The Supply Chain Risks of China’s Critical Minerals Crackdown (Part 1)

‍This article is part one of a two-part series examining China’s export controls on minerals and potential future supply chain impacts. 

Article Highlights:

• China’s export controls are a retaliatory response to the U.S.’s stringent export control regime, which has limited China’s access to the most advanced chips, semiconductor manufacturing equipment and software, and other “dual-use” items.
• The export restrictions on both minerals and associated processing equipment show that China is building a more competent export control program, one designed to not only restrict the flow of the minerals it produces to the U.S., but also prevent its chief geopolitical rival from acquiring the equipment needed to secure an alternate supply chain.
• Countries may face significant challenges in replacing China’s mineral production capacity because the equipment, industry best-practices, and commercial scaling of processing in other nations does not match the level that currently exists in China. 

A Look at China’s Recent Critical Minerals Crackdown

Over the past six months, China has announced numerous rounds of trade restrictions on the export of several minerals that are commonly used in the electronics industry. All of these minerals are designated as “Critical” by the United States Geological Survey (USGS). Two announcements in late 2024 and early 2025, in particular, have put many industries on edge, and companies are now scrambling to understand and evaluate their supply chains – and the role that these restricted minerals play in them. 

On December 3^rd, 2024, China’s Ministry of Commerce (MOFCOM) announced export restrictions on the export of so-called “dual-use” items to the United States. These restrictions specifically affected gallium, germanium, antimony and other “superhard” materials. While there have not been any additional definitions provided for the meaning of “superhard” materials, the aforementioned three minerals have seen end-use checks implemented which are screening for materials which may be destined for final use in the US. 

Two months later, on February 4, 2025, China made a much less publicized announcement that it would be requiring export licenses for five additional minerals and derivative products: tungsten, tellurium, bismuth, indium, and molybdenum. While this regulation does not directly restrict exports to the U.S., any additional restrictions on these minerals would be a significant cause for concern.

The primary objective of these new restrictions coming from China appears to be limiting items that have potential military end uses. The export controls are also, of course, a retaliatory response to the U.S.’s stringent export control regime, which has limited China’s access to the most advanced chips, semiconductor manufacturing equipment and software, and other “dual-use” items that could be used in military applications.

The Escalating Pattern of China’s Critical Minerals Export Controls

While it may seem like China’s recent restrictions came out of nowhere, or were a direct response to the most recent barriers imposed by the U.S., they are actually part of a larger pattern from the Chinese Communist Party (CCP). Beginning in 2020, when China initiated an export controls regime, there was a gradual release of new restrictions until 2023, when China significantly ramped up its trade barriers. China has established a fairly coherent trend in how it restricts the exports of minerals in particular. The CCP starts by requiring a license to export select minerals in certain states. Next, the government implements an outright ban on the export of specific minerals to the US. In the case of gallium, germanium and antimony, China required export licenses for these minerals beginning in 2023. One year later, the Chinese government blocked the export of these minerals to the US and US-based entities. 

While it may seem like China’s recent restrictions came out of nowhere, or were a direct response to the most recent barriers imposed by the U.S., they are actually part of a larger pattern from the Chinese Communist Party (CCP).

Along with restricting or outright banning the export of critical and rare earth minerals, China has also enacted measures to restrict the export of associated manufacturing equipment required to process those minerals. In one recent example, China announced that it would ban production technology for gallium and other cathode materials. Moreover, several of the minerals that China has restricted have also seen restrictions placed on associated processing equipment. 

Taken together, these export restrictions on both minerals and associated processing equipment show that China is building a more competent export control program. This program is designed to not only restrict the flow of the minerals it produces to the U.S., but also prevent its chief geopolitical rival from acquiring the equipment needed to secure an alternate supply chain of the minerals. As the U.S. applies more export controls and restrictions on China, this strategic effort to cut America off from critical minerals and the manufacturing equipment required to process it is likely to continue. 

Informal vs. Formal Export Controls

One challenge with identifying Chinese export controls is their curiously informal nature. (By contrast, in the U.S. export controls are largely transparent to all parties inside and outside the country.) While gallium had export license requirements applied to it in 2023, for example, it was not officially banned for export to the U.S. and U.S. entities until December of 2024. Despite this clear distinction between license requirement and an outright ban, market aggregator Fastmarkets reported that, beginning in August of 2023, there was no material exported directly to the U.S. since the export license requirements were announced. This suggests that the ban was practically implemented in August 2023—rather than late 2024. This distinction between a legally implemented ban and one that is essentially just as powerful on the ground—if not codified into law—is a key part of discerning the supply chain implications of China’s actions. The government’s ability to enact these “shadow bans,” so to speak, means that mineral supply chains can be impacted overnight—even if there’s no new law explicitly imposing new restrictions. Finally, this reality highlights the criticality of the on-the-ground experience of stakeholders operating in these markets, perhaps even above and beyond official trade legislation.

Assessing the Impact of China’s Critical Minerals Restrictions

Despite the export restrictions impacting myriad minerals deemed “critical” by the USGS, there have been limited publicly-disclosed examples of companies negatively impacted by these Chinese controls. In one of the publicly known cases, Henkel AG declared force majeure impacting its supply of parts. Even in this case, however, the impact was only on two products. Overall, it appears that companies have largely been able to identify and secure alternate sources of mineral supply for their products, take other mitigation measures, or have simply decided not to publicly disclose their sourcing challenges. 

Despite this limited impact, there are still several variables to be vigilant about. 

• First, the industries most affected by China’s mineral export restrictions may have stockpiled their supplies, effectively pushing tangible supply chain impacts into the future. 
• Second, the aforementioned restrictions on processing equipment from China could stymie forthcoming projects aimed at establishing new supply chains for these critical minerals. 
• Third, based on the practical history of how certain restrictions were implemented—including gallium’s de-facto ban—industry stakeholders who aren’t aware of the minerals in their parts face significant exposure if China restricts a prominent mineral overnight.

The Challenge of Securing Alternative Critical Minerals Sourcing  

Based on data from the USGS 2025 Mineral Commodity Summaries, China is the world’s largest producer of the eight minerals it has imposed recent trade restrictions on: 

• Gallium
• Germanium
• Antimony
• Tungsten
• Tellurium
• Bismuth
• Indium
• Molybdenum

Based on data from the USGS 2025 Mineral Commodity Summaries, China is the world’s largest producer of the eight minerals it has imposed recent trade restrictions on.

In the case of gallium, 90% of the world’s primary production of the mineral is done in China. More broadly, other countries will face significant challenges in replacing China’s capacity of all these minerals. This is in part because, while a stakeholder could hypothetically source the ore required to make these critical minerals outside of China, the processing equipment, industry best-practices, and commercial scaling of processing is not nearly present at the level that currently exists in China. 

The U.S., for example, has environmental pollution concerns around processing minerals currently being refined in China. Moreover, while there are deposits of many of the minerals currently restricted by China within the U.S., they are often located in National Parks or places that would require significant regulatory approval to mine and extract from. Given these impediments, it appears unlikely that a new stakeholder could configure a supply chain for a mineral restricted by China quickly. As a result, companies that rely on these critical materials will need to understand their supply chains and be prepared for future restrictions with alternate designs, components, and suppliers.  

Part two of this in-depth analysis of China’s export controls and their impact on the future of the minerals supply chain will be published on Monday, March 31.