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Mineral Supply Shock Looms as China Limits Key Exports

Metals and Mining

Business Honor
15 April, 2025

China bans key mineral exports, disrupting global tech supply and escalating U.S. trade tensions.

In an attempt to cut off supply to a variety of industries, from semiconductors and electric cars to defense and aerospace, Beijing has suspended exports of a wide spectrum of vital minerals and magnets, the New York Times reported late Sunday. China's retaliation for US President Donald Trump's steep tariff hike amid rising trade tensions between the two largest economies in the world includes the suspension.

Since rare earth magnets now account for a very minor portion of China's total exports, the country would be less affected by the restrictions than its major trading partners. According to the article, ports have stopped shipments since the announcement while the Chinese government completes a new regulatory framework that could permanently stop some businesses, particularly US military contractors from entering the country.

Many American businesses hold small reserves to free up cash, whereas some Japanese corporations keep more than a year's worth of rare earth inventories. The study claims that the price of essential minerals such as dysprosium oxide, which are now governed by new export laws, has gone up to almost $204/kg in Shanghai and far higher prices outside of China.

Companies in the US, Japan, and Germany, to which the export restrictions also apply, would incur higher costs as a result. However, according to the NYT, the limitations seem to be applied inconsistently throughout China's ports. While some require stringent testing to guarantee conformity, others permit the export of magnets containing traces of heavy rare earth elements.

Because of its control over the mineral reserves in Jiangxi province and the potent magnet production base in Ganzhou, China dominates the rare earth industry. Global manufacturing still heavily relies on factories like JL Mag Rare-Earth, which supplies EV behemoths Tesla and BYD.