When China first halted exports of rare earths to Japan amid a geopolitical dispute over the sovereignty of contested islands in 2010, the move sent shockwaves around the world, awakening leaders in board rooms and national capitals to how tightly Beijing now controlled the global supply of the metals needed for batteries, modern weapons, and microchips. But the West nonetheless got complacent. It wasn’t until recently that the United States and Europe started taking aggressive steps to shore up alternative supplies of critical minerals.
This year, in response to mounting trade tensions, China has moved to flex its muscle yet again, slapping the strictest export controls yet on rare earths and other critical minerals. On Thursday, Beijing agreed to suspend its latest restrictions for one year, fueling even more chaos in the market and sending stocks in Western rare earth companies on a rollercoaster ride.
“The immediate impact is mostly on sentiment, not substance,” Pini Althaus, a veteran rare earths executive who is now exploring U.S. mining projects in Central Asia, told Latitude Media. “China’s export-control headlines swing U.S. rare earth stocks in the short term because investors react to the news flow.”
Behind the scenes, he said, companies are working with the Trump administration to harden the supply chain through long-term offtakes, Defense Production Act tools, and financing through the federal government’s in-house lenders for overseas projects such as the Export-Import Bank and the Development Finance Institution.
New mines will take years — possibly even decades — to produce metals. That means recycling and imports from friendly countries are likely to serve the West’s needs in the next few years. But, in the U.S., the Trump administration’s focus on mining over refining, which experts say is the real bottleneck, risks leaving the country dependent on China even as investments move forward.
Rare earth bonanza
Washington made establishing new critical mineral supply chains — either allied or domestic — a high priority for the first time under the Biden administration. Some of those efforts relied upon incentives. For instance, the $7,500 tax credit awarded per electric vehicle gave the largest write-offs to cars made with batteries that sourced minerals to either domestic mines or countries with which the U.S. had a free trade agreement. But the administration also provided billions in loans and grants to support projects to mine and process critical minerals in the U.S.
The GOP’s One Big Beautiful Bill Act eliminated that tax credit, and yanked back a lot of the money provided through the Department of Energy. Instead, in addition to tariffs meant to raise the cost of imported minerals, the Trump administration has deployed America’s vast military budget to stockpile critical minerals, in order to establish a price baseline that mining and processing companies can depend on; it has also provided financing through the obscure Defense Logistics Agency.
And in Trump’s boldest move and biggest break from the past, his administration has started investing directly into mining companies, taking equity stakes meant to provide the American taxpayer with revenues from the companies.
The government shopping spree began in July when the administration bought a 15% equity stake in MP Materials, the only major active rare earths producer on the continent. The purchase not only made the federal government the company’s largest shareholder, The Economist said the move marked the biggest intervention in the U.S. private sector since the nationalization of the country’s railroads in World War I. Since then, the administration has seized 10% stakes in Lithium Americas in exchange for keeping the developer’s Loan Programs Office financing for its Nevada mine intact, and in Trilogy Metals, a developer seeking to build a mine in an area of Alaska where Trump just approved construction of a long-awaited road.
Shares in the companies soared after the purchases.
“Stocks of rare earth projects — particularly those developing vertically integrated mine-to-magnet capabilities or demonstrating independence from Chinese supply chains — have surged following the latest export control tensions,” Neha Mukherjee, a London-based rare earths analyst at the battery-metals consultancy Benchmark Mineral Intelligence, told Latitude Media. “These projects are attracting heightened government interest and public funding as the U.S. accelerates efforts to localize supply chains.”
Those stocks slumped again this week when the Financial Times cited U.S. officials saying Washington expected Beijing to postpone its trade restrictions. “In other words, headlines move prices,” Althaus said. “Policy and execution are building a secure, non-Chinese mine-to-magnet reality.”
Trouble with Trump’s approach
The Trump administration’s push for mining above the other steps in the supply chain has created something of a lopsided federal strategy. Earlier this month, the Energy Department revoked $700 million in grants to battery manufacturing and mineral processing projects, E&E News reported.
The move highlighted a problem. “Mining is not critical,” Trafigura CEO Richard Holtum said at a conference in London earlier this month, according to Mining Journal. “True supply chain security comes from processing investment, not just extraction.”
While China doesn’t mine everything within its own borders, Beijing refines roughly 65% of the world’s supply of copper, 70% of its lithium, and 90% of its rare earths. China also controls not just the global output of refined rare earths and other minerals, but the supply of the technologies needed to process the ores in the first place. The export controls Beijing paused on Thursday included rules requiring Chinese companies to obtain permission from the central government before selling any of that equipment overseas.
“Western nations are fighting the wrong battle,” Giacomo Prandelli, a commodities trader and analyst, wrote in a post on LinkedIn in response to Holtum’s speech. “They obsess over mining permits while China and Indonesia dominate the midstream, turning raw ore into refined metals that power the global energy transition.”
Indeed, “there’s a pattern emerging where the emphasis for progress is all on upstream work and returns for taxpayers,” said Tim Puko, a metals and mining analyst at the Eurasia Group consultancy in Washington. “There’s a lack of focus, even counterproductive moves, on processing, which is where the real weakness is.”
“We are at a crossroads, and now is the time for the administration to choose how their focus is going to go,” he added. “Beijing’s decisions should be a wakeup call.”
The Trump administration appears to be getting the message. Earlier this month, Trump signed a critical minerals deal with Australia, cementing a steady supply of metals from one of the country’s two most stable sources of raw materials. However, in a development that may offset that benefit, trade talks with the other country — Canada — have abruptly soured in the past week.
For more on China’s investment in mining and its electro-industrial race with the U.S., listen to the latest episode of the Open Circuit podcast:
But in any case, new mines will take a long time to come online. That makes facilities that can recycle rare earths a critical component of the U.S. policy approach.
“For recycling, we’re talking months and years versus years and decades if you’re building a mine,” Rasmus Gerdeman, chief executive of the rare earth recycler REEcycle, told Latitude Media.
His company is restarting its demonstration plan next year, adding a stream of about eight tons annually to the U.S. supply. By the end of 2026, he said, REEcycle will have its first commercial facility up and running, with a capacity to produce 100 tons per year.
“The biggest hurdle is some of the longest lead time equipment, which, for us, could be up to a year,” Gerdeman said. “If you’re permitting and building a mine from scratch, it’s different.”
Still, he said, it’s a great time for anyone in any part of the industry. The difference between Trump’s approach and that of the Biden administration, Gerdeman said, “is like night and day.”
“The tools they’re pulling out, they’re actually solving it by not just adhering to traditional channels,” he said. “They’re doing things that other countries, like China, have done. They’re taking a different playbook.”


