export controls on rare-earth elements, then partially suspended the
second layer. The cumulative effect rewrote the terms on which every
rare-earth consumer outside China now plans its supply chain.¹²
on seven rare-earth elements — samarium, gadolinium, terbium,
dysprosium, lutetium, scandium and yttrium — together with related
alloys, compounds, metals, oxides and magnets.¹ The measure came as part
of Beijing's response to new U.S. tariffs and was structured to require
exporters to obtain specific licenses rather than operating under the
previous general-export regime.
May as the new licensing system ground through its first cases.
sourcing permanent magnets, and several plants cut utilisation rates or
paused lines while inventories were rebuilt. The April measures targeted
precisely the heavy rare earths that permanent-magnet producers need
most.²
fabricators, which had long-standing commercial relationships with
partly because Beijing issued licenses more readily to buyers in
countries that had not imposed tariffs, and partly because Japanese
refineries in particular had built inventory buffers anticipating
exactly this scenario. European manufacturers sat somewhere in between.
to cover five additional elements — holmium, erbium, thulium, europium
and ytterbium — as well as processing equipment and technologies. The
new measures were to take effect from 8 November.¹
quantitative one. The additional elements are used in smaller volumes
than those covered in April, but the inclusion of processing equipment
meant that Chinese refining technology could not easily be exported to
support non-Chinese rare-earth projects elsewhere. That second-order
effect hit the strategic ambitions of countries trying to build
independent supply chains — including Brazil, with its Poços de Caldas
refining hub plans, and the United States, with the MP Materials
Independence facility in Texas.
year. The April measures remained in effect, but Beijing began issuing
general export licenses to selected exporters, which partially restored
the flow.¹ The climb-down came in the context of a framework trade
agreement reached between the U.S. and China in June 2025 and of further
negotiations through the year.
who had been forced to identify alternative sources, build inventory
buffers or accept materially higher prices during April-November were
unlikely to abandon those adjustments simply because some of the Chinese
licenses were reissued. The credibility cost to the pre-April status quo
had already been incurred.
that buyers paid roughly US$10-30 per kilogram more than usual for
permanent magnets produced outside China, and that European rare-earth
prices rose to up to six times the levels seen in China during the
tightest months.¹ Dysprosium traded around US$250 per kilogram, and
terbium above US$1,000 per kilogram.
signal. In a fully integrated global market, regional price differences
of that magnitude persist only when arbitrage is impossible — that is,
when physical movement of material across borders is blocked by
licensing or logistics. For much of 2025, that condition held.
commentary during the year, underscored that the fundamental mismatch
between supply and demand for dysprosium and terbium would widen through
the rest of the decade even without further Chinese policy intervention.
in place. Buyers who had previously treated rare-earth supply as a
commodity problem began treating it as a strategic one.
rare-earth consumer. Automakers, defence contractors, wind-turbine
manufacturers and electronics producers outside China now assume that a
portion of their rare-earth supply is politically contingent, and they
build that assumption into contracts, inventory planning and supplier
diversification.
refining hub — offer non-Chinese supply of precisely the kind that
the strategic logic of diversification.³
warning. The short-term leverage of export controls produced a durable
external response — more capital flowing to non-Chinese projects, more
political urgency in Western governments, more willingness to pay
premiums for non-Chinese supply. The policy worked in one dimension and
backfired in another.
critical-minerals policy. The G7 Critical Minerals Action Plan,
published after the IEA's 2025 Global Critical Minerals Outlook,
explicitly framed its priorities in terms of reducing concentration risk
the European Critical Raw Materials Act's implementation priorities.
2025 gave the policy language a specific, visible event to point to.
licenses case by case. The October 2025 suspension could be reinstated
at short notice. Every month that passes, however, is another month in
which non-Chinese producers ramp, Western refining capacity grows, and
the structural share of Chinese dominance declines at the margin. The
the multi-year shift away from it. Brazilian producers entering
commercial operation during precisely this window are direct
beneficiaries, and the trajectory of their share within global supply
through 2026-2027 will be one of the most closely watched storylines of