China Won’t Allow U.S. Stockpiling of Rare Earths

Despite signs of export relaxation, experts predict that Beijing’s export controls are here to stay — and that stockpiling by the U.S. is not a viable option.

The spokesperson for China’s Ministry of Commerce stated on June 12 that China has approved a certain number of compliant rare earth export applications in accordance with the law.

Following this announcement, American companies—long lamenting a “rare earth shortage”—breathed a sigh of relief. The Washington Post reported on June 13 that while uncertainty remains, U.S. firms welcomed the news. However, analysts also warned that China’s export licensing system for rare earth magnets is permanent, and China will not allow U.S. clients to stockpile rare earths.

“If China truly begins releasing some heavy rare earths and allows them to enter the global economy, I’d be one of the happiest people,” said Mark Smith, CEO of American critical minerals developer NioCorp. “Because without these heavy rare earths, the world economy would grind to a halt.”

NioCorp is currently developing a new mine in Nebraska to produce niobium, scandium, titanium, and various rare earth elements.

Still, Gabriel Wildau, managing director at U.S. consulting firm Teneo, wrote in a report that “supply cutoffs will remain an ever-present threat,” even with the latest developments. He emphasized that China’s export license regime for rare earth magnets is here to stay.

“China is unlikely to approve enough exports to allow U.S. clients to build stockpiles,” Wildau wrote, “in order to maintain its leverage in the sector. It may even withhold or completely deny rare earth exports to U.S. defense contractors and their suppliers.”

Rare earths are critical to the production of electric vehicles, nuclear submarines, and more. Over the past 30 years, China has maintained dominance in both the mining and refining of rare earth elements.

According to the International Energy Agency, in 2023 China accounted for over 60% of global rare earth mining, but an even more dominant 92% of processing capacity—giving it an almost monopolistic grip on the refining stage. The U.S. Geological Survey noted that from 2020 to 2023, 70% of America’s rare earth compound and metal imports came from China.

In April this year, after former President Donald Trump imposed steep tariffs on Chinese goods, Beijing swiftly retaliated with countermeasures—including export controls on a range of critical minerals and rare earth magnets. Industry insiders revealed that China is establishing an export license system.

Reuters previously reported that China has also introduced a tracking system for its rare earth magnet sector as part of the export control regime. According to informed sources, the system is already in effect, requiring producers to submit additional information online, including transaction volumes and customer names.

As these controls begin to take effect, companies in the U.S. and other Western countries have been loudly warning of a looming “rare earth shortage,” with some Western media fueling narratives about the “weaponization” of rare earths.

Global automakers are increasingly worried about potential delays and disruptions to production. Ford, for example, announced that due to a rare earth shortage, it paused production of one vehicle model at its Chicago plant for a week in May. Automakers and industry associations in Europe, Japan, and India have also warned that the sector is “severely disrupted,” with production halts imminent.

The Washington Post noted that MP Materials, based in California, owns the only operating rare earth mine in the U.S. Previously, the company sent its mined heavy rare earths to China for processing—but was forced to stop during the U.S.–China tariff war initiated by Trump.

Neha Mukhi, a rare earth analyst at U.S.-based Benchmark Mineral Intelligence, had earlier predicted that most companies wouldn’t feel the squeeze of rare earth shortages until later this year. However, recent developments suggest that some firms are already facing problems.

“There is indeed inventory in the overall market,” Mukhi said, “but many original equipment manufacturers, especially automakers, seem unprepared. Even though some U.S. companies have stockpiled supplies, if this continues, they may begin to feel the pinch.” She added, “It appears most of the inventory is still in China, which is where the real supply bottleneck lies.”

On the afternoon of June 12, China’s Ministry of Commerce held its regular press briefing, where a reporter asked about the first meeting of the China–U.S. Economic and Trade Consultative Mechanism.

Spokesperson He Yadong stated that from June 9 to 10 local time, Chinese and U.S. economic and trade teams held the first meeting of the mechanism in London. The two sides reached a consensus in principle on implementing the key understandings from the June 5 phone call between the two heads of state, and on a framework to consolidate the outcomes of the Geneva trade talks. New progress was made on addressing each other’s trade and economic concerns.

He Yadong said that next steps will involve both sides continuing to make full use of the consultative mechanism, maintain dialogue and communication, deepen mutual understanding, reduce misperceptions, and enhance cooperation—so as to jointly promote a stable and sustainable China–U.S. economic and trade relationship.

Regarding the rare earth issue, He emphasized that as a responsible major power, China fully considers the legitimate needs and concerns of all countries in the civilian sector. It will review export license applications for rare earth-related items in accordance with laws and regulations, and has already approved a certain number of compliant applications. The approval process for compliant applications will continue to be strengthened.