China has imposed export controls against two US rare earth producers, MP Materials Corp. and USA Rare Earth Inc., citing national security and interests. This action comes as a direct response to Washington's efforts to reduce its reliance on Beijing for critical minerals by establishing an alternative supply chain. Both US companies were added to China’s export control list on Monday.
The move by China is also a direct retaliation for the Pentagon's decision this month to add several prominent Chinese companies to a list of firms accused of supporting the Chinese military. While the Chinese Commerce Ministry stated the controls are for national security, both MP Materials and USA Rare Earth have indicated that the curbs are largely symbolic, as they have already significantly reduced their dependence on Chinese equipment and materials.
MP Materials operates the only major rare earths mine in America and received a $400 million equity investment from the Department of Defense last year. USA Rare Earth, an emerging producer, recently secured $1.6 billion in funding from the US Department of Commerce and plans to acquire Brazil's Serra Verde Group for additional mining access. The Chinese export controls prohibit these US companies from receiving dual-use items from China and ban organizations worldwide from providing them with Chinese-origin dual-use items.
This decision marks an end to a months-long lull in China's use of such restrictions against US companies, following a summit between US President Donald Trump and Chinese leader Xi Jinping last October. The timing also follows an agreement by G7 countries to cap imports of rare earths and permanent magnets from any single non-bloc country to below 60% by 2030, aimed at reducing reliance on China. In addition to the rare earth companies, China also placed eight other US firms, including drone makers and robotics and aerospace companies, on its export control list.
