China Tightens Grip on Rare Earths

Samarium cobalt magnets are nearly impossible to buy from China right now. So are yttrium and cadmium. The U.S.-China Business Council reported this week that despite a Trump-Xi deal last October promising to "effectively eliminate" export controls, some rare earth elements remain "nearly unobtainable" for American manufacturers, according to Reuters. Three-quarters of affected companies are now scrambling to find alternative suppliers—though nearly half admit they haven't found viable ones yet.

The squeeze is real, and it's reshaping the global mining industry faster than most anticipated. China controls roughly 90% of rare earth processing and 70% of mining, the U.S. House Foreign Affairs Committee noted this week. For materials that power everything from F-35 fighter jets to wind turbines, that concentration has become a strategic vulnerability Washington can no longer ignore.

Can Legislation Break the Chokehold?

The U.S. House of Representatives passed the DOMINANCE Act on June 9 by voice vote, a bipartisan push to reduce dependence on Chinese critical minerals, MINING.COM reported. The legislation—formally the Developing Overseas Mineral Investments and New Allied Networks for Critical Energies Act—authorizes equity investments, political risk insurance, and priority U.S. offtake agreements for allied mining projects. It now heads to the Senate.

The bill singles out nickel with its own dedicated section, authorizing U.S. membership in the International Nickel Study Group. It defines "processed" minerals as metals, metal powders, or master alloys—a specification that could favor North American projects already producing material in usable forms. Representatives Ami Bera and Young Kim, who introduced the bill, framed it as essential to national security. "China controls roughly 90% of global rare earth processing capacity, creating a strategic vulnerability that Beijing has shown it is willing to exploit," Bera said in a statement.

But legislation alone won't conjure new mines overnight. The U.S. currently imports 100% of its domestic consumption for at least 11 critical minerals, including graphite, gallium, scandium, and yttrium, according to U.S. Geological Survey data. Building alternative supply chains will take years, not months—and Beijing knows it.

What About the Allies?

Canada is feeling the pressure too. A new PwC Canada report warns the country risks losing the critical minerals infrastructure race unless it accelerates project approvals and investment, MINING.COM reported. Canada invests 6.6% of GDP in infrastructure compared to 7.4% among leading countries—a gap that would require an additional $34 billion annually by 2050 to close. Annual resource infrastructure spending is forecast to rise from $53 billion today to $63 billion by 2050, driven by demand for critical minerals and the search for alternatives to concentrated suppliers.

Ontario's Ring of Fire, one of Canada's largest undeveloped mineral districts, exemplifies the challenge. It will require roads, power transmission, digital connectivity, and community infrastructure developed in tandem before large-scale mining can proceed. PwC's message echoes what the industry has repeated for years: faster approvals, stronger partnerships with First Nations, and new financing models are essential if Canada hopes to capitalize on shifting supply chains.

Meanwhile, global demand keeps climbing. UN Trade and Development reported this week that lithium demand is projected to rise 353% between 2024 and 2040, while graphite demand could increase 131%. Clean technologies will account for 87% of lithium demand by 2040, up from 62% in 2024. Supply remains dangerously concentrated: the Democratic Republic of Congo produces 74% of global cobalt, Indonesia 67% of nickel, and China 69% of rare earths, according to UNCTAD's June 2026 Global Trade Update.

Copper prices reflected the geopolitical uncertainty this week. Benchmark three-month copper on the London Metal Exchange gained 1.2% to $13,650 per metric ton on Friday, snapping two days of losses, Reuters reported. The rebound came on hopes that the U.S. and Iran could sign a peace deal this weekend, easing concerns over inflation and economic growth that had pushed copper to its lowest level in three weeks.

Where Does the Supply Actually Come From?

China's dominance extends beyond mining to the higher-value processing stages. The country controls 91% of refined rare earths and 92% of magnet production, according to J.P. Morgan research. For lithium-ion batteries, China maintains 80% or more market share across multiple supply chain segments—and near-monopoly positions in precursor cathode materials and lithium iron phosphate cathodes, the IEA noted in recent analysis.

The concentration creates leverage Beijing has proven willing to use. China introduced sweeping export controls on rare earths and battery materials in October 2025, then partially suspended some restrictions earlier this year as part of broader trade negotiations. But the U.S.-China Business Council's survey, conducted in February and March, found that "confidence in longer term access remains low." Of 38 impacted companies, 29% said they were actively shifting to non-Chinese suppliers while 47% were searching but hadn't found alternatives.

"China is forcing this diversification away from China and creating a strong interest on the part of the corporate sector to find alternatives," U.S.-China Business Council President Sean Stein told Reuters. He added it would be difficult for the U.S. to eliminate supply issues over the next three years, even with aggressive diversification efforts.

Europe faces similar constraints. A four-year Horizon Europe-funded study released in early June found that Europe is sitting on valuable supplies of lithium, cobalt, and rare earths—but most are going to waste through improper disposal or leaving the region before recycling. Over 80% of European companies depend on Chinese supply chains for critical minerals essential to defense, EVs, and renewable energy, with independent alternatives requiring 20 to 30 years to rebuild, according to multi-institutional analysis.

What Changed This Week

Washington formalized its legislative response to China's rare earth dominance with the DOMINANCE Act passing the House. Simultaneously, U.S. business leaders confirmed that Beijing's export controls remain effective despite diplomatic assurances, with some materials effectively cut off from American manufacturers. Canada's infrastructure deficit emerged as a concrete obstacle to capitalizing on critical minerals demand, while UN data underscored just how concentrated global supply remains—and how fast demand is growing.

What to Watch

The DOMINANCE Act now moves to the Senate, where timing and amendments remain uncertain. Watch for Commerce Department decisions on copper tariffs, expected by the end of June, which could reshape North American trade flows. Canada's federal budget implementation will reveal whether infrastructure commitments translate to actual project approvals in Ontario's Ring of Fire and British Columbia. And any confirmation—or collapse—of U.S.-Iran peace talks this weekend will move copper and broader commodity markets Monday morning.