Highlights

• China dominates 70-95% of critical minerals processing, including:
  • 90%+ of graphite
  • 94% of permanent magnets
  • 85-95% of battery materials
• This creates severe supply chain vulnerabilities for Western industries such as electric vehicles (EVs), semiconductors, and defense systems.
• Beijing is leveraging this control by imposing export bans on:
  • Gallium
  • Germanium
  • Tungsten
  • Graphite
• These actions are causing immediate production halts and price spikes that threaten U.S. chip manufacturing, EV production, and military hardware.
• The hidden strategic value of these minerals lies downstream, as cheap raw ore is transformed into multimillion-dollar products like magnets, batteries, and semiconductors. This effectively means China holds the switch to entire Western industries worth billions in economic value.

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China today sits astride the global supply of many critical minerals – not just at the mine mouth, but across processing, refining and final manufacturing. In fact, the International Energy Agency (IEA) reports that for 19 of 20 key strategic minerals, China is the world’s leading refiner, with an average market share of 70%. In sectors like batteries and magnets, that dominance is far more extreme.

China processes over 90% of the world’s graphite (used in lithium-ion battery anodes) according to the U.S. Energy Information Administration (opens in a new tab) (EIA), supplies 94% of permanent rare-earth magnets, and in some battery materials segments has 95%+ market share. Such concentration creates “multiple points of vulnerability” for everything from electric vehicles to national defense. As one analyst bluntly puts it, Chinese firms now control the “mineral arteries” of the modern economy (opens in a new tab) – from the Congo’s cobalt to Myanmar’s rare earths – through a web of investments, loans and export policies.

Minerals Under Beijing’s 80%+ Thumbs

The chokepoints are real. In supply-chain terms (production and processing), China effectively monopolizes the following critical minerals:

Mineral	China Control
Graphite (battery anode material)	China mined 79% of the world’s natural graphite in 2024 and processes over 90% of it. It also dominates synthetic graphite for batteries. Virtually all high-quality battery anodes today depend on Chinese graphite. U.S. production is essentially zero, meaning any Chinese export cutoffs would halt EV and defense battery manufacturing
Tungsten	China supplies roughly 80–81% of the world’s tungsten, a metal critical for hard steel alloys, armor-piercing ammunition and aerospace components. China also holds over half of known tungsten reserves and in late 2024 imposed strict export controls on tungsten. This has already sent tungsten prices soaring (some compounds up 20%+) and left Western munitions and jet producers scrambling.
Gallium	China produces about 90%+ of the world’s gallium and refines roughly 99% of it. Gallium is essential for advanced semiconductors (GaN/GaAs chips, lasers and 5G components). Without Chinese gallium, fab lines for defense communications, data centers and AI chips would quickly choke off
Battery Materials (midstream)	China commands 80–95% of critical battery material production. For example, China produces 85% of global lithium-ion battery anodes and 70% of cathodes, and it holds a near-monopoly (>95%) on precursor cathode powders (NCM/NCA) and lithium iron phosphate (LFP) cathode materials. In practical terms, this means almost all EV battery components funnel through China. (Image: China’s lead in battery-cathode materials – e.g., nickel/cobalt/manganese precursors and LFP powders – now exceeds 95%. Such chokepoints put global EV and defense applications at China’s mercy.)

So China’s dominance of the battery supply chain is extreme. For instance, it controls roughly 95% of key cathode precursor and LFP cathode production. It also makes ~85% of all battery anode materials per EIA. The nation refines over 90% of battery-grade graphite. In short, virtually every high-performance battery in the world depends on Chinese-refined materials.

As Rare Earth Exchanges™ reports frequently, China now makes about 94% of all sintered NdFeB permanent magnets – the strongest magnets used in everything from EV motors and wind turbines to guidance systems. (By contrast, two decades ago, China only supplied ~50% of these magnets.) In effect, U.S. and allied industries that rely on these magnets (automotive, aerospace, military hardware) are 94%-dependent on China.

China also dominates many related critical supplies. It refines roughly 73% of the world’s cobalt and 68% of its nickel; it produces over 90% of semiconductor-grade germanium and gallium (with new export bans on those materials to the U.S. as cited by Reuters (opens in a new tab) last year); and, by recent government report, it “controls” 85% of battery cathode precursors, 97% of anode active material, 85% of anode and 70% of cathode production globally.

The upshot: Chinese firms or state proxies have locked down the vast majority of these supply chains. Washington and its allies have essentially outsourced EVs, chips, and even missiles to Beijing. (By contrast, Europe reports (opens in a new tab) that China supplies 100% of its heavy rare earths and nearly all other “advanced metal” needs.) Japan also learned this lesson the hard way in 2010: it was ~90% dependent on China for rare earths, a gap it has since only partially closed.

The Hidden Strategic Value of Raw Ore

It gets worse. The market price of these raw minerals woefully understates their true value. As Rare Earth Exchanges explains, most of the economic worth lies downstream, in the high-tech products they enable. A ton of NdPr ore may sell for a few thousand dollars, but a finished NdFeB magnet (made from that ore) can be worth millions in cars, motors, and missiles. Likewise, cheap graphite or gallium feedstock is turned into multibillion-dollar battery packs or semiconductor chips. In effect, the “enhanced value” of these materials is hidden in the final systems – yet China captures it all. In practice, if Beijing clamps down on exports, the true value (for example in EVs or defense systems) simply vanishes from the U.S. and its allies.

Put bluntly: the nation that supplies 90%+ of a critical mineral isn’t just selling ore – it’s holding the switch to entire industries. That switch is effectively in Chinese hands today. No one can build an F-35 fighter, a high-end data center, or a modern submarine without the magnets, semiconductors, and batteries made possible by these “obscure” elements. But because these minerals trade cheaply, traditional markets ignore the fact that their economic worth is many times greater. As one analyst notes via REEx, a strong permanent magnet is “worth exponentially more” than the raw ore it contains – meaning Western factories building EVs or wind turbines are trading on Chinese goodwill.

Weaponizing the Supply Chain

China’s leverage isn’t hypothetical. Beijing has begun to weaponize these choke points through export controls and bans. In late 2024, it quietly slashed export quotas and tightened licensing on graphite and tungsten, two minerals critical for batteries and defense steel. The result was immediate: U.S. manufacturers scrambled for alternatives as prices spiked. As cited above, by December 2024, China went further – banning exports of gallium, germanium, and antimony to the United States. Gallium and germanium are semiconductor workhorses, and China already refines ~99% of global gallium. Suddenly, U.S. chipmakers face a near-total cutoff of these inputs. The same month, new rules halted virtually all U.S. imports of graphite and tungsten products. These steps demonstrate Beijing’s strategy: use resource dependency to extract concessions.

China has already tested this power. In 2010, it famously embargoed rare earth exports to Japan over a political spat – a move that helped force Japan to diversify, as we have reported in REEx. More recently (April 2025), China slapped strict controls on heavy rare earths and magnets, causing Western automakers to idle EV production and driving European magnet prices to 6× the Chinese level. These are not one-off warnings. The IEA reports China is now expanding export curbs to entire battery supply chains (including LFP cathodes, anodes, and even EV battery packs).

If these controls hold, the impact will be chilling. Many factories overseas lack any buffer. For example, as of late 2024, the U.S. had received zero gallium or germanium shipments, despite being a top-five market, as cited by Reuters (opens in a new tab) last year.

Meanwhile, China now accounts for 98.8% of global refined gallium and 59% of refined germanium. In battery supply chains, delays in graphite or precursor shipments could drive prices through the roof and stall EV rollouts (just as Rare Earth magnets did earlier this year). In short, every major U.S. and allied industry – from electric cars and solar power to fighter jets and radar systems – now has critical inputs tied to Chinese policy.

Consequences: Chips, EVs, and National Security

The fallout of China’s dominion would be immense. U.S. industry insiders warn that cutting off these minerals would grind production to a halt. Without tungsten, many guided missiles and armor-penetrating shells could not be made; without gallium and germanium, advanced chips for F-35 fighters or AI centers would be impossible; without graphite and cathode materials, electric vehicles and grid storage batteries would dry up.

The automotive and energy sectors have already reported panic-buying magnets and battery materials. The European Union, alarmed by recent export threats, is rushing to fund new rare-earth and critical mineral projects, although not as fast as America’s efforts. Japan, which once got nearly 90% of its rare earths from China, spent a decade cutting that to ~60% by diversifying sources. Those are the kind of aggressive measures that the U.S. and others must now not only contemplate, but execute.

For policymakers and investors, the message is clear and urgent: China’s chokehold on raw materials is no longer academic. The hidden “value” trapped in these minerals – the value of cutting-edge products, technologies, and defense capabilities – will only remain if supply chains are hardened now. Otherwise, billions in downstream value could evaporate overnight as Beijing flips a switch. This vulnerability should be a wake-up call: high-tech militaries and economies cannot afford to let a rival control the raw ingredients of their future.

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