By Focus | 2025-04-11

China has implemented new export restrictions on critical minerals, expanding a ban imposed last December on rare earth magnet technology and leaving the region scrambling for alternatives.

The latest ban, announced on April 4, targets essential elements like dysprosium, terbium and samarium -- materials crucial for technologies ranging from smartphones and electric vehicle (EV) motors to precision weapons and wind turbines.

This tightening of export controls has sent tremors across the West as well as in Asia's industrial heartlands, particularly Japan, South Korea and India.

Countries that rely on these minerals now face rising costs, disrupted timelines and heightened vulnerability.

China has long dominated the market for critical minerals.

For years, it has quietly fortified its lead, particularly in the midstream -- refining and processing. According to the US Geological Survey, China produced 60% of the world's rare earth elements in 2023 but accounted for almost 90% of their processing.

Its grip is even tighter for specific materials: it refines more than 90% of the world's gallium and holds dominant positions in graphite and germanium supply chains.

China "has mastered the technically difficult and environmentally harmful refining process," Reuters reported on April 4.

Even resource-rich countries like Australia and the Democratic Republic of Congo frequently export their raw materials to China for final processing.

Growing threat

The small volume of critical minerals and China's dominance over midstream processing enable Beijing to manipulate global supply and demand through non-market practices, DevTech noted in a report published in February.

"China has repeatedly shown its willingness to weaponize these minerals," the Center for Strategic and International Studies (CSIS) warned the same month.

The rare earths under new restriction are critical for high-performance magnets used in smartphones, EVs and defense systems. Companies like Apple, Tesla, Lockheed Martin and Boeing rely heavily on the newly restricted elements.

Japan has been among the first to sound the alarm over its reliance on China.

In an April 2025 Sustainability Times report, Japanese officials described an "invisible war" over gallium, a strategic component in semiconductors and battery production. Japan is the world's largest consumer of gallium.

Between August 2023 and August 2024, Japan's gallium imports from China dropped almost 85% following Chinese export restrictions, forcing manufacturers to scramble for alternatives.

South Korea's tech giants -- including Samsung, LG and SK On -- are also deeply dependent on Chinese mineral supply chains.

While Seoul has launched initiatives to source materials from Australia and Africa and to boost domestic recycling, analysts warn the transition will be slow and costly.

India, which produced just 2,900 metric tons of rare earths in 2024, is particularly exposed. The country's ambitions to become a global hub for EVs and electronics now face new obstacles.

China's potential expansion of restrictions to include lithium or gallium processing technology -- floated in early 2025 -- could hinder India's nascent battery development sector.

A strategic tool

What makes these restrictions especially potent is their extraterritorial impact. Beijing's message is clear: it is willing to use its control of mineral flows as a strategic tool.

Governments are responding with urgency. Japan is accelerating stockpiling and supply chain diversification. India is expanding rare earth partnerships with Australia and Vietnam. South Korea is investing in domestic refining and recycling efforts.

With China maintaining a commanding position not just in mining but in refining and technological standards as well, the challenge for the rest of the world is clear: securing a future less reliant on a single, increasingly assertive supplier.