Highlights

• China is signaling potential restrictions on rare earth exports to Japan amid Taiwan Strait tensions, echoing its 2010 export slowdown during maritime disputes.
• Heavy rare earths like dysprosium and terbium are indispensable for permanent magnets in motors and electronics, with China controlling 90% of global refining capacity.
• Diversification efforts focusing only on mining are insufficient—the real bottleneck lies in refining chemistry, industrial plants, and specialized workforce development.

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The headlines make it sound new. China is once again signaling that access to rare earths—particularly the medium and heavy elements—could be curtailed in response to political friction with Japan, this time amid rhetoric touching the Taiwan Strait. The language suggests escalation. The pattern suggests repetition. And of course indirectly aggressive American moves across the Pacific Ocean are likely woven into the underlying strategy.

This is not innovation; it is muscle memory.

Beijing learned long ago that in an economy powered by motors, magnets, and miniaturization, obscure elements can project power more quietly—and sometimes more effectively—than fleets. In 2010, during a maritime dispute, rare earth shipments to Japan slowed to a near standstill. The episode was brief, deniable, and consequential. The lesson was absorbed, then only partially acted upon. Sixteen years later, the leverage remains intact.

What has changed is not China’s willingness to apply pressure, but the density of its grip. Heavy rare earths—dysprosium, terbium, and their less-famous cousins—are not headline commodities. They are indispensable. Without them, permanent magnets lose thermal stability, efficiency collapses, and modern industry begins to stutter, and at least for now without viable and sustainable alternatives, eventually stop.

Over the past decade, China has tightened control not merely over mining, but over the far more decisive stages of separation and refining, where alternatives are scarce and timelines unforgiving.

A recent industry report cited by Robert Clark in Light Reading (opens in a new tab) notes that even a short-lived export disruption could shave billions from Japan’s economy, an estimate attributed to Nomura Research Institute. That figure is plausible not because it is dramatic, but because magnet supply chains are brittle by design—feeding autos, electronics, robotics, and industrial machinery with little slack and few substitutes.

On structure, the reporting largely holds.

China still dominates roughly 70% of global rare earth mining, around 90% of refining, and an overwhelming share of heavy rare earth separation. It also punctures a persistent misconception: progress on light rare earth mining in the United States does almost nothing to resolve the heavy rare earth problem. The bottleneck, as _Rare Earth Exchanges_™ has continuously cited, is not in the ground. It is in the chemistry, the skills and know-how, and the industrial plants that turn ore into usable material.

Where narratives begin to stretch is in implying that rare earth threats have recently forced U.S. policy reversals. Evidence for that causal chain is thin. Export controls function less like a hammer and more like a loaded pistol on the table—used sparingly, but impossible to ignore. This is not a newly discovered weapon. It is a structural advantage patiently accumulated.

For investors and policymakers, the implication is uncomfortable but clear.

Heavy rare earths remain the unresolved vulnerability. Diversification that stops at mining is cosmetic. Yes, that heavy rare-earth feedstock is of paramount importance. And without refining capacity, workforce development, and allied industrial coordination (and that includes North America, Europe, Australia, Japan, and South Korea, exposure persists.

Japan learned this after 2010. The U.S. and Europe are learning it now—under brighter lights and higher stakes.

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