US Mineral Supply Cut: China’s Cleantech & Defense Move

In a strategic maneuver this April, China has implemented export licensing on crucial minerals, impacting U.S. defense and clean technology sectors. These aren’t your everyday commodities; we’re talking dysprosium, terbium, tungsten, indium, and yttrium – the unsung heroes powering everything from electric vehicles to fighter jets.

This action, though subtly framed as “export licensing,” effectively chokes off the supply of these vital minerals to the U.S., granting Beijing significant control over their distribution. Applications for licenses that include the U.S. as a final destination are unlikely to be approved. This isn’t a surprise; China has been building its dominance in these supply chains for decades, while the U.S. has been complacent, ignoring warnings about over-reliance on a single, potentially adversarial nation.

The restricted materials are precisely targeted. Dysprosium is essential for high-temperature electric motors, vital for both EVs and military aircraft. Tungsten provides the armor-piercing power to ammunition and is critical for semiconductor manufacturing. Terbium enhances high-efficiency motors in EVs and wind turbines, and is used in night-vision goggles. Indium makes touchscreens work and enables 5G communications. Yttrium is critical for jet engine coatings and laser systems.

This move has widespread implications. The defense sector faces challenges in producing guided munitions, infrared imaging, and stealth aircraft. The semiconductor industry, despite the CHIPS Act, relies on tungsten and indium. The U.S. clean technology ambitions are also under threat. Electric vehicle motor efficiency is compromised, First Solar’s panel production is jeopardized, and wind turbine longevity is reduced.

The economic impact is already being felt, with rising prices and supply chain disruptions. The U.S. is now scrambling for alternative sources, but faces the consequences of years of neglect and dependence on China.

A course correction is possible, but unlikely under the current administration’s trade policies. It would require a bipartisan strategy to rebuild domestic mining, processing, and refining capacity, support recycling, and develop substitutes. However, this requires long-term vision and investment, a difficult sell in a short-term-focused financial environment.

China’s action is a wake-up call. The U.S. is now facing the consequences of its strategic miscalculations, holding a clipboard and wondering where the magnets went.

Key Minerals Impacted:

• Dysprosium: Critical for high-temperature electric motors.
• Tungsten: Used in ammunition, semiconductors, and industrial tools.
• Terbium: Enhances efficiency in motors, night-vision tech.
• Indium: Essential for touchscreens and 5G communications.
• Yttrium: Vital for jet engine coatings and laser systems.

This situation underscores the urgent need for the U.S. to secure its critical mineral supply chains and reduce its reliance on foreign sources. The future of U.S. defense and clean energy leadership depends on it.