China’s recent export restrictions on rare earth elements may affect United States military capabilities, according to a report from the Center for Strategic and International Studies (CSIS).

The new regulations, implemented earlier this month, require Chinese companies to obtain special licenses to export seven rare earth elements critical to defense and technology sectors.

The restricted elements include samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.

CSIS warns that the licensing system could disrupt exports during its implementation.

This disruption may affect US companies that rely on these materials.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ China’s rare earth leverage follows established historical patterns

China’s current export restrictions mirror its 2010-2011 actions when it limited rare earth exports to Japan during a territorial dispute, causing significant price spikes and global supply chain disruptions 1.

This strategic pattern has evolved but remains consistent. In 2012, the U.S., EU, and Japan successfully challenged China’s previous rare earth export restrictions at the WTO, with rulings concluding China’s actions violated trade obligations 2.

Despite this legal defeat, China has maintained dominance through other means, reducing its mining market share from 92% in 2010 to 58% in 2020 while retaining control over approximately 90% of the critical processing capacity 3.

The recurring use of rare earth restrictions as geopolitical leverage demonstrates China’s calculated approach to capitalizing on supply chain vulnerabilities, knowing that Western alternatives remain years away from viability.

China’s strategy has consistently emphasized value chain control rather than just resource extraction, explaining why previous international efforts to break its monopoly have had limited success.

2️⃣ The processing bottleneck presents a more formidable challenge than mining

While countries have made progress developing alternative rare earth mining projects, the processing bottleneck represents a more persistent vulnerability, with China controlling nearly 90% of global refining capacity 4.

This processing dominance is particularly acute for heavy rare earths. The CSIS report specifically notes that “there is no heavy rare earths separation happening in the United States at present,” highlighting a critical technical gap 5.