How China wields uncommon earths as a strategic weapon – DW – 06/23/2025 | EUROtoday

China’s chokehold on uncommon earths — the minerals important for electronics, automotive and protection programs — gave it important leverage over the United States throughout current tariff talks in London.

Controlling about 60% of worldwide rare-earth manufacturing and practically 90% of refining, China tightened its grip in April by imposing export controls on seven rare-earth components and everlasting magnets.

The curbs, partly in response to sky-high tariffs on Chinese exports imposed by US President Donald Trump, uncovered US vulnerabilities, because the nation lacks home refining capability.

“The whole world economy relies on these magnets from China,” Jost Wübbeke, managing associate on the Berlin-based Sinolytics analysis home specializing in China, advised DW. “If you stop exporting those, it will be felt across the globe.”

The ensuing provide chain disruptions have hit American industries laborious. US carmaker Ford, for instance, introduced two weeks in the past (June 13) it had been compelled to reduce SUV manufacturing in Chicago because of shortages, whereas auto elements suppliers Aptiv and BorgWarner stated they had been creating motors with minimal or no rare-earth content material to counter provide constraints.

Michael Dunne, a China-focused automotive guide, advised the New York Times that China’s curbs “could halt America’s automotive plants entirely.”

US shares might run out in months

A survey by the American Chamber of Commerce in China revealed that 75% of US companies count on their rare-earth shares to be exhausted inside three months. US producers urged Washington to barter an finish to the restrictions, and in London, China agreed to hurry up export license approvals, though a big backlog persists.

It can also be unclear whether or not the deal consists of entry for US army suppliers, who rely on these minerals for fighter jets and missile programs.

China’s strategic use of uncommon earths as a geopolitical instrument is just not new. In 2010, Beijing halted exports to Japan for 2 months amid a territorial dispute, triggering worth spikes and exposing provide chain dangers.

Gabriel Wildau, managing director at New York-based CEO advisory agency Teneo, warned that China’s export licensing regime is a everlasting fixture, not merely a response to Trump’s tariffs. In a notice to shoppers, he wrote that “supply cutoffs will remain an ever-present threat,” signaling China’s intent to keep up leverage over Washington.

European business additionally harm by China’s curbs

The US is just not the one nation dealing with a rare-earth scarcity. The European Union depends on China for 98% of its rare-earth magnets wanted for auto parts, fighter jets and medical imaging gadgets.

The European Association of Automotive Supplies (CLEPA) warned earlier this month the sector was “already experiencing significant disruption” because of China’s export curbs, including that that they had precipitated “the shutdown of several production lines and plants across Europe, with further impacts expected in the coming weeks as inventories deplete.”

Alberto Prina Cerai, a analysis fellow on the Italian Institute for International Political Studies (ISPI), advised DW that Brussels urgently wanted to “buy time.”

“In terms of scale, we [the West] cannot catch up with China,” Prina Cerai warned. “They have an integrated, mine-to-magnet supply chain that is very hard to replicate.” But whereas an entire decoupling from China is “unthinkable” within the quick time period, he stated the EU ought to “manage this interdependence with a coherent industrial strategy.”

The European Commission, the bloc’s govt arm, goals to provide 7,000 tons of EU-based magnets by 2030 beneath the Critical Raw Materials Act, with a number of mining, refining, and recycling tasks underway. An enormous rare-earth processing plant is because of open in Estonia later within the 12 months, and one other giant facility in southwestern France will likely be operational subsequent 12 months.

After assembly together with his Chinese counterpart earlier this month, EU Trade Commissioner Maros Sefcovic known as China’s curbs “extremely disruptive” to Europe’s auto and industrial sectors. China did suggest a “green channel” to expedite license approvals for EU companies, however specialists warn approvals might nonetheless take as much as 45 days.

India cuts exports to spice up home provide

Despite having the world’s fifth-largest rare-earth reserves, at 6.9 million metric tons, India contributes lower than 1% of the worldwide provide of uncommon earths. The South Asian nation lacks the refining capability to course of them to be used in high-tech functions. India additionally depends on Chinese exports, which have additionally confronted restrictions.

Although New Delhi has stepped up efforts to diversify its provide via offers with the US, Australia and Central Asian nations, progress has thus far been gradual.

News company Reuters reported just lately that New Delhi ordered its state-run miner IREL to cease exports of the domestically produced minerals, together with to Japan, to safeguard provides for the nation’s producers. Last 12 months, IREL delivered a 3rd of the two,900 metric tons of the uncommon earths it mines to Japan, through a Japanese processing agency.

G7 leaders vow to deal with China disruption

With China’s stranglehold unlikely to be rivaled anytime quickly, G7 leaders assembly in Canada on June 15 tentatively agreed on a technique to anticipate essential rare-earth shortages, vowing a joint response to deliberate market disruption, corresponding to China’s, in addition to strikes to diversify manufacturing and provide.

“Recognizing this threat to our economies, as well as various other risks to the resilience of our critical minerals supply chains, we will work together and with partners beyond the G7 to swiftly protect our economic and national security,” the group of superior economies stated in a doc known as G7 Critical Minerals Action Plan.

ISPI’s Prina Cerai advised DW that entry to uncommon earths will turn into extra essential for the West as superior applied sciences emerge, noting how “robotics and humanoids might be an important market” within the medium time period.

Several rivals ramp up rare-earth manufacturing

After China’s 44 million tons of rare-earth deposits, Brazil, India and Australia have the following largest deposits, collectively round 31.3 million tons, based on the US Geological Survey. Around 20 million tons had been just lately found in Kazakhstan.

The US and Australia are essentially the most superior in ramping up their very own rare-earth mining and processing output, whereas different nations’ plans are nonetheless within the early to mid-stages, requiring 5-10 years, environmental concerns and billions in funding.

Another future supply could possibly be Greenland, regardless of its harsh climate situations. The US and EU have already signed cooperation agreements, and in 2023, the Tanbreez Project, in southern Greenland, was ranked as the highest uncommon earth mission by mining business knowledge supplier Mining Intelligence, with an estimated 28.2 million tons of minerals.

Reuters reported earlier this month that the US Export-Import Bank was set to approve a mortgage of as much as $120 million (€104 million) to the agency working Tanbreez, in what could be the Trump administration’s first abroad funding in a mining mission. Trump has repeatedly threatened to amass Greenland for US strategic functions, however the island nation, which is a Danish territory, has rejected the overture.

The EU, in the meantime, has recognized 25 of the 34 minerals on its official checklist of essential uncooked supplies in Greenland, together with uncommon earths, in one other signal of the nation’s more and more essential position within the world economic system.

But till different rare-earth provides are considerably scaled up, China will proceed to wield this essential useful resource as a robust geopolitical weapon, holding world industries and nations in its grip.

Sinolytics’ Wübbeke is skeptical about whether or not different nations will ever deal with China’s stranglehold on uncommon earths as a result of market chief’s big price benefit.

“Once China takes down export controls, prices will go down and the supply situation will ease. Nobody will talk about it [overrealiance on China] again because then it’ll be about prices,” Wübbeke advised DW. “Non-Chinese mines and refineries have to compete with these prices and normally they cannot.”

Edited by: Uwe Hessler