Highlights

• China controls 97% of global heavy rare earth production, creating significant supply chain pressure for countries like South Korea.
• Export controls and restrictions are impacting industries including electric vehicles, defense, and renewable energy technologies.
• Global investors and companies are seeking alternative heavy rare earth suppliers outside of China to mitigate supply risks.

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According to one Korean account, China still commands roughly 97% of global heavy rare earth production—especially dysprosium, terbium, and samarium, the quiet metals that keep EV motors spinning and missile radars locked on target. And there is on-the-ground distress: Star Group Industry, a Daegu magnet maker, scraped by on just 2.5% of its import needs since April, and a defense supplier weighing a halt in samarium-cobalt magnet production for tanks and radar.

Customs clearance delays, falling export tonnages, and dwindling supply are all documented with reference to official Chinese trade data. These are not exaggerations; they’re the mechanics of a chokehold tightening.

Rare Earth Exchanges (REEx) probes concern out of South Korea.

Between Alarm and Reality

Where the reporting from the Korea JoongAng Daily leans is in its sense of imminent collapse. Korean SMEs are indeed exposed, but chaebol giants typically cushion against shocks with inventory stockpiles, diversified sourcing, and global supply contracts.

Suggesting that defense exports could unravel overnight oversimplifies a system built on redundancies and multinational ties. The portrayal of Seoul as “oblivious” overlooks a ₩10 trillion ($7B) stabilization fund, albeit one hamstrung by bureaucracy and limited scope. In elevating the plight of small suppliers—real and pressing—the piece risks shading into alarmism at the expense of acknowledging Korea’s broader industrial resilience.

Signals for Investors

For investors, the true signal isn’t just Korean firms under stress—it’s the global tightening of heavy REEs. China’s export curbs ripple well beyond Seoul, unsettling EV, wind turbine, and defense supply chains across continents. Brazil’s Serra Verde, America’s MP Materials, and Australia’s Lynas stand to gain as substitute suppliers if they can sustainably extract and refine heavy rare earth elements. The contrast is stark: Washington has taken a 15% stake in MP Materials, while Tokyo’s JOGMEC has secured preferential access at Mount Weld. Seoul, by contrast, has been cautious, still scarred by past resource diplomacy scandals.

The REEx Takeaway

Yes China is squeezing, and Korea is caught. However, the recent Korean news piece's tone drifts toward panic without balancing existing buffers or acknowledging a global shift to new suppliers. For retail and institutional investors, the lesson is simple: heavy rare earths—dysprosium and terbium above all—remain the pressure points.

Companies and governments able to deliver these metals outside of China will be the true beneficiaries as Asia’s industrial machine desperately hunts for stability.

Source: Korea JoongAng Daily, “China’s rare earth export controls threaten Korea’s auto and defense supply chain (opens in a new tab),” Sept. 26, 2025.

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