>>2417618China possesses vast quantities of rare earths, which are essential for smartphones, electric vehicles, and military technology.
Beijing controls approximately 60% of global rare earth production and nearly 90% of their processing.
China did recently agree to accelerate the approval of rare earth export licenses. However, it is unclear whether this applies to American defense companies that need these minerals for fighter jets and missile systems. According to the American Chamber of Commerce in China, 75% of US companies expect their rare earth stockpiles to be depleted within three months.
The restrictions, which were partly a response to the tariffs on Chinese exports imposed by President Donald Trump, highlighted the vulnerabilities of the US, which lacks its own refining and processing capacity for rare earths.
The European Union also relies on China for 98% of its supply of rare earth magnets used in auto parts, fighter jets, and medical diagnostic equipment.
The European Association of Automotive Suppliers warned that the sector "is already facing significant disruptions" due to Chinese export restrictions. These have led to the shutdown of several production lines and factories across Europe, with further impacts expected in the coming weeks as inventories run out.
Alberto Prina Cerai, a researcher at the Italian Institute for International Political Studies (ISPI), told DW that Brussels urgently needs to buy time. "In terms of scale, the West cannot catch up with China," he warned. While a complete decoupling from China is "unthinkable" in the short term, the EU must "manage this interdependence with a coherent industrial strategy."
"The entire global economy depends on rare earths from China," Jost Wübbeke, CEO of the Berlin-based research institute Sinolytics, which specializes in China, told DW. "If their exports stop, the impact will be felt worldwide."
Targeting the Military Industry
Defense equipment manufacturers supplying the US military rely on minerals primarily produced in China for microelectronics, drone engines, night vision goggles, missile guidance systems, and military satellites.
China is mainly restricting the flow of critical minerals to Western defense equipment manufacturers, delaying production and forcing companies to search worldwide for supplies of these minerals, which are essential for manufacturing everything from bullets to fighter jets.
According to the Wall Street Journal, an industry manufacturing components for unmanned aircraft supplying the US military was forced to delay orders by up to two months while seeking a non-Chinese source of magnets, which are assembled from rare earths.
Some materials needed by the defense industry are now selling for five times or more their standard price before the Chinese restrictions.
The price of Samarium, a key element for building magnets capable of withstanding the extreme temperatures of a fighter jet engine, has skyrocketed to 60 times its normal level. This is already making defense systems more expensive.
Although companies have tried to find alternative sources in recent years, some elements are so specialized that their production in the West is not economically viable.
In addition to the latest controls on rare earths, China has banned sales since December of germanium, gallium, and antimony – materials used in the defense industry. Germanium, for example, is used in infrared sensors embedded in missiles.
China "Inside" the Pentagon
More than 80,000 components used in the weapon systems of the US Department of Defense rely on critical minerals currently subject to Chinese export controls. Nearly all supply chains for key minerals used by the Pentagon rely on at least one Chinese supplier, meaning restrictions from Beijing could lead to widespread disruptions.
China has begun requiring detailed documentation from companies regarding how they use the rare earths and magnets they import. Chinese regulators often demand sensitive information, such as product images and even photos of production lines, to ensure the materials are not used for military purposes, according to Western buyers.
A Western company supplying rare earth magnets manufactured in China to both civilian and defense customers reports that its import applications have recently been approved for many civilian uses, but are rejected or delayed when it comes to defense and aerospace.