineral supply chain and national security.

The requirement for government approval to export products with even small amounts of rare earths and the clear denial of licenses for arms manufacturers are a direct threat to the US defense industrial base. Rare earths like neodymium and dysprosium are indispensable for the high-performance permanent magnets found in precision-guided munitions, jet engines, and radar systems.

What Does China's Rare Earth Export Controls Mean for the US and Europe?

By choking off this supply, Beijing is intentionally creating friction in the manufacturing of US military assets, while also slowing the development of Artificial Intelligence (AI) with military applications —the very technology the US sought to contain in China with its own chip restrictions.

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  • China’s Extraterritorial Reach of Control
  • Why It Matters

China’s Extraterritorial Reach of Control

The restrictions go further than just materials. By banning the unlicensed export of mining, smelting, separation, and magnet-making technology, China is actively working to obstruct the establishment of rival rare earth processing facilities outside its borders.

The US, with its significant raw rare earth mining capacity but severe lack of processing infrastructure, is uniquely exposed. This extraterritorial control means Beijing is effectively attempting to veto the West’s ability to create a mine-to-magnet supply chain, locking in its decades-long dominance and confirming the success of its long-term industrial planning.

Why It Matters

The Western world must recognise that relying on commercial market forces alone will not solve a problem created by a state-controlled geopolitical strategy. Reducing reliance on China requires a decades-long, government-backed critical minerals strategy.

Owing to this, the West must aggressively diversify the rare earth supply chain by cultivating strategic alliances and providing financial support to projects in politically stable, resource-rich nations like Australia, Canada, and Brazil.

A formal “Critical Minerals Club” among NATO, EU, and key allies should be established to share technology, pool investment, and create joint ventures that focus specifically on heavy rare earths like dysprosium and terbium, where China’s control is near absolute. This unified front will dilute China’s ability to use its leverage to divide and conquer.

Tags: chinaEuropefederal characterForeign NewsgovernmentNewsUS
Somto Nwanolue

Somto Nwanolue

Somto Nwanolue is a news writer with a keen eye for spotting trending news and crafting engaging stories. Her interests includes beauty, lifestyle and fashion. Her life’s passion is to bring information to the right audience in written medium

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