China’s latest export restrictions on rare earths and battery materials are reshaping global supply chain strategies and accelerating efforts by the US and its allies to build independent critical minerals industries.
Beijing’s new measures target rare earth elements essential to defence, telecoms and medical technologies, as well as magnets, recycling equipment and a broad range of battery components including cathode and anode materials. The move reinforces China’s influence over global markets but is also prompting renewed investment and innovation abroad.
US President Donald Trump initially signalled a sharp tariff increase on Chinese imports in response, but later softened his stance.
Washington’s long-running drive to diversify supply chains is gaining momentum. The US Department of Defense has committed more than $US1 billion to secure critical minerals such as cobalt, antimony and scandium, while backing domestic projects like MP Materials’ Mountain Pass rare earths mine in California.
Private investment is also flowing. JPMorgan this week announced a $US1.5 trillion security and resiliency initiative to fund and support strategic industries, including critical minerals, over the next decade.
Wood Mackenzie’s vice-chair of metals and mining Julian Kettle said the shift toward diversification marks a turning point for Western economies.
“China has been working consistently on these critical minerals for many decades,” he said. “They had a lot of failures, but they learned from them. They kept trying and trying again.”
Kettle noted that while resource potential is widespread, China’s long-term investment in processing and technology gives it a strong head start.
“It’s quite a sobering moment for the West to have to go to China to say, ‘Can you show us how to do it?’ But in many sectors, that’s the reality,” he said.
The new controls could slow some projects, but they are also spurring governments and companies to invest, innovate and collaborate more aggressively in the race for supply chain security.
To explore Wood Mackenzie’s full analysis of China’s new export measures and their implications for global supply chains, visit Wood Mackenzie’s website.