Rare-Earth Supply Crunch Threatens Tech and Defense

As of October 2025, a tightening of Chinese export controls and new licensing rules have compressed the global rare-earth supply chain.
Beijing’s October measures now cover 12 of 17 critical elements and require export licenses even for tiny shares of Chinese-processed material in finished goods, reportedly down to a 0.1% threshold. That red tape is already delaying shipments and disrupting procurement cycles.
Industry inventories in the U.S. and allied manufacturers are estimated to cover roughly five to six months of normal operations, pushing a potential crunch into April 2026. If supplies do not expand or rationing begins, production of defense magnets, EV motors and advanced electronics could slow or halt.
China still dominates mining and refining—roughly 60% of mining and over 90% of refining—while midstream capacity for separation, metallization, alloying and magnet fabrication remains scarce outside China. New upstream mines in the U.S. and Australia help feed material but cannot yet substitute for midstream processing.
Strategic stockpiles are limited and Department of Defense deals with domestic processors will take years to scale. Meanwhile, firms are hoarding inventory and key inputs such as terbium oxide, praseodymium-neodymium alloys and dysprosium are climbing in price.
Without rapid scaling of mine-to-magnet capacity among allies, access — not price — appears to be the critical vulnerability.