Highlights

• China imposes strict export restrictions on seven critical rare earth elements.
• China controls 90% of global refining and 70% of mining in the rare earth sector.
• Global economies accelerate diversification strategies.
• Australia emerges as a key alternative supplier despite processing limitations.
• Market volatility and strategic realignment expected.
• Meaningful supply chain diversification likely to take up to a decade.

In  Spherical Insights, “China’s Rare Earth Export Restrictions: Global Market Shockwaves and Australia's Emerging Opportunity (opens in a new tab),” June 2025, the authors report on China’s April 2025 imposition of new export restrictions, making it hard to access seven critical rare earth elements. This, of course, intensified global supply chain disruptions. As the world’s dominant rare earth processor, controlling nearly 90% of refining and 70% of mining, China’s actions have significantly impacted industries reliant on rare earth magnets, semiconductors, batteries, and defense technologies. The resulting shortage has already led to factory slowdowns, particularly in Europe’s automotive sector, while prices for rare earths have surged globally.

Spherical Insights highlights that China’s export curbs are both an economic and geopolitical maneuver, tightening control over global rare earth element (REE) pricing and availability. These restrictions have prompted major economies, including the U.S., EU, Japan, and India, to accelerate strategies for diversification, including domestic production, recycling, and stockpiling.

Australia is positioned as a key beneficiary. With 13,000 tonnes of REE output in 2024 (3.3% of global production) and significant reserves at Lynas’s Mt Weld mine, the country is seen as a strategic alternative. However, Australia still lacks downstream processing infrastructure—most refining is outsourced to Malaysia, highlighting a persistent bottleneck.

The report also highlights environmental concerns surrounding China’s rare earth mining and emphasizes the lengthy lead times required to develop independent refining capacity elsewhere. While recycling and new facilities in Canada and the U.S. show promise, meaningful diversification will likely take a decade.

In sum, China’s REE export controls have triggered market volatility and strategic realignment. Nations are scrambling to secure alternative supply chains, but short-term substitutes remain limited, cementing China's grip on global rare earth markets for the foreseeable future.