Highlights
- China controls over 90% of dysprosium production, implementing strict export restrictions that have created significant challenges for the EV industry.
- Dysprosium prices surged 35% in one week, highlighting the critical vulnerability of rare earth element supply chains.
- Experts predict it could take 5-10 years to establish alternative rare earth supply chains outside of China.
Dysprosium, a heavy, rare-earth element, has become a focal point of concern for the electric vehicle (EV) industry due to its critical role in manufacturing high-performance permanent magnets essential for EV motors. China’s recent export restrictions on dysprosium have exacerbated supply chain vulnerabilities, leading to significant disruptions in the global EV market.
China dominates the global dysprosium supply chain, controlling over 90% of its production and nearly all of its refining capacity. In April 2025, the Chinese government implemented stringent export licensing requirements for heavy rare earth elements, including dysprosium, as a countermeasure in the ongoing trade tensions with the United States. This move has left American automakers scrambling for alternative sources, with some companies reporting that their existing stockpiles may only last until the end of May. Sean McLain, writing for the Wall Street Journal, (opens in a new tab) recently covered the topic.
The scarcity of dysprosium has led to a sharp increase in its price, with reports indicating a 35% surge within a single week following the announcement of export restrictions. This price volatility not only affects the cost of EV production but also has broader implications for industries reliant on rare earth elements, including renewable energy and defense sectors. See Strategic Metals Invest (opens in a new tab).
In response to the crisis, countries like the United States and Australia are exploring strategies to reduce dependence on Chinese rare earth supplies. Initiatives include developing domestic mining and refining capabilities, as well as forming strategic partnerships to diversify supply sources. For instance, as Rare Earth Exchanges has reported, Australia has announced plans to establish a strategic rare earths reserve and invest in refining facilities to bolster its position in the global market.
However, establishing alternative supply chains is a complex and time-consuming endeavor. Experts warn that building a robust non-Chinese supply chain for rare earth elements could take 5 to 10 years, requiring significant investment and overcoming technical challenges associated with mining and processing these materials. Rare Earth Exchanges has suggested that less an industrial policy an accelerated change will be a stretch.
The current dysprosium shortage underscores the urgent need for the EV industry and allied sectors to develop resilient and diversified supply chains. Without immediate and coordinated action, the reliance on a single dominant supplier poses a significant risk to the stability and growth of critical industries worldwide.
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