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You may not have heard of terbium or dysprosium, but these elements are essential to modern technology. From electric vehicle motors and wind turbines to military-grade lasers and the tiny vibration motors inside smartphones, their operation relies on rare earth elements.
In recent years, as global tech competition intensifies and geopolitical risks rise, rare earths have increasingly become a critical source of leverage in international power struggles, a trend that became especially evident after China imposed export controls on certain rare earth products in 2025.
What Are Rare Earths—and Why Do They Matter?
Rare earths refer to a group of 17 metallic elements with similar chemical properties. Although they are not truly rare in the Earth’s crust, the extraction process is complex, costly, and highly polluting—making stable large-scale production possible in only a few countries.
These elements are widely used in high-tech industries, including electric vehicles, industrial robots, drones, low-Earth orbit satellites, renewable energy equipment, and even military and aerospace technologies.
China’s Grip on the Global Rare Earth Supply Chain
China wields strategic influence over the rare earth market primarily because of its overwhelming dominance across the global supply chain:
China’s dominance stems not only from its resource abundance but also from its integration of upstream and midstream industries. As rare earth refining is highly polluting, many Western countries have exited the sector, enabling China to establish a commanding lead in processing capacity.
In other words, even if other countries discover rare earth deposits, without the ability to process them independently, they remain reliant on China.
Export Controls: China Officially Plays the Rare Earth Card
In April 2025, China announced the implementation of an export licensing system for seven rare earth-related products—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. Most of these elements are classified as heavy rare earths, which are difficult to mine, require advanced separation technologies, and are critical for high-end magnetic materials, laser equipment, and aerospace alloys.
The restrictions have exposed the global supply chain’s heavy dependence on China. While countries like the U.S., Japan, and Australia have launched initiatives such as the Minerals Security Partnership (MSP) and the Critical Minerals Agreement (CMA) to develop China-free supply networks, significant technical barriers and long investment cycles—particularly in midstream segments like separation and processing—mean these efforts will likely take another 3 to 5 years to materialize. In the short term, China’s dominant position remains largely unchallenged.
Scenarios That Could Escalate the Global Rare Earth Disruption
According to a recent report by TrendForce, if China’s export controls target specific countries—such as the U.S.—while still permitting a certain level of exports, the resulting pressure on global markets may not fully emerge until after 2026. However, if the restrictions are broadened to include other major high-tech manufacturing nations such as Europe, Japan, and Australia, the global impact could become apparent as early as the second half of 2025 and may persist until around 2030 before easing.
It’s also worth noting that such export restrictions are not a zero-cost strategic move. China’s own industries—such as electric vehicles, drones, and automation—also depend heavily on a stable rare earth supply chain. As a result, China is more likely to adopt a selective and targeted export strategy as a tool for geopolitical negotiation, rather than enforce a blanket ban.
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(Photo credit: Grinm Semiconductor Materials)
