Rare Earths, Gallium and Germanium: China's Critical-Material Leverage

Rare-Earth Magnets in Weapons

The most strategically important rare-earth product is the neodymium-iron-boron (NdFeB) permanent magnet, the strongest commercially available magnet. These magnets allow electric motors and actuators to be made small, light and powerful — exactly what is needed inside the fins of a guided missile, the control surfaces of a precision-guided munition, the gimbals of an electro-optical seeker, and the motors of drones, radars and aircraft systems.

The quantities involved are not trivial. A single F-35 fighter is estimated to contain hundreds of kilograms of rare-earth materials, and a nuclear submarine far more. Because magnets convert electrical power into precise mechanical motion, they are effectively impossible to design out of modern guided weapons. That makes the magnet supply chain a direct constraint on how fast the West can build the missiles Ukraine and NATO need.

Rare earths are not actually rare in the earth's crust; the difficulty lies in extracting and separating the individual elements economically and cleanly. That midstream chemistry, not the ore itself, is where the real bottleneck sits.

Gallium and Germanium

Gallium and germanium are minor metals with outsized military importance. Gallium is the basis of gallium-nitride (GaN) and gallium-arsenide (GaAs) semiconductors, which power the active electronically scanned array (AESA) radars, electronic-warfare jammers and high-frequency communications systems that define the modern sensing battle. GaN radar is precisely the technology that detects and tracks the missiles and drones used in Ukraine.

Germanium serves a different but equally critical set of roles. It is central to infrared optics used in thermal imaging and night vision, to fiber-optic systems, to certain high-efficiency space solar cells, and to some semiconductor applications. Thermal sights and infrared seekers — vital for night fighting and for homing munitions — depend on germanium-based optics.

Both metals are typically recovered as byproducts of other mining and refining, which means production cannot be ramped quickly even when prices spike. That inelastic supply is exactly what makes export licensing such an effective pressure point.

China's Dominance

China's grip on these materials is overwhelming. It controls roughly 70% of global rare-earth mining, about 90% of separation and processing, and over 90% of the world's rare-earth magnet manufacturing capacity. The processing and magnet dominance is the decisive figure: even ore mined in the United States, Australia or Africa has historically been shipped to China for refining.

For the minor metals the concentration is starker still. China accounts for the vast majority of global gallium production — figures of around 98-99% are widely cited — and a large share of germanium. In 2024 it held roughly a 60% share of global antimony production, about 83% of tungsten and around 79% of natural graphite. The USGS Mineral Commodity Summaries 2025 records high U.S. net-import reliance for rare earths and antimony, much of it sourced from China.

This is the legacy of decades of industrial policy, low-cost processing and lax environmental enforcement that drove Western producers out of the midstream business. The dependence built up gradually and cannot be unwound in a single budget cycle.

The 2023-2025 Export Controls

Beginning in 2023, China converted its dominance into an explicit policy instrument. It introduced export licensing on gallium and germanium in July 2023, on graphite in October 2023, on antimony and superhard materials in August 2024, on tungsten and tellurium in February 2025, and on certain medium-to-heavy rare earths and magnet technology in April 2025. In December 2024 it went further, banning exports of gallium, germanium, antimony and superhard materials specifically to the United States.

According to CSIS and Global Trade Alert, the first wave of controls was framed primarily as a response to U.S. restrictions on advanced semiconductors and computing, rather than to the Ukraine war directly. Yet the same materials feed Western defense production, so the controls indirectly squeeze the industrial base supplying Ukraine and replenishing NATO stockpiles.

The targeting of rare-earth magnet technology in April 2025 was especially pointed, because it threatened not just the materials but the know-how to make finished magnets — the very capability the West is racing to rebuild. Some prohibitions on superhard materials to the U.S. were later suspended amid trade negotiations, underlining how the controls function as bargaining leverage.

The Western Response

The signature Western move came on 10 July 2025, when the U.S. Department of Defense agreed to invest about $400 million in MP Materials in exchange for convertible preferred equity and warrants — a roughly 15% as-converted stake — plus a commitment to purchase 7,000 metric tons of magnets per year for ten years. Analysts described it as the most significant U.S. critical-minerals intervention since the Cold War, explicitly aimed at replacing an 80%-China-dominated NdFeB supply chain with a domestic one.

MP Materials, which operates the Mountain Pass mine in California, began commercial NdPr metal and trial NdFeB magnet production at its Independence facility in Fort Worth, Texas, in early 2025. It plans a much larger second plant — the so-called "10X Facility" — adding an estimated 10,000 metric tons per year of magnet capacity when commissioned around 2028, with the DoD committing to take 100% of its output.

Other strands complement this effort. Lynas Rare Earths of Australia provides non-Chinese mining and processing, including a new U.S. facility, and Western governments are rebuilding strategic stockpiles of gallium, germanium and other minor metals. None of this closes the gap quickly: processing plants take years to build and qualify, and China retains decisive scale and cost advantages for the foreseeable future.

Key Data

⚠ Figures are approximate and tied to as-of dates of 2024-2025. Verify against the USGS Mineral Commodity Summaries 2025, CSIS and MP Materials filings. Not investment advice.