Elemental Leverage: How the United States Can Stop China’s Rare-Earths Squeeze Before the Next Crisis

CIMSEC | Josh Richards, Joseph Hanacek

Chinese trade negotiator Li Chenggang in August 2025 warned Beijing would restrict rare-earth exports if Washington tightened advanced technology controls, leveraging China’s monopoly over critical defense and clean-energy supply chains. China currently controls approximately 70 percent of global rare-earth mining, 90 percent of separation processing, and over 90 percent of high-performance magnet manufacturing.

Beijing uses this industrial asymmetry to exert geopolitical pressure. Domestic operations like California’s Mountain Pass Mine still remain dependent on overseas midstream processing despite extracting raw concentrates. To counter this vulnerability before a potential cross-strait conflict, the United States must execute a multi-track strategy focused on domestic refining, allied sourcing compacts, expedited permitting, and strategic reserves. Accelerating midstream processing is vital. Expanding initiatives through the Defense Production Act, the Minerals Security Partnership, and advanced recycling frameworks will secure the supply of vital elements like neodymium, dysprosium, and terbium against future market coercion.

Comment

Concentrating rare-earth industrial capacity in upstream extraction while surrendering midstream refining creates a critical bottleneck for precision-guided munitions and aerospace propulsion. At the Mountain Pass Mine in California, raw ore production fails to translate into sovereign military output because domestic facilities lack the solvent-extraction circuits necessary to separate heavy rare-earth oxides. This industrial disconnect leaves defence contractors reliant on foreign refining networks to process raw concentrates into usable weapon-grade inputs.

The fundamental vulnerability rests in the multi-stage metallurgical process required for high-coercivity neodymium-iron-boron magnets. Achieving the thermal tolerances needed for F-35 flight control actuators requires precise dysprosium alloying and specialised vacuum sintering, capabilities that cannot be rapidly replicated by expanding raw mining tonnage alone. Without dedicated domestic chemical separation lines, capital investment at sites like Mountain Pass yields unrefined material rather than actionable industrial throughput for defence production.

Strategic Question for Discussion

Which factor presents a greater bottleneck to scaling neodymium-iron-boron magnet production for military platforms — the long lead times required to build environmentally compliant chemical separation plants, or the capital risk of price manipulation by dominant overseas suppliers?

The available evidence points toward the capital risk of price manipulation as the more decisive bottleneck. Private investment in chemical separation facilities remains constrained because sudden surges in foreign export volumes can crash spot prices and render high-cost domestic processing unviable. Consequently, state-backed price floors or long-term offtake guarantees represent a necessary precursor before private capital will commit to multi-year infrastructure builds.

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