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On October 9, 2025, China expanded licensing and export control requirements to additional rare earth elements, processing technologies, and magnet components. The move could disrupt shipments essential for electric vehicles, wind turbines, and advanced weapons. After April’s restriction on seven rare earth elements in response to U.S. tariffs and semiconductor controls, Beijing shifted from cautious signaling to active use of resource control as an instrument of influence. Today’s contest over rare earths is not a replay of the 1973 oil crisis but a redefinition of how power is exercised through production. Leverage now lies less in owning resources than in controlling the processing and refining that give them value. Regulation, not embargo, allows Beijing to shape how other countries and firms adapt to its terms.
The 1973 oil crisis remains the benchmark for understanding resource leverage. When Arab producers embargoed oil shipments to countries supporting Israel, prices quadrupled and Western economies convulsed. The episode proved that control over a single resource could reorder global politics, prompting diversification of energy production, fuel stockpiles, and institutionalized energy security strategies. Yet today’s rare earth struggle differs sharply in structure and scale.
First, the 1973 oil crisis unfolded in a world where the United States and the Soviet Union were economically separate. During the Cold War, economic rivalry coincided with systemic separation. Today’s resource competition, by contrast, emerges from the tensions of deep interdependence between the United States and China. China is a strategic rival whose vast industrial capacity was built through and remains deeply linked to the U.S.-led economic system, transforming competition from one between blocs into one fought within shared supply chains. Interdependence now conceals a deeper struggle, as one power threatens to surpass the other. Second, unlike oil, which is traded in both long-term contracts and transparent spot markets managed by a coalition of exporters, rare earths are chemically diverse, traded in small volumes, and refined within a system dominated by China. In 1973, the Organization of Petroleum Exporting Countries (OPEC) controlled the tap and held leverage through supply restriction. Today, Beijing commands both supply and processing, turning material control into production bottlenecks that stockpiles cannot mitigate and that require rebuilding of entire supply chains.
From the Oil Shock to Restraining Processing
The events of 2025 show how quickly resource politics now move. Amid U.S. semiconductor and tariff actions, Beijing curtailed exports of neodymium, dysprosium, and terbium—metals vital to defense and renewable technologies. Benchmark NdPr oxide prices rose 40 percent by late August, reaching $88,000 per metric ton, the highest since March 2023. Emergency talks in Geneva and London briefly eased tensions, but China’s October 9 licensing regime, announced as a national security measure, introduced strict end-use and equipment-related requirements. While Trump and Xi’s recent agreement in Busan pauses both the rare earths ban and the Department of Commerce’s BIS ruling, for at least a year, these issues are bound to continue in the future. The speed of these shifts reveals a new rhythm in resource competition: less a sequence of shocks than a state of continuous adjustment, where decoupling and dialogue evolve together.
The United States and its partners have begun translating recent disruptions into long-term frameworks for supply-chain resilience. MP Materials, a rare earths mining and processing company, has revived refining at Mountain Pass, California, with the help of the Department of Defense. Australian firm Lynas is building a U.S. separation plant, and Solvay is expanding capacity in France. Japan, through JOGMEC, has backed regional projects and increased stockpiles, while the European Union supports new exploration in Sweden and Estonia. Alliances convert disparate initiatives into collective strategy. The Minerals Security Partnership links the G7 with Indo-Pacific allies, the Quad integrates mineral supply chains into its agenda, and NATO maps material dependencies as part of readiness planning. In Southeast Asia, the Luzon Economic Corridor opens opportunities for allied investment in mining, processing, and logistics. In 1973, governments built oil reserves; in 2025, they are constructing strategic production systems where the advantage lies in refining, scaling, and coordinating industrial capacity.
China’s leverage stems from long-term industrial strategy rather than geological luck. It controls about ninety percent of rare earth refining and nearly all magnet manufacturing. Since the 1990s, Beijing has consolidated hundreds of firms into large state groups, aligning environmental enforcement with export licensing. The October 2025 rules did not ban exports outright but replaced quota systems with case-by-case licensing, giving officials broad discretion to delay or deny approvals. The rules also cover foreign producers using Chinese inputs or equipment, extending Beijing’s reach into global supply chains. China constrains throughput without declaring an embargo, maintaining plausible deniability while setting production standards. Even mining concessions in Africa or Southeast Asia depend on Chinese processing and refining systems. The chokepoint is not only geographic but technical: The capability to refine, recycle, and certify materials is under Beijing’s terms.
Each restriction triggers institutional learning among Western partners, narrowing exposure and speeding adjustment. The United States and Australia agreed to a major deal in late October 2025 to invest in critical mineral projects in processing, refining and manufacturing. The U.S. Department of Energy moved forward on nearly $1 billion in funding for critical minerals supply chains, including up to $135 million targeted at rare earth refining and recovery from secondary sources. Australian authorities also advanced support for new projects, including backing for the Donald rare earths project and other processing initiatives, while hosting the State Government of Utah to discuss joint mineral ventures, reinforcing allied supply chains beyond China. South Korea formed a Rare Earth Supply Chain Task Force to craft a whole-of-government response and publish a comprehensive strategy by year-end. Indonesia and the Philippines had already been in discussion with the United States and allied partners on critical-resource projects, but China’s October 9 export controls will give these talks new urgency and strategic weight. The result is a bifurcated yet connected economic system, anchored in alliances and markets on one side and in China’s command of supply and refining on the other. The contest is not about the next embargo but about who can endure.
This has given rise to managed interdependence, a condition in which rivals control exposure rather than sever it. China still depends on the United States as an export market when measured through indirect flows and for access to American technologies that sustain its industrial ascent. American defense contractors, in turn, rely on Chinese refineries for specialty alloys and catalysts embedded deep within their supply chains. Across the broader economy, from manufacturing to treasury holdings, both remain intertwined despite political momentum toward separation. Each new restriction exposes a paradox: Interdependence fuels rivalry even as it constrains escalation. Complete decoupling would slow growth and erode legitimacy, forcing both to manage risk through selective insulation. As Washington and Beijing revisit their fragile 2026 framework, they acknowledge that separation is neither possible nor desirable. Geopolitics has entered economic planning as energy once did in the 1970s. Rare earths now steer both production and innovation, determining who leads in computation, mobility, and defense. In this accelerating cycle, stability is the rarest resource of all.
Endurance as Strategy
To move from reaction to resilience, policymakers must treat material security as a collective function. As industrial and supply networks have become a single strategic domain, resilience must be engineered into production systems rather than stored in reserves. Three priorities follow. First, coordination should be further institutionalized. The Minerals Security Partnership and the Quad should move beyond project-level collaboration to harmonize environmental and data standards, since differing national regulations continue to slow project implementation and create regulatory bottlenecks. Second, midstream investment must integrate laboratory research and development, pilot plants, and industrial deployment in separation chemistry, magnet recycling, and low-emission refining. The aim is to build a separated ecosystem, turning isolated projects into cumulative learning systems that erode China’s structural lead. Third, resource security has only recently been incorporated into defense planning. NATO and Indo-Pacific partners now treat materials as enablers of deterrence rather than instruments of trade. The goal is a system capable of absorbing coercion without cascading failure, a distributed strategic reserve measured in capacity rather than inventory.
Implementing this agenda will test allied cohesion. Japan’s willingness to fund high-risk refining ventures contrasts with Europe’s slower, regulation heavy model, while Southeast Asian states hedge toward Western defense agreements with Chinese infrastructure offers. European stakeholders demand strict safeguards even as allied firms press for speed and scale. The result is a patchwork of incentives that Beijing can exploit through targeted investment and green technology partnerships. Building predictable resilience will require more than economic alignment. It demands diplomatic coordination on risk tolerance, financing priorities, and shared environmental benchmarks before the next crisis arrives.
