China and Rare Earth Supply Chains

This paper reveals how China’s rare earth supply chain dominance and export controls are reshaping global defence and security industries, directly affecting the UK and its Allies. China’s strategic use of export controls sustains its manufacturing advantage, restricts access to key elements, and enables geopolitical leverage. The analysis highlights vulnerabilities, opportunities and actionable steps for supply chain resilience.

Key Recommendations

• Develop government- or market-supported stockpiles of critical rare earths and magnets to mitigate supply delays.
• Strengthen partnerships with US, Japanese, and European companies to diversify supply chains and leverage existing UK assets (such as Less Common Metals, HyProMag and Ionic Technologies).
• Invest in domestic rare earth processing, alloy and magnet manufacturing to reduce reliance on Chinese imports.
• Enhance supply chain intelligence and transparency, especially for defence applications, to address structural vulnerabilities.
• Support fiscal measures (price floors, offtake agreements and targeted investment) to offset China’s structural cost advantages.
• Align UK Critical Minerals Strategy with NATO and EU stockpiling initiatives for coordinated resilience.