China’s latest decision to tighten export controls on six rare earth elements (REEs) and the magnets derived from them has shaken up industries around the globe. From clean energy tech to defense systems, these materials are at the heart of modern innovation. The electric vehicle (EV) industry, in particular, is feeling the heat, with fears that some plants might face shutdowns unless Beijing relaxes restrictions.
China isn’t outright banning exports, but it’s raising the bar: companies now need government approval before shipping these materials abroad. This adds bureaucratic delays and uncertainty—two things manufacturers hate most.
🧪 The “Rare” in Rare Earths Is a Myth
Despite the name, rare earth elements aren’t scarce. This group of 17 metals—including neodymium, dysprosium, and praseodymium—is actually widely dispersed in the Earth’s crust. For example, cerium is more abundant than copper.
So why the term “rare”? It’s not about how much exists—it's about how hard they are to extract and refine. These elements usually appear in mixed clusters, making them expensive and complex to separate.
🇨🇳 How China Cornered the Rare Earth Market
China’s grip on the rare earth supply chain isn’t due to natural abundance—it’s the result of a decades-long strategic plan. Starting in the 1980s, China invested heavily in rare earth mining and refining, using:
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State subsidies
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Low-interest loans
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Relaxed environmental rules
This allowed Chinese firms to undercut global competitors, especially those in countries with stricter regulations and higher operational costs. Fast-forward to today, China controls:
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70% of global REE mining
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90% of refined REE production
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Nearly 90% of the world’s rare earth magnets, vital for EVs and wind turbines
⚠️ Why China’s Strategy Might Backfire
By weaponizing its dominance, China risks triggering a global push for diversification. Countries like the U.S., Australia, India, and members of the EU are already investing in:
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Domestic mining operations
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Rare earth recycling
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Alternative materials
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New refining technologies
History shows that overplaying a monopoly can often inspire rivals to build their own supply chains. In this case, China’s latest move may accelerate global efforts to break free from its rare earth dominance.
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