Published on: 2026-04-27
China controls 60% of rare earth mining, 90% of processing, and 94% of permanent magnet manufacturing. The October 2025 export controls were suspended until November 10, 2026 as part of the Trump-Xi summit deal. Six months into the pause, the licensing infrastructure Beijing built has not been dismantled. It has been suspended.
Bloomberg Intelligence projects a 36% global shortfall of NdPr (the rare earth pair used in defense, EV, and wind turbine magnets) by 2030, even with $10 billion in public funding expected in 2026. New mines take 10-15 years to reach production.
The April 2025 controls on seven rare earth elements and permanent magnets remain in force. China still requires case-by-case export licensing for dysprosium, terbium, samarium, and other elements critical to defense applications. U.S. companies report continued difficulty accessing these materials.
Every F-35 engine, every EV motor using permanent magnets, every wind turbine generator, and every precision-guided missile depends on materials that one country can restrict with a single policy announcement. The November 10 deadline arrives against unresolved U.S.-China tensions and an active Middle East war.
On November 10, 2026, the 12-month suspension of China’s sweeping rare earth export controls expires. What happens next will determine whether the most concentrated supply chain dependency in the global economy becomes an active crisis or continues as a managed risk.
Six months into the pause, the answer is already taking shape. And the data does not suggest readiness.
The distinction between what China suspended and what it kept in place tells you more about Beijing’s strategy than any diplomatic statement.
The October 2025 controls, which added five more rare earth elements to the restricted list, banned transfers of processing equipment, and extended Beijing's jurisdiction to products made anywhere in the world containing as little as 0.1% by value of Chinese-origin rare earth materials, were suspended for one year. The extraterritorial provisions, which would have required export licenses for products made anywhere in the world if they contained Chinese-origin rare earth materials, were also paused.
The April 2025 controls were not suspended. These controls require case-by-case export licensing from MOFCOM for seven medium and heavy rare earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, along with all their metals, oxides, alloys, compounds, and permanent magnet materials. These are the elements that go into F-35 engines, missile guidance systems, submarine motors, and the high-performance magnets inside EV drivetrains and wind turbine generators.
China paused the escalation while keeping the foundation in place. Beijing approves civilian export licenses but continues to restrict anything connected to defense end-use. The Foundation for Defense of Democracies confirmed in November 2025 that the suspension “pauses some hostile trade actions” but “Beijing isn’t laying down its most potent weapons.”
Three numbers define the structural dependency.
China mines roughly 60% of global rare earth ore. It processes approximately 90% of all rare earths into usable oxides and metals. And it manufactures 94% of the world’s rare earth permanent magnets, the finished components that go into motors, generators, and weapons systems.
The processing stage is where the real leverage sits. Australia, the United States, Brazil, and Myanmar all mine rare earths. But almost all of that ore goes to China for separation, refining, and conversion into the metals and alloys that industry actually uses. As one industry executive told Fortune: “If you build a product where 90% of a key component is controlled by one country, you’re not very comfortable.”
China produces an estimated 98% of the world’s dysprosium, 99% of its yttrium, and 85% of its holmium oxide. These are the heavy rare earths that have no viable substitute in high-temperature, high-performance applications. A 10-kilogram permanent magnet inside an F-35 engine contains dysprosium that came, almost certainly, from Chinese-controlled sources. That has not changed during the pause.
The 12-month window was meant to give the West time to accelerate alternative supply chains. The results so far are measurable.
Bloomberg Intelligence’s March 2026 Rare Earths Outlook projects that NdPr production outside China could grow 4.4 times between 2024 and 2030. That sounds significant until you read the next line: even with that growth, a 36% global NdPr shortfall is projected by 2030. Demand is rising at 7% annually, driven by EV motors, wind turbines, defense procurement, and industrial automation. Supply outside China cannot keep pace.
The U.S. has two companies with meaningful rare earth operations: MP Materials in Mountain Pass, California, and the newly formed USA Rare Earth, which announced a $2.8 billion merger with Brazil’s Serra Verde Group last week. MP Materials ships most of its concentrate to China for processing. USA Rare Earth is building toward integrated processing, but commercial-scale production is years away.
Australia’s Lynas Rare Earths became the first company outside China to produce commercial quantities of separated dysprosium oxide in May 2025. Iluka Resources’ Eneabba refinery in Western Australia is expected to begin commissioning in 2026. These are real milestones. But combined, every non-Chinese rare earth operation on the planet produces a fraction of what China’s system delivers.
CSIS analysis put it directly: “No single country currently possesses the financial resources or technical capabilities to independently outpace China’s dominance.” The timeline gap is the core problem. A new semiconductor fab takes 3-5 years. A rare earth mine, refinery, and magnet factory from scratch takes 15-20 years. China has been building its system for over 30 years.
The dependency runs through five sectors simultaneously.
Defense and aerospace: Every F-35 fighter jet uses rare earth permanent magnets in its Pratt & Whitney F135 engine. Precision-guided munitions, submarine propulsion systems, radar systems, and satellite components all require rare earth materials. NATO’s defense expansion is increasing demand at exactly the moment supply concentration is highest.
Electric vehicles: A typical EV motor contains 1-2 kilograms of NdPr magnets. Global EV sales are projected to exceed 20 million units in 2026. Tesla has announced its next-generation motors will be rare earth-free, but the timeline remains uncertain and the broader industry is years from that transition. Chinese EV manufacturers face no such supply constraint.
Wind energy: Each offshore wind turbine generator uses roughly 600 kilograms of rare earth magnets. The EU, U.S., and UK all have aggressive offshore wind targets. Every turbine installed depends on magnets that are 94% manufactured in China.
Electronics and industrial automation: Rare earths are used in hard drives, speakers, sensors, medical imaging equipment, and industrial robots. The demand base is broad and growing.
Semiconductors: Rare earths are used in polishing compounds for semiconductor wafers and in certain chip fabrication processes. The intersection of China’s rare earth controls and the U.S. semiconductor export restrictions creates a mutual chokepoint: the U.S. controls 90% of semiconductor manufacturing equipment, while China controls 90% of rare earth processing. Each side holds leverage over the other’s most critical industry.
Scenario 1: Extension. Beijing extends the suspension for another 6-12 months as part of ongoing trade negotiations. This is the market consensus and the most likely near-term outcome if U.S.-China relations remain stable. It changes nothing structurally.
Scenario 2: Selective reimposition. China reinstates controls on specific elements (dysprosium, terbium) or specific end-uses (defense) while maintaining civilian general licenses. This is the most strategically rational option for Beijing because it maximizes leverage while minimizing global backlash. The April 2025 licensing framework already enables this approach and can be reactivated within 30 days of a policy decision.
Scenario 3: Full reimposition. The October 2025 controls, including the extraterritorial provisions, take effect on November 10. This would immediately disrupt supply chains across defense, automotive, and clean energy, trigger price spikes across NdPr and heavy rare earth markets, and force downstream manufacturers to choose between Chinese-licensed supply and production shutdowns. Suzuki already halted production and several European parts plants shuttered during the brief window when controls were active in October 2025.
China did not invent the playbook it applied to rare earths in October 2025. It adapted the same mechanism Washington has used for decades to restrict semiconductor technology exports to China: the Foreign Direct Product Rule, which extends jurisdiction to products made anywhere in the world using controlled technology.
Beijing applied that same extraterritorial logic to rare earths. Products made outside China containing Chinese-origin rare earth materials would require MOFCOM export licenses. The principle is identical. The asymmetry is in the timeline: the U.S. can rebuild semiconductor capacity in 3-5 years with enough capital. Rebuilding a complete rare earth supply chain from mine to magnet takes a generation.
Bloomberg Intelligence projects that non-Chinese NdPr supply could reduce China’s market share from 90% to 69% by 2030. That is meaningful progress. But 69% is still dominance, and the 36% supply shortfall projected alongside it means the world will remain structurally short of critical rare earths even in the optimistic scenario.
The November 10, 2026 deadline is 197 days away. China’s licensing infrastructure is suspended, not eliminated. The April 2025 controls on the most defense-critical elements remain active. Bloomberg projects a 36% global shortfall by 2030 even with $10 billion in new public funding this year.
Every alternative project, from MP Materials in California to Lynas in Australia to USA Rare Earth’s $2.8 billion merger, is measured in years of development against a deadline measured in months. The pause gave the world a window. The data suggests it used that window to stop worrying rather than to build the supply chain it will need when the window closes.
