Highlights
- China has added bismuth, indium, molybdenum, tellurium, and tungsten to its list of restricted mineral exports.
- This action escalates economic tensions with the U.S.
- The restrictions potentially disrupt global supply chains for semiconductors, clean energy, and defense industries.
- China dominates mineral production in these industries.
- The U.S. faces significant economic and national security challenges due to these restrictions.
- There is an urgent need for the U.S. to develop domestic mining and alternative supply chain strategies.
China has once again expanded its list of critical mineral export restrictions, adding bismuth, indium, molybdenum, tellurium, and tungsten to an already growing roster of materials subject to government control. These metals are essential to industries ranging from clean energy and high-tech manufacturing to defense applications, making their restriction a potential economic and strategic threat to countries reliant on Chinese supply chains—particularly the United States. This move continues Beijing’s pattern of leveraging its dominant position in global mineral production to counter trade policies and technology restrictions imposed by the U.S. and its allies.
The Current Situation: China’s Control Over Key Minerals
China’s latest export restrictions come amid rising geopolitical tensions and a deepening U.S.-China trade war. In previous years, China had already imposed limitations on exports of gallium and germanium (used in semiconductors), graphite (essential for EV batteries), and antimony (a key component in ammunition and fireproofing compounds). This growing list underscores China’s dominance in critical mineral supply chains:
- Bismuth (81% of global supply) – Used in cosmetics, pharmaceuticals, and advanced permanent magnets that could replace rare earths in EVs and military applications.
- Indium (70% of global supply) – Essential for touchscreens, 5G networks, and high-speed telecommunications.
- Molybdenum (42% of global supply) – A superalloy-strengthening metal used in steel, lubricants, electronics, and catalysts.
- Tellurium (77% of global supply) – A rare metalloid crucial for cadmium telluride solar panels, thermoelectric generators, and potential EV battery advancements.
- Tungsten (83% of global supply) – A superhard metal used in aerospace, military, and industrial applications, including rocket engines and drill bits.
Beyond these materials, China remains the top supplier for 30 minerals deemed critical to the U.S. economy and dominates global rare earth element production (69%), underscoring its strategic control over key supply chains.
Potential Ramifications: A Growing National Security Threat
China’s mineral restrictions highlight a critical vulnerability in the U.S. and Western supply chains, particularly for defense, semiconductor, and clean energy industries. The immediate consequences of these bans include the following:
| Consequences | Summary |
|---|---|
| Supply Chain Disruptions | Key American industries reliant on these materials—such as semiconductor manufacturing, battery production, and aerospace—will face shortages, increased costs, and a scramble to find alternative suppliers. |
| Economic Impact | A U.S. Geological Survey (USGS) report estimated that a complete Chinese ban on gallium and germanium could reduce the U.S. GDP by $3.4 billion, illustrating the disproportionate economic effects of losing access to these critical materials. |
| Increased Reliance on Unstable or Unfriendly Nations | With China restricting supply, the U.S. may be forced to rely on other nations with geopolitical or ethical concerns, such as the Democratic Republic of Congo for cobalt or Russia for certain metals. |
| Shift in Global Trade Alliances | This could accelerate efforts by the U.S., EU, and Japan to develop alternative supply chains, invest in domestic mining, and forge mineral trade agreements with allied nations like Canada and Australia. |
| Rising Prices and Technological Slowdowns | Restrictions could drive higher costs for EVs, solar panels, semiconductors, and military equipment, impacting everything from consumer electronics to defense capabilities. |
As Rare Earth Exchanges often points out, much of the media seems to overlook key unfolding dynamics and factors.
- Trump’s Energy Shift Away from Renewables
With Donald Trump back in office, his administration is prioritizing hydrocarbons and fossil fuel development under a “drill baby drill” policy. Suppose federal incentives for EVs and renewable energy are reduced. In that case, the demand for some of these restricted minerals—such as tellurium (used in solar panels) and graphite (used in EV batteries)—may decline in the U.S. However, China’s mineral control could still disrupt global supply chains, affecting allied economies like the EU and Japan, which remain committed to green energy.
- China’s Strategic Play for Technology Superiority
China’s restrictions are often framed as retaliation for U.S. tariffs and chip bans, but they also serve a broader strategy: They ensure that Chinese manufacturers have priority access to these materials while limiting U.S. technological advancements. By controlling these minerals, China gains leverage over industries critical to its future economic and military power.
- Lack of a U.S. Domestic Production Plan
While the U.S. government acknowledges its reliance on China for critical minerals, there is no clear, unified strategy for boosting domestic mining and refining capabilities. Environmental and regulatory hurdles make it difficult to open new mines, and past efforts to establish a U.S. rare earth supply chain have largely stalled due to high costs, legal challenges, and lack of long-term investment. An often not-mentioned factors are the ideological limitations in the U.S. that serve as an impediment to looking at the problem more holistically for what it is.
- Allied Collaboration is Moving Too Slowly
Though the U.S., EU, Canada, and Australia have made agreements to develop alternative supply chains, progress remains slow. China still dominates the refining and processing of most of these minerals, even if raw materials are mined elsewhere. Western nations remain vulnerable to future restrictions without rapid investment in refining capabilities.
So What Comes Next?
China’s continued tightening of mineral exports raises alarms about global supply chain stability and emphasizes the urgent need for the U.S. and its allies to develop secure, diversified, and domestic sources of critical materials. As geopolitical tensions escalate, relying on China for essential defense and technology inputs is an unsustainable risk.
While the media focuses on short-term trade war consequences, the bigger issue is China’s long-term strategic control over future industries. The U.S. should be focusing on the acceleration of domestic mining efforts, investment in refining capacity, and the establishment of stronger mineral alliances with friendly nations before the situation becomes an economic and national security crisis. Rare Earth Exchanges has suggested a possible third path, creative dealmaking with Trump and key advisors, meeting the Chinese to negotiate and structure some form of great compromise. But this is unlikely.
Daniel
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