China's Rear Earth Element Exports Restart Amid Warning Against Stockpiling

China has restarted rare earth element exports, which were halted earlier this year due to trade tensions. However, the government warned Western companies not to stockpile large inventories, amid concerns of a potential shortage. The move is seen as a response to the US defense establishment's efforts to diversify its rare earth supply chain.

China has restarted rare earth element exports, which were halted earlier this year due to trade tensions. The move has been seen as a response to the United States' ongoing efforts to diversify its rare earth supply chain. While the resumption of exports may alleviate some immediate concerns, the US government and private sector remain committed to bolstering domestic processing capabilities to mitigate long-term risks.

The US has recognized the strategic importance of rare earth elements, which are critical for defense technologies, renewable energy, and consumer electronics. The Department of Defense has played a key role in addressing vulnerabilities in the supply chain, providing funding for the development of domestic processing facilities. A recent 10-year supply agreement between Critical Metals and Ucore Rare Metals exemplifies this effort. Under this agreement, Critical Metals will supply up to 10,000 metric tons of heavy rare earth concentrate annually from its Tanbreez project in Greenland to Ucore's Louisiana processing facility [1].

The Louisiana facility, which is being developed in multiple phases, is expected to have an initial production capacity of 2,000 tonnes per annum (tpa) by 2026, with plans to scale up to 7,500 tpa by 2028. This facility is designed to process both light and heavy rare earth elements, with a focus on those critical for permanent magnet production. The strategic location of the facility in Louisiana offers logistical advantages and access to a skilled workforce, making it a key link in the emerging domestic rare earth supply chain [1].

The US government's multi-faceted approach to supporting rare earth supply chain development includes investments in both domestic processing capabilities and secure access to raw materials. The Pentagon has provided $18.4 million in funding for the first phase of construction of Ucore's Louisiana facility, while the Export-Import Bank of the United States (EXIM) has issued a letter of interest for a loan of up to $120 million to support the development of Critical Metals' Tanbreez project [1].

The Tanbreez project in Greenland is one of the world's largest undeveloped rare earth deposits, with a projected annual production capacity of 85,000 metric tons of rare earth concentrate once fully operational. The project's location in Greenland provides geopolitical advantages, as it is in a politically stable jurisdiction allied with Western interests [1].

Despite the recent resumption of rare earth exports by China, the US government has warned Western companies not to stockpile large inventories. The concern is that a potential shortage could disrupt critical industries that rely on these materials. The US is taking a proactive approach to ensure the security and resilience of its supply chain, investing in both domestic processing and alternative materials to reduce dependence on primary rare earth sources [1].

References:
[1] https://discoveryalert.com.au/news/us-rare-earth-supply-chain-2025-strategic-partnership/