The following is an updated event summary of Cory Combs’ talk at China Crossroads, a discussion forum based in Shanghai. For the original post, see here.
The event took place on 7/1/2025, and this brief has been modified to include more background and further readings.
Cory Combs is Head of Critical Mineral and Supply Chain Research at Trivium, the China consultancy which saw the critical minerals crisis coming.
As of July 2025, China’s critical mineral export restrictions are a developing issue with no concrete answers, but Mr. Combs attempted to shed some light on a few key questions that have generally gone undiscussed in the current media frenzy.
What is the current export-control regime in China with regard to critical minerals? How did China become the key supplier of the world’s critical minerals, and finally, why use critical minerals as a weapon, and not some other industry?
Exports are scrutinized, not forbidden.
The current export controls are not a full ban. Rare earths are still purchasable, but now companies need a license to do so to prove that the processed minerals are not intended or likely to be used for military end-uses (用于或者可能用于以下最终用途). Because the minerals placed under control are all deemed dual-use, exporters will need to apply for a “Dual-use Item Export License” (两用物项出口许可证).
The key word to note is “Dual-Use”. A dual-use item is one that can have both civilian and military applications. Think advanced computer chips, commercial use drones, thermal imaging technology, and GPS. As US-China tensions have ramped up, both countries have been applying the term to ever more products.
Technically speaking, the goal of all of China’s current export controls is to prevent the creation of military or dual use technology. But drawing the line between what is dual-use and what isn’t is not only difficult, but also political. For example, while some specific forms of carbon are components in dual-use technology, China has also banned the sale of forms of carbon that have no military applications. Rare earths fall into an ambiguous category, because they can be used to manufacture dual-use items. For example, all the minerals on China’s current export restriction list are used in magnets. While magnets themselves are innocuous, they can be used in everything from motors, engines, remotes, sensors, night vision goggles, and other essential military equipment. This makes the process of obtaining a Dual-use Item Export License much more complicated.
The process for applying for a license is described at this Ministry of Commerce (MOFCOM) site. There six required and one non-required document that make up an application submission: First, the application form itself, the ID cards of the applicant’s legal representative, principal manager, and authorized representative as one document, documentation of export agreements with the foreign company, the technical specifications or test reports of the items being exported, documents proving the end-user is who they say they are and the end-use is what they say it is, an overview of the company importing the dual-use items, and “other documents […] required by […] the State Council”. This last document is, ironically, not required.
There is a 45-day review period for applications, but that only starts when the license gets officially received and inputted into the MOFCOM system, which can also take ~20 days. So, getting these licenses can take months.
Mr. Combs also stressed the human element. The current workers going through the applications greenlighting licenses to buy rare earths are often overworked and underpaid. They are under immense stress from superiors to figure out which companies could be using Chinese rare earths to manufacture dual-use products. When reviewing an application for a license, they have absolutely no incentive to rush, and every reason to be cautious.
Some of these documents are simple to fill out, but others become incredibly difficult when the importers of rare earths are forced to give out the technical specifications of their products. The high stakes for the form-fillers leads to Chinese auditors asking to see factories where their exports are headed. But to the companies being asked, the process comes off as industrial espionage and stealing trade secrets.
Getting dirt to mean something
Coming out of the Chinese civil war, Beijing already had its eye on the minerals industry. Natural resource extraction was promoted as the way to kickstart the economies of undeveloped regions. Investing in the industry was development for development’s sake, and at the time, not necessarily for profit. In fact, up until recently, rare earths have been extremely cheap – the business was literally selling dirt at dirt-cheap prices. Because of the low prices and the fact that it’s a primary/unprocessed product, most rare earth extraction operations barely break even, and many run at a loss.
Since at least the 90s, Beijing has been trying to turn this cheap, often ‘worthless’ industry into something profitable. The way they achieved this was to start doing the mid- and downstream processing of these rare earths in addition to the extraction. At the same time, ‘Western’ economies were offshoring much of their pollution costs. Critical mineral mining and processing is incredibly destructive to the environment. Only about 3% of the waste generated from the extraction and processing of these minerals can be recycled. The other 97% is unrecoverable waste. Due to stricter standards for public health, environmental laws, and social pressure, many advanced economies outsourced the mining and processing to China. The combination of foreign and domestic support for China’s rare earths industry made the decision to forge ahead a no-brainer.
For more info on the history of Chinese policy towards the rare earths industry, see this primer article, then mine the bibliography for citations. As overviews from the Chinese perspective on a domestic industry, the books by Su and Yang seem particularly interesting.
It is easy to think that the new export controls on rare earths were a plan decades in the making, but the reality is that China’s monopoly on rare earths came more from the fact that they kept investing in the industry in order to “get these rare earths to mean something” (Combs)—that is, to turn a loss-making operation processing dirt into a profitable industry manufacturing magnets and electronics. The critical minerals industry was originally a tool for development, but because of recent geopolitical developments and critical minerals’ military applications, “the development lens is lost, we have our threat goggles on” (Combs).
Many people were caught blindsided in the summer of 2025, but using policy analysis, it was clear that Beijing was preparing to ‘pull the plug’ if needed. They were consolidating the industry to prevent any minerals from being smuggled out, with major players being consolidated into the China Rare Earth Group in 2021. Beijing also passed laws to allow them to control the flow of rare earths out of the country. Some relevant policy documents include Export Control Law (2020), Regulations on REE Management (2024), REE Traceability Measures (2025), MofCom Announcement No.18 (2025). There have been additional policy changes such as requiring stricter reporting and inventory taking that also signified that China was gathering its leverage in case it needed to use rare earths as an economic weapon.
But why use critical minerals as economic leverage and not low-end chips or other areas where China has market dominance? According to Combs, Beijing needed an area where they could pull the plug without ruining their own exports. For example, they did not place export restrictions on EVs or batteries, but rather on rare earths at the very beginning of the value chain, so as not to disrupt export revenues for those industries.
The Chinese government chose this basic, building-block resource: it’s dirt cheap domestically, they barely lose money by not selling it abroad because all the value-add is done in China. China mines nearly 70% of the world’s rare earth supply. Even when other countries mine their own rare earths, most send them to China to be processed. Apart from one small plant in Malaysia, all the processing to turn this ‘dirt’ into useable material is done in China. By halting the flow of rare earths, China is able to stop other places from being able to make the same kinds of very expensive products that they make.
Combs mentioned that since the announcement of these export controls, other countries have become wary. Most advanced economies are diversifying away from China, and he doubts that the country will not be able to replicate this playbook to as great effect, either in the critical mineral sector, or in other industries.