Rare-Earth Supply Strains Persist as U.S.-China Mineral Tensions Move Toward Washington Summit
By Shahnoor Saqib — SCN NEWS
BEIJING/SINGAPORE/WASHINGTON — Fresh disruptions in Chinese rare-earth shipments to U.S. customers are exposing a deeper weakness in Washington's critical-mineral supply chain, with some suppliers reportedly reluctant to sell even where export licences are available as geopolitical compliance risks increasingly shape commercial decisions.
Some Chinese rare-earth suppliers have declined shipments to U.S. buyers because they fear repercussions from Beijing, according to people familiar with the trade cited by Reuters. A handful of suppliers have refused shipments since early August following Chinese sanctions on the Responsible Business Alliance, a U.S.-based supply-chain monitoring organization, while other Chinese companies had already stepped away from U.S.-bound business in recent months to avoid becoming caught in geopolitical disputes. Reuters said it could not establish how many suppliers had refused U.S.-destined shipments.
The development is significant because it shows that the rare-earth dispute is no longer solely about whether Beijing formally issues export licences. Companies operating inside China must also assess whether a transaction, customer or downstream destination could expose them to domestic penalties, creating another layer of uncertainty between regulatory approval and actual delivery. In one example reported by Reuters, a source cited four cases in which Chinese companies declined to supply material because of concern that it might eventually be resold to prohibited users.
That uncertainty is becoming a diplomatic issue ahead of Chinese President Xi Jinping's planned Sept. 24 visit to Washington. U.S. officials have repeatedly pressed China over commitments intended to keep rare-earth export licensing flowing more smoothly, and the continuing problems have now entered U.S. preparations for the meeting, according to Reuters. A U.S. official said Washington continued to raise what it regards as China's failure to comply with previous understandings, while Beijing has linked its own actions to U.S. restrictions affecting Chinese technology-related entities.
The dispute matters far beyond the mining sector because rare earths and related critical materials feed industries ranging from advanced manufacturing and semiconductors to aerospace, energy and medical equipment. Although exports of many rare-earth products and magnets have recovered since China's restrictions introduced in April 2025, supplies of several strategically sensitive materials remain tight and prices for some are near record highs. Yttrium, tungsten and indium phosphide are among materials affected by restrictions or licensing difficulties, according to the Reuters reporting.
Yttrium illustrates the uneven recovery. Chinese exports of the material to the United States have increased this year but remain around half their 2024 level, despite larger shipments to some other destinations. After two months without U.S.-bound yttrium exports, China shipped 27 tonnes to the United States in July, its second-highest monthly total since January 2025. Some American companies, meanwhile, have waited more than six months for mineral licences, according to people familiar with the process.
The bottlenecks extend beyond the United States and underline the international character of China's leverage over critical-mineral supply chains. Reuters reported that licence approvals have been even more constrained for some Indian and Japanese buyers. Chinese customs data cited in the report showed no terbium exports to Japan between January and August this year, compared with 20 tonnes during the same period a year earlier, while gallium shipments fell 65% and yttrium exports dropped 98%.
Those numbers matter because small quantities of specialized rare-earth elements can be essential to high-performance magnets and other advanced technologies. Supply-chain security therefore depends not simply on the volume of minerals extracted globally but on access to processing, refining and specialized materials at the point manufacturers need them. For governments seeking to reduce exposure to China, developing mines outside the country addresses only one part of that chain; processing capacity, commercial relationships and predictable cross-border access remain equally important.
Beijing has maintained that it is committed to preserving global critical-mineral supply chains. Chinese officials have also argued that U.S. restrictions on Chinese electronics-testing laboratories, drones, consumer routers, submarine cables, advanced robotics and power equipment have breached previous bilateral understandings, according to Reuters. The dispute therefore increasingly links mineral access with the wider technology and national-security confrontation between the world's two largest economies.
There are signs that flows can improve when political conditions allow. Several U.S. companies have recently received multiple licences after lengthy waits, and some businesses expect approvals could increase around the Washington summit. But the latest supplier refusals show why licence statistics alone may give an incomplete picture: an approved shipment still depends on a Chinese company being willing to execute the transaction without fearing regulatory consequences.
That distinction could become increasingly important for governments pursuing critical-mineral diversification strategies. The latest disruptions suggest that resilience will require not only alternative mines but also alternative processing capacity, diversified supplier relationships and supply chains capable of operating when geopolitical disputes interfere with ordinary commercial decisions.
For Washington and Beijing, rare earths are consequently moving back toward the centre of bilateral diplomacy ahead of Xi's visit. The immediate question is whether the two sides can restore more predictable mineral flows. The longer-term issue is harder: whether industries dependent on strategically important materials can continue treating concentrated cross-border supply chains as commercially reliable when individual suppliers increasingly have to calculate geopolitical risk before accepting an order.