Why China’s critical mineral dominance is still disrupting US supply chains

American companies are grappling with a shortage of critical minerals used in daily operations despite China easing some of its export controls, according to industry insiders.

But China’s dominant position in the global market for these vital raw materials, including heavy rare earths, continued to weigh on US companies, industry insiders said.

“There is no immediate broad-based solution except supply loosening in China,” said David Abraham, director of Three Legged Capital in New York, a specialist advisory firm focused on critical mineral supply chains.

“It’s not just that materials are dear; it’s that they are not getting to manufacturers,” he added, noting the current situation was creating “severe challenges” for the defence and tech industries.

The industries “feeling this most acutely” were aerospace, defence, semiconductors and electric vehicles, as companies faced lengthy approval timelines for export licences while quarterly volume caps constrained their ability to plan, Marks added.

The general licences China issued were valid for only one year and capped quarterly, creating operational limits, he said.

“They also face heightened end-user scrutiny by the Chinese Ministry of Commerce, even for civilian products,” he added. “And if you’re a new company trying to access controlled minerals, it’s even more difficult.”