Highlights
- China’s 2025 export controls strategically target defense and aerospace sectors.
- The controls aim to avoid broader panic while potentially disrupting global rare earth supply chains.
- Export restrictions could create bureaucratic delays of up to 45 business days.
- These restrictions encourage potential long-term supply chain decoupling by U.S. and allied governments.
- The current geopolitical rare earth strategy represents a sophisticated approach compared to China’s 2010-2011 actions.
- Both sides are playing a calculated long-term game.
Rare Earth Exchanges (REEx) reports on a detailed and timely analysis published by Ryan Castilloux (opens in a new tab) of Adamas Intelligence (Mining.com, April 25 (opens in a new tab), 2025), titled “CHARTS: Rare earth export restrictions, price spikes and the risks of demand destruction.” Castilloux recounts the historic 26-fold surge in dysprosium oxide prices between 2009 and 2011, triggered by China’s tightening quotas, rising export duties, illegal production crackdowns, and geopolitical friction, culminating in profound volatility that led to permanent shifts in global manufacturing strategies.
In Mining.com, Castilloux warns that Beijing’s newly announced export controls—effective April 2025—appear far more sophisticated. Rather than provoke a global panic, China is targeting critical industries like defense and aerospace for maximum disruption while sparing sectors like electric vehicles, where China has a commercial stake. He notes that bureaucratic delays in securing new export licenses could bog down global rare earth flows for at least 45 business days, with broader supply chain disruptions looming for U.S. and European defense contractors.
REEx concurs with Castilloux’s core observations, particularly the risk of “engineered demand destruction”—where end users aggressively pivot away from rare earths to avoid future vulnerability.
However, the article underemphasizes one critical omission: while China’s precision targeting strategy is tactically smart, its moves still encourage long-term supply chain decoupling efforts now aggressively backed by U.S., Australian, and European industrial policies. Important—the resilience movement.
Furthermore, Castilloux does not deeply engage with the impact of Trump’s recent Executive Orders mandating critical mineral stockpiling and incentivizing rare earth processing capacity inside the United States, which could alter Beijing’s calculus over the longer term. While REEx has been somewhat critical of the Executive Orders, they are a start toward decoupling and resilience.
What makes sense in Castilloux’s analysis is the measured tone: today’s China is not blindly repeating the mistakes of 2010-11. However, he may underestimate how significantly U.S. and allied governments have learned from the past—and how the current wave of what hopefully becomes more strategic industrial policy and national security strategies, such as the Department of Defense’s MCEIP program and new Trump directives, could drive a historic pivot toward self-sufficiency regardless of short-term market stabilization.
The rare earth chessboard is being reset—but this time, both sides are playing a long game. See Castilloux’s piece (opens in a new tab).
Leave a Reply