By Paul Allen in strategic leverage — 11 Nov 2025

China’s Plan to Block US Military Access to Rare Earths Reshapes Global Supply Leverage

China is preparing a strategic plan to restrict the United States military’s access to its rare earth elements, according to a Wall Street Journal report published in November 2025. This move arrives amid escalating geopolitical tensions and follows China's dominant position as the supplier of roughly 60-70% of the global rare earth supply, critical for defense, electronics, and manufacturing industries. The plan aims to exclude US military-related entities explicitly from acquiring these minerals, which include neon, dysprosium, and neodymium, essential for manufacturing advanced technology and weaponry. Details on the specific restrictions or timing were not disclosed, but this represents a deliberate lever to reshape supply dependencies between the world’s two largest economies.

China Controls Rare Earths to Shift Military Supply Constraints

The rare earth elements supply chain has become a chokepoint in US-China strategic competition. China’s dominance stems from its vertically integrated mining, refining, and production ecosystem, which extracts upwards of 80% of all processed rare earths globally. By conditioning access based on end users, particularly barring the US military, China moves the constraint from physical supply availability to geopolitical access control.

This is leverage embedded in supply chain ownership and export control mechanisms. The US military, which heavily depends on rare earth magnets and components for fighter jets like the F-35, missile guidance systems, and electric vehicle fleets, faces a complex barrier. Instead of negotiating price or volume, China’s supply restriction targets the usage constraint, halting transactions at the point of sale based on customer profile rather than commodity scarcity.

Such a mechanism operates without requiring constant diplomatic confrontation. It leverages China’s market gatekeeper position and export licensing processes to effectively freeze a critical input for US defense systems. The impact hits procurement cycles and spurs accelerated efforts to develop alternative sources or suppliers without Chinese rare earth inputs, though these have yet to scale to match China’s 1.3 million metric tons of annual rare earth oxide production capacity.

Why Alternatives Have Yet to Unlock Real Military Independence

US efforts to diversify away from China’s rare earths run into both scale and refinement constraints. Mining projects in Australia, the US, and Greenland are either nascent or limited to raw extraction with insufficient refining capacity. For example, the US’s Mountain Pass mine reopened but still lacks domestic processing facilities to generate the magnets and alloys required for military-grade components.

Unlike raw commodities such as oil where logistics and transportation can be redesigned, rare earths supply chains are characterized by specialized chemical processing and compound manufacturing that China has optimized over 20 years. Building new refining plants costs upward of billions and takes 5-7 years, during which the US military remains vulnerable. This means the constraint shifts from locating ore to industrial-scale processing capacity and expertise, which are concentrated predominantly in China.

Renault’s recent search for rare earth-free motor technology exemplifies an alternative approach: circumventing the China-centric system entirely. However, these innovations remain in R&D or early production phases and cannot replace current supply at scale for defense needs imminently.

Restricting Military Access Repositions the Constraint from Commodity Supply to Geopolitical Control

China’s plan reveals a nuanced mechanism: shifting the leverage point from raw material scarcity to export flow control specifically targeted by end-user. Instead of a broad export ban that would disrupt global markets and invite retaliatory measures, selective restrictions on US military buyers create a more discrete but powerful lever.

This form of targeted export control forces the US to navigate a newly imposed layer of legal and operational barriers. Companies supplying the US military must now prove non-involvement or circumvention of these controls, driving up compliance costs and increasing supply chain complexity.

From a systems perspective, the constraint redefinition means that solutions focused solely on physical supply—like boosting mining output—are insufficient. Instead, the US and allied nations must either:

Build parallel, secure supply chains with independent refining (requiring massive capital and time)
Develop substitutes that bypass rare earth usage altogether (long-term innovation with uncertain timelines)
Engage in diplomatic or trade negotiations to reopen supply lines (politically complex and slow)

This three-pronged response underlines the complexity of the new constraint. The leverage held by China comes not from ownership alone, but from the legal enforcement of end-use restrictions embedded in export systems that cannot be easily sidestepped.

Contrast with Previous Rare Earth Export Policies

Earlier rounds of Chinese rare earth export restrictions, such as the 2010 curtailment where overall export quotas were cut by 40%, impacted both military and commercial sectors broadly. That sparked global price surges and accelerated supply diversification efforts.

This latest shift narrows the focus, withholding rare earth access explicitly from US military supply chains, potentially leaving commercial buyers less affected. This selective targeting creates discriminatory leverage that can be masked as export compliance rather than full embargo, reducing global market backlash.

In contrast to broad sanctions regimes, this approach leverages China’s position as producer and final processor to selectively throttle US defense capabilities without triggering wholesale disruption of global rare earth prices.

Implications for Supply Chain Risk and Strategic Autonomy

China’s move amplifies the strategic risk embedded in relying on a single dominant supplier with regulatory gatekeeping powers. For operators, the mechanism to watch is how export controls become a tool for geopolitical influence by layering non-tariff barriers over physically available resources.

Analogous supply constraints and leverage play out in other critical industries, such as semiconductor manufacturing or lithium extraction. For instance, our analysis of China’s conditional approval of a lithium joint venture with Codelco reveals similar leverage in battery supply chains.

Businesses and governments ignoring this dynamic face systemic vulnerability: capable of raw input sufficiency but restricted by supplier control layers that act as choke points without physical scarcity.

Strategic Responses Must Focus on Decomposing Leverage in End-to-End Systems

Effective countermeasures will not come from isolated mining investments but require building industrial ecosystems that include chemical refinement, magnet manufacturing, and end-use component integration outside China’s sphere.

This lever differs markedly from attempts to simply increase procurement spending or stockpile inventories. The essential mechanism is creating autonomous production loops that bypass China’s export gatekeeper function, a multibillion-dollar infrastructure challenge combined with significant technological know-how.

Technologies that reduce dependency on rare earths, such as Renault’s rare earth-free motors, highlight a parallel path of attacking the constraint by supplanting the material system itself. But these require long lead times before meaningful scale.

Meanwhile, the legal and bureaucratic enforcement of end-user restrictions creates operational friction, requiring military contractors to implement compliance automation and alternative supplier verification, increasing costs and slowing deployment.

Why Businesses Must Watch Geopolitical Supply Chain Leverage Like Rare Earths

China’s strategic use of rare earth export controls reveals a broader pattern where resource ownership alone is insufficient leverage. The lever intensifies when combined with regulatory control and end-use restriction enforcement. This exemplifies how geopolitical power embeds itself into supply chains as systemic constraints that cannot be solved by market forces or capital alone.

Operators in industries dependent on rare earths, semiconductors, or critical minerals must build resilience beyond conventional sourcing, incorporating scenario planning for selective access restrictions and developing technologies that can either substitute or decouple from dominant supply chains.

This story complements our earlier coverage of how China’s rare earth export policies reset global supply dynamics and why companies like Renault seek rare earth-free alternatives as a hedge.

Addressing geopolitical supply leverage requires a systemic approach to industrial independence, blending infrastructure, innovation, and regulatory agility—far beyond mere procurement strategies.

Managing complex supply chains and compliance requirements like those emerging from China's export controls demands clear and consistent operational procedures. Tools like Copla can help military contractors and defense suppliers streamline their standard operating procedures to meet evolving regulatory challenges with precision and reliability. This structured approach to operations is critical for navigating geopolitical constraints and maintaining strategic autonomy. Learn more about Copla →

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Frequently Asked Questions

Why does China control the supply of rare earth elements globally?

China dominates the rare earth elements market by extracting and processing over 80% of globally processed rare earths, maintaining a vertically integrated ecosystem that includes mining, refining, and production. This control gives China significant leverage over industries dependent on rare earths, such as defense and electronics.

How do rare earth export controls affect US military technology?

China’s export controls restrict the US military's access to rare earth minerals vital for producing components like magnets used in fighter jets and missile systems. This targeted end-user restriction increases compliance costs and supply chain complexity for US defense contractors.

What challenges does the US face in developing alternatives to Chinese rare earth supplies?

US alternatives are limited by insufficient refining capacity and the high costs of building new processing plants, which can exceed billions of dollars and take 5-7 years to become operational. Current mining projects focus on raw extraction but lack the industrial-scale chemical processing expertise that China holds.

What strategies exist to reduce military dependency on Chinese rare earths?

Strategies include building independent refining and supply chains, developing substitutes such as rare earth-free motor technologies, and engaging in diplomatic efforts to reopen supply lines. However, these approaches require significant capital, long timelines, and complex negotiations.

How does China’s targeted export control differ from previous rare earth export policies?

Unlike broad export quotas like the 40% cut in 2010 affecting all sectors, China’s current plan selectively restricts the US military's access to rare earths. This discriminatory leverage limits military supply chains without causing wide global market disruption.

Why is the rare earth supply chain considered a chokepoint in US-China competition?

The specialized chemical and compound manufacturing processes, concentrated mainly in China, create a chokepoint because physical ore availability is less critical than industrial processing control, which China can leverage to impose geopolitical constraints.

What are the broader implications of China’s rare earth supply leverage for other critical industries?

China's use of regulatory control combined with resource ownership as leverage exemplifies a pattern seen in other sectors like semiconductors and lithium batteries, where supplier regulatory gatekeeping layers create vulnerability despite raw material sufficiency.

How can businesses prepare for geopolitical supply chain constraints like those seen with rare earths?

Businesses should build resilience through diversified sourcing, scenario planning for access restrictions, investing in substitute technologies, and developing operational procedures that address compliance and supply chain complexity to mitigate systemic vulnerabilities.