Can the Sea Save America from Beijing’s Dominance in Rare Earths?

In a development threatening U.S. military technology supply chains, China's Ministry of Commerce announced a comprehensive ban on the export of dual-use materials to ten American companies, targeting the precision magnet sector and vital military components.

This step comes in the context of the trade escalation between the United States and China, as concerns grow over the weaponization of vital resources in the conflict between the two powers.

This unexpected escalation opens new horizons for questions about vital supplies and tests Washington's plans for economic self-sufficiency after rare earths turned into a direct weapon in the conflict between the world's two strongest economies.

What is the background of the recent Chinese decisions against American companies?

The Chinese decision came as a reaction to the U.S. Department of Defense's inclusion of companies such as 'Alibaba,' 'Baidu,' and 'NIO' on the list of Chinese companies linked to the military establishment.

Imposing trade restrictions and a total ban on the export of Chinese-made materials with potential military uses to American defense companies, turning previous procedures that only required export licenses into a complete and direct prohibition of supply transfers to these entities.

What are the most prominent American companies affected by the ban?

The companies 'MP Materials' and 'USA Rare Earth,' which lead the 'Trump' administration's efforts to rebuild domestic supply chains for magnets.

The company 'Aveox,' specializing in manufacturing electric motors for military applications.

What is the extent of China's current control over the global rare earths market?

China accounts for about 70% of rare earth mining operations and dominates over 90% of their processing globally.

Beijing controls about 90% of light rare earth supplies and processes over 98% of heavy rare earths.

How have supplies of dysprosium and terbium to the United States been affected?

Chinese customs data shows that dysprosium shipments to the United States have completely stopped since April 2025; it is a key component for military systems and automotive systems operating at high temperatures, such as brakes.

Manufacturers can replace dysprosium with the more expensive terbium, but data shows Chinese terbium shipments to America have been interrupted since last October, except for one shipment of 6 tons coinciding with the South Korea summit.

How have the defense industries of the Republic of Korea been affected by this conflict?

Exports of unwrought Chinese gallium to Seoul dropped 97%, threatening the missile radar industry and 5G network infrastructure.

Korean military industries face production delay risks due to the lengthy process of obtaining Chinese export licenses, which take 7 weeks.

What is the magnitude of the price jumps that rare earths have experienced due to the restrictions?

Germanium prices have roughly doubled over the past five years, exceeding $6,100 per kilogram in America and Europe.

The price of gallium jumped 550% to reach $1,850 per kilogram, while tungsten rose 557%.

How has U.S. financing of mining projects sparked competition with European allies?

Washington allocated about $46 billion for rare raw material projects, equivalent to eight times the European Union's budget for the same field.

The American rush to seize mining deals in Brazil and Angola has stirred resentment among European officials over U.S. dominance.

What is the expected growth in global demand for metals such as cobalt and lithium?

The International Energy Agency expects global demand from the clean energy sector to double to quadruple by 2040.

The pace of this growth accelerated toward the maximum due to the closure of the Strait of Hormuz, which pushed clean energy adoption efforts to record levels.

What is the new American technology that has been developed?

A research team at the U.S. Pacific Northwest National Laboratory has succeeded in developing an innovative technology based on a reactor to extract high-purity critical metals directly from seawater.

The new technology relies on passing seawater with sodium hydroxide to produce high-purity magnesium hydroxide, with future plans to expand the technique to include nickel extraction.

End of the Road

It seems that what lies ahead will not be more harmonious between the great powers on the trade front, as China intends to introduce stricter global export restrictions on rare earth metals next November.

China's new mineral resources law officially activates 'countermeasures' against any foreign restrictions described as discriminatory against Beijing, at a time when Washington seeks to protect its national security by pouring billions into building independent supply chains.

The question remains: Will seawater become the United States' new weapon to break China's dominance over rare earths, or will Beijing remain in the driver's seat in this strategic market?

Sources: Argaam – International Energy Agency – Wall Street Journal – Oil Price – UNCTAD – Reuters – New York Times – National Association of Manufacturers (NAM) – International Institute for Strategic Studies (IISS)

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The Chinese decision comes as a retaliatory response to Washington's inclusion of Chinese companies on its military list, deepening the cycle of trade conflict. With China controlling over 90% of rare earth processing, American companies face a challenge in securing immediate alternatives, jeopardizing Trump's plans to restore independence in this sector.