Critical minerals for the global industry
The end of October 2026 concentrates all lines of resource‑based confrontation at a single point. On October 22, Reuters reported that TSMC, the world’s largest contract chip manufacturer, is exploring with equipment suppliers the possibility of switching to automation motors capable of operating without rare‑earth magnets, something that was previously unthinkable for equipment where the precision of plate movement had been built on neodymium drives for decades. On November 10, the suspension period for the “October” package of Chinese export controls expires, and Beijing, according to the American press, is preparing new, even stricter rules for November. Against this backdrop, the US administration is rapidly expanding the national rare‑earth industry; the G7 aims to reduce its dependence on a single supplier outside the group and partner countries to below 50 % by 2030 [1]; and the European Union is asking Beijing for “fair and predictable conditions” for access to metals is a request that reflects a weakness in its negotiating position rather than strength.
Critical minerals have long ceased to be a narrow raw material topic. Rare‑earth elements are 17 metals: the lanthanides, as well as scandium and yttrium. They are embedded in small but indispensable quantities in iPhones and washing machines, F‑35 fighter jets and Tomahawk cruise missiles, electric vehicles and wind turbines, hard drives. According to the International Energy Agency, China’s full‑scale introduction of restrictions on the export of rare‑earth metals could jeopardize the production of final products outside China to the tune of up to $1.5 trillion annually [2]. This figure explains why the resource conflict has ceased to be an industry‑specific issue and has become a matter of macroeconomic and military stability for entire blocs.
The monopoly that took forty years to build.
China’s dominance in rare‑earth metals is not the result of geological luck, but of a consistent state strategy since the 1980s: subsidized extraction, bearing the environmental costs, and acquiring processing technologies. By the early 2000s, Beijing had вытеснил all competitors from the market. The legendary Mountain Pass mine in California, once the world’s largest, closed in 2002, unable to withstand price competition. The precedent of using leverage forcefully occurred a long time ago: during a territorial dispute with Japan in 2010, exports were suspended, and prices surged 10–15 times. The regulation on the management of rare‑earth metals was approved by the State Council of the People’s Republic of China on April 26, 2024, promulgated by a decree dated June 22, and came into force on October 1, 2024. It establishes state ownership of rare‑earth resources, provides for a unified information system for product traceability, and regulates extraction, processing, and trade [3].
China’s dominance in rare earth elements
Today, the scale of concentration is described by three figures representing different links in the chain: about 70% of global rare‑earth element production, according to the U.S. Geological Survey; about 90% of processing, according to the International Energy Agency; and about 95% of the production of finished permanent magnets. In heavy rare‑earth elements, the concentration is even higher: until 2023, China accounted for about 99% of the separation capacity. In terms of proven reserves, China also holds the world’s first place with 44 million tons. It is fundamentally important that the bottleneck in global industry is not in the ore: alternative deposits exist, but the processing, separation, and production of magnets represent a technological monopoly that cannot be replicated with money and in a short time.
The April strike and the October escalation.
The systematic use of leverage began in 2025. In April, in response to US tariffs, the Ministry of Commerce of the PRC introduced licensing for the export of seven medium- and heavy-weight elements (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium) and permanent magnets based on them. Formally, this is not a ban: exporters are required to obtain individual licenses, which are issued selectively, with delays and questionnaires about the final use. The effect was immediate: in May 2025, total exports of rare‑earth magnets from China fell by approximately 75 % year‑on‑year, and supplies to the United States dropped to 46.4 tons, a decline of about 93 % compared to May 2024 [4]. The European automotive industry shut down some production lines, and, as the Financial Times put it, European industrialists “panicked.” As early as June, exports surged more than sevenfold, reaching 353 tons [5], as licenses were issued and the first trade agreement was reached, but the signal was received by everyone.
On October 9, 2025, a qualitative leap occurred: the list was expanded by five more elements (holmium, erbium, thulium, europium, ytterbium), processing technologies and equipment came under control, and, most importantly, the rules acquired an extraterritorial character. Under the new rules, a license from the Chinese ministry is required for the re‑export of any product manufactured outside the PRC if rare‑earth elements of Chinese origin account for at least 0.1% of its value. A facility assembled in Japan, the Netherlands, or the United States falls under Beijing’s jurisdiction if its engines contain magnets of Chinese origin, and such magnets are widely used in high‑precision drives. President Donald Trump responded with a threat of 100 percent duties, bringing the total tariff to 157 %. As early as the summer of 2025, shares of American and Australian rare‑earth companies doubled on news of government support. According to Bild, German defence enterprises are facing an acute shortage of components.
The mineral confrontation between the United States and China
The economy of scarcity: prices as an echo of export controls. The market is recording Beijing’s monopoly with the precision of a stock market indicator. By September 2025, dysprosium in Europe was trading at $840 per kilogram, three times more expensive than before the restrictions were introduced; terbium reached $3,600 per kilogram, breaking records several times. Neodymium‑praseodymium oxide, which fell from $170 per kilogram in 2022 to $62 in 2024, recovered to $148 by mid‑2026. Analysts also note a new phenomenon: price premiums are concentrated precisely where certification, characteristics, and supply continuity are important; buyers are paying not for chemical raw materials, but for a long‑term supply guarantee. Export restrictions are encouraging the shift of part of the demand to suppliers outside China. The growth in order volume may increase the return on investment for alternative projects that seemed unviable before 2024.
Risks and threats
The emerging architecture is facing a number of critical challenges. First and foremost, the deadline is November 10, 2026: the suspension of the “October” package will expire shortly before the date of the extension of the Busan Agreement (January 10, 2027), and any of these nodes could trigger a new escalation with a domino effect across supply chains. The second institutional trap for the West: alternative projects outside China face high capital costs, environmental regulations, and a shortage of division‑specific competencies, while Chinese state‑owned companies have many years of experience; therefore, many new projects either fail to move beyond the early stage or cannot withstand cost comparisons.The third risk is market distortion: guaranteed state prices and buybacks create competitive asymmetry in the US and Australia, and if Chinese policy is eased, they could collapse entire segments. The fourth phenomenon is “dual jurisdiction”: the extraterritorial 0.1% rule and mirror sanctions lists force even neutral producers to choose a side at every link in the production chain, from equipment to packaging. Finally, there is the political risk of getting used to truces as a permanent state: each extended round perpetuates structural dependence and reduces the motivation to invest in restructuring supply chains until the next crisis.
Raw material reserves and supply chains
Conclusion and scenarios for the development of the situation
Thus, by the autumn of 2026, critical minerals have secured the status of an independent dimension of major politics — in parallel and in close connection with the trade and technological war. China has transformed export control from a one‑off retaliatory measure into a systemic tool; the West has responded not with market competitiveness, but with a return of the state to extraction and collective goals aimed at reducing dependence. The analysis carried out allows us to identify the following scenarios:
1. Managed competition (“Chain competition”). The truces are being extended, and alternative projects in the USA, Australia, Brazil, and Japan are reaching industrial capacity in 2027–2029, while China’s share in processing is gradually declining towards the G7 targets. The chances are moderate: the economy of alternative projects works only if high prices and political discipline are maintained, and each round of Beijing’s easing undermines their profitability.
2. Chronic truce (“Negotiation crisis as the norm”). The leverage is used in measured doses and in a circular manner: licenses are either slowed down or accelerated, sanction lists are updated, and actual volumes fluctuate around 80% of the pre‑crisis level. Companies have to design production to accommodate uncertainty: strategic reserves, supplier duplication, cost increases. The probability is high; the scenario perpetuates costs for all parties but maintains the manageability of the conflict.
3. Resource gap (“Two circuits”). One of the two deadlines is not being extended: the suspension of October restrictions until November 10, 2026, or the Busan Agreement until January 2027. Beijing is fully deploying the extraterritorial 0.1% rule; the West is responding with collective restrictions and quotas; the market is splitting into two jurisdictional circuits with different prices and certifications. The production of final products outside China worth 5.5 trillion dollars annually is under threat, and the neutral jurisdictions of Southeast Asia, the Middle East, and Latin America are sharply increasing their geopolitical weight. The scenario, which is recognized as undesirable by all parties, remains the most destructive, but its likelihood is growing as truces turn into a mechanism for delaying rather than resolving the conflict.
In any of the scenarios, one factor will remain decisive: the speed at which the West manages to turn supporting projects into sustainable competitive capacities. Until this point is passed, rare‑earth metals remain what Beijing has made them — not raw materials, but a license for industrial development, which is issued and revoked by a monopolist.
Tags: critical minerals, rare‑earth metals, China, the USA, G7, export control, supply chains, geoeconomics.
