China’s export controls on rare earth elements (REEs) and magnets have virtually choked off global supply, following their announcement on April 4 in retaliation to US President Donald Trump’s reciprocal tariffs – which have since spiraled into a full-blown trade war between the world’s two largest economies.
Although the curbs were targeted at the US, the Chinese government has yet to set up a licensing regime for other countries, effectively halting shipments at ports, The New York Times reported early Tuesday (IST).
China’s export suspension applies to around half a dozen REEs, including yttrium and dysprosium, which are widely used in the manufacturing of jet engines components, defence equipment, and advanced electronics.
A global supply crunch in the making
Since China produces most of the world’s REEs, shipments stuck at ports are likely to trigger a global supply crunch – especially affecting major REE-consuming countries like the US, Japan, Vietnam, and Germany.
Some Japanese companies could withstand a supply crunch, as they maintain rare earth inventories of over a year’s supply, ever since China imposed a seven-week export ban in 2010 over a territorial dispute in the South China Sea.
“A number of policies have foreshadowed that REE export restrictions were on the horizon. China first weaponized rare earths in 2010 when it banned exports to Japan over a fishing trawler dispute. Between 2023 and 2025, China began imposing export restrictions of strategic materials to the United States, including gallium, germanium, antimony, graphite, and tungsten,” experts at Washington-based Center for Strategic and International Studies (CSIS) said.
While several countries have sought to build self-reliance in rare earths – and are expected to accelerate those efforts – experts warn that dependence on China is unlikely to lessen, as it tightly controls the technologies critical for refining.
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Impact on India to be limited
The impact on India is expected to be limited, given its relatively low domestic consumption of rare earths, though demand has seen some growth in recent years.
India imported 2,270 tonnes of REEs in 2023-24, up 23 per cent from 1,848 tonnes in 2019-20, according to a recent press release from the Ministry of Mines. Imports from China accounted for 65 per cent, and another 10 per cent came from Hong Kong.
Domestic mining and refining remains modest, led by state-owned IREL Ltd, which operates a processing unit with a capacity of over 10,000 tonnes per annum. In contrast, China refined over 2 lakh tonnes of REEs in 2023 alone.
US, India turn to seabed in rare earths hunt
On Tuesday, Reuters reported that China’s foreign ministry has opposed US plans to mine and stockpile deep-sea metals, many of them rare earths.
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The Trump administration is working on an executive order to allow stockpiling of deep-sea metals from the Pacific seabed, aiming to reduce reliance on China for battery minerals and rare earths, the Financial Times reported Saturday, citing sources familiar with the plan.
“Exploration and exploitation of mineral resources in the international seabed area must be conducted in accordance with the United Nations Convention on the Law of the Sea and within the framework of the International Seabed Authority,” China’s foreign ministry said in a statement according to Reuters.
In November last year, India launched an auction for seven seabed blocks in the Andaman Sea for exploration and eventual mining. These blocks hold polymetallic nodules and crusts, which can contain heavy rare earth metals.
