Ending China’s 60-Year Grip on Critical Minerals

Center for European Policy Analysis | Sharon Hudson-Dean

China controls approximately 90 percent of global rare earth processing and 94 percent of permanent magnet manufacturing, giving Beijing leverage over critical defense platforms like the F-35 fighter jet. Following Chinese export restrictions on heavy rare earths, graphite, and processing tech, US President Donald Trump and Chinese President Xi Jinping agreed at Busan in October 2025 to suspend curbs temporarily.

This pause threatens $6.5 trillion in annual output. Decades of Western industrial outsourcing left allied defense sectors dependent on state-backed Chinese monopolies. Beijing trains hundreds of specialized rare earth engineers annually across 11 universities. Washington trains none. To counter Beijing, Washington launched Project Vault with $12 billion for strategic stockpiles alongside FORGE, a 17-member coalition designed to set price floors. Concurrently, the European Union deployed its €3.3 billion RESourceEU plan to finance priority raw material projects, pilot joint purchasing, and restrict scrap exports.

Comment

Monopolising raw mineral extraction fails to capture the true structural bottleneck in Western military procurement, which resides in chemical separation and high-purity metallurgy. While raw ore can be sourced globally, converting oxides into refined terbium and samarium requires specialized solvent-extraction metallurgy that Western defense contractors currently lack. The primary vulnerability for platforms like the F-35 fighter jet is not the unrefined dirt, but the single-source refining pathways that yield sintered neodymium-iron-boron magnets.

Replicating these metallurgical steps requires decades of specialized chemical engineering expertise and custom-built solvent separation cascades rather than simple capital infusions. Chinese state-backed processing facilities at Baotou operate with environmental cost externalisation and continuous operational throughput that private Western ventures cannot match under standard commercial conditions. Consequently, public funding mechanisms like Project Vault risk stockpiling unrefined chemical precursors that cannot be converted into military-grade components without foreign industrial processing.

Strategic Question for Discussion

If Project Vault successfully accumulates raw mineral stockpiles without establishing domestic solvent-extraction cascades, how does that shift the operational vulnerabilities of high-end defense programs like the F-35 fighter jet?

The available evidence points toward an operational mismatch where strategic reserves remain dependent on foreign midstream processing to produce actionable components. This pattern suggests that raw stockpiles provide short-term buffer capacity against embargoes, but fail to resolve severe manufacturing bottlenecks during sustained high-intensity combat. My assessment is that military readiness will remain tied to overseas industrial infrastructure until domestic solvent-extraction capacity is fully operationalized.

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