China curbs rare earth exports. Now the minerals behind EVs, chips and missiles are getting pricier – Firstpost

China’s decision to tighten exports of key rare earth minerals is sending shockwaves through global supply chains, driving up prices of materials used in everything from electric vehicles and semiconductors to advanced missile systems.

The export controls, introduced by Beijing in April last year, cover seven medium and heavy rare earth elements, including yttrium, terbium and dysprosium. While the restrictions stop short of an outright ban, they require exporters to obtain special licences, creating delays and sharply reducing supplies reaching overseas markets.

The impact on prices has been dramatic.

Yttrium, a mineral used in aerospace components, defence systems, semiconductors and medical equipment, has surged since the controls were announced, with prices reaching roughly $1,100 per kilogram.

Terbium, a key ingredient in permanent magnets used in electric vehicles and wind turbines, has climbed about 350 per cent to nearly $4,500 per kilogram. Dysprosium, another critical magnet material used in electric motors and military applications, has risen about 450 per cent to around $1,450 per kilogram.

The sharp gains underscore China’s dominant position in the global rare earth industry and highlight how difficult it is for other countries to replace Chinese supplies.

Exports fall as licensing regime bites

The surge in prices comes as exports of several restricted rare earth elements have dropped sharply since the new rules took effect.

Exports of yttrium and terbium have fallen by about 50 per cent compared with the previous 12-month period, while dysprosium shipments are down around 60 per cent.

China introduced the measures in response to tariff increases imposed by US President Donald Trump, turning rare earths into one of the most strategically important fronts in the broader trade dispute between the world’s two largest economies.

The restrictions have exposed a critical weakness in Western supply chains. Although rare earth deposits exist in countries such as the United States, Australia, Canada and India, processing capacity remains heavily concentrated in China.

Industry estimates suggest China controls roughly 90 per cent of global rare earth processing, giving Beijing significant influence over supplies even when mining takes place elsewhere.

Why these minerals matter

Rare earths are a group of 17 minerals that play a vital role in modern technology.

Yttrium is used in semiconductors, jet engine coatings, lasers, radar systems and medical imaging equipment. Terbium and dysprosium are essential for producing high-performance magnets that can withstand high temperatures, making them critical for electric vehicles, wind turbines, advanced electronics and military hardware.

As countries race to expand artificial intelligence infrastructure, clean energy projects and defence capabilities, demand for these materials is increasing rapidly.

That demand has coincided with China’s tighter export controls, creating a supply squeeze that is pushing prices higher across global markets.

China remains the dominant force

China not only leads the world in rare earth processing but also possesses the largest known reserves.

According to industry estimates, China holds around 44 million metric tons of rare earth reserves, more than double the reserves of Brazil, the world’s second-largest holder. India ranks third with approximately 6.9 million metric tons, followed by Australia with 5.7 million metric tons.

Despite efforts by the United States, Europe, Japan and other countries to build alternative supply chains, analysts say reducing dependence on China will take years because refining and separating rare earth elements requires complex, capital-intensive processing facilities.

Building those facilities can take years and involve significant environmental and regulatory hurdles.