On April 4, 2025, China's Ministry of Commerce introduced a new export licensing system for seven critical rare earth elements: samarium, gallium, terbium, dysprosium, lutetium, scandium, and yttrium. These minerals are essential for manufacturing powerful magnets used in electric vehicles, wind turbines, military equipment such as F-35 fighter jets, and other high-tech products.
China controls around 70% of global rare earth mining and about 90% of processing. Chinese firms produce over 90% of all high-performance magnets. Export restrictions have pushed companies to innovate: producers began making magnets without restricted elements using advanced grinding techniques, experimented with new alloy formulas, and worked with component suppliers to export finished products with magnets already embedded.
Another method to bypass rules involved using holmium, a rare earth not initially restricted, but in October 2025, Beijing expanded its list to include five more elements, such as holmium. Stricter limitations were also introduced on export of related technology and equipment and cooperation of Chinese citizens with overseas rare earth projects.
A significant rule for Western defense producers, coming into effect on December 1, 2025, largely blocks licenses for military-related end-users, including the US. China uses its monopoly as a geopolitical tool. Meanwhile, Chinese companies look for new ways to continue exports and maintain investments, sometimes in conflict with government policies.
On October 30, after a meeting between US and Chinese leaders, some restrictions were temporarily eased, but most remain. The world continues to watch the delicate balance between geopolitical influence and commercial interests in this sector.
