Rare Earths: The New Oil Embargo in the Making?

Rare Earths: The New Oil Embargo in the Making?

October 1973. Lines of cars snaked through gas stations across the United States. Some waited hours only to see "Out of Gas" signs when they finally reached the pump. In just a few months, the price of oil jumped from $3 to nearly $12 a barrel. The cause? The Arab oil embargo, triggered by U.S. support for Israel during the Yom Kippur War. For the first time, Americans learned how vulnerable they were to foreign control over a single critical resource.

That lesson is still relevant. But today, it isn’t about oil. It’s about rare earth elements. And once again, the world is waking up to just how fragile the supply chain can be.

Rare Earths Power Everything

Rare earths are not rare in nature, but they are difficult and costly to process. These 17 elements play a central role in technologies that define modern life and national security. The magnets made from rare earths are especially important. They are used in everything from smartphones and electric vehicles to missile guidance systems and fighter jets.

Consider this:

• An electric vehicle uses 1 to 2 kilograms of rare earth magnets.

• A large wind turbine can require up to 600 kilograms.

• An F-35 fighter jet contains over 900 pounds of rare earth materials.

• Smartphones, medical imaging devices, drones, satellites, and robotics all depend on them.

These aren’t luxury technologies. They’re essential to the infrastructure of modern society.

China Owns the Supply Chain

The problem is that nearly all of this runs through China.

• China mines about 70% of the world’s rare earth ore.

• It processes 90% of the global supply.

• It manufactures 90% of all rare earth permanent magnets.

In comparison, the United States has just one active rare earth mine. And it sends its raw material to China for processing.

This isn’t just about economics. It is about strategic leverage. And China has proven willing to use that leverage.

The 2025 Shock

In 2010, China cut off rare earth exports to Japan during a territorial dispute. The result was a 500% spike in prices. That event triggered concern, but not lasting change.

In April 2025, China announced new export restrictions on seven categories of rare earths and associated magnets. These restrictions were framed as a national security measure, but the timing coincided with escalating trade tensions with the West. Immediately, shipments slowed. Prices climbed. Automakers halted production lines. Defense contractors warned of serious delays.

Factories in the U.S., Japan, and Europe began scrambling. It became clear that this wasn’t a temporary bottleneck. This was a pressure point. And the finger on it belonged to Beijing.

A Choke Point for the West

The risk isn’t theoretical. It is structural. Entire sectors now hinge on access to a supply chain that can be squeezed with a political decision.

• Defense: Jets, drones, sonar systems, and missiles cannot be built without rare earths.

• Energy: Without magnets, EV motors and wind turbines lose major efficiency.

• Tech: Phones, laptops, servers, and medical equipment all rely on these elements.

• Automation: Robotics and AI-driven manufacturing need high-performance motors built with rare earth magnets.

If China turns off the tap entirely, the result will not just be economic. It will be strategic.

Building a New Supply Chain

Governments and companies are not standing still. But reshaping a global supply chain is slow work.

• Australia is increasing its rare earth output through Lynas Corp.

• The U.S. is investing in mining and processing facilities in California, Texas, and Wyoming.

• Europe is developing refining capacity and recycling operations.

• Apple is now using 100% recycled rare earths in key products.

• The Pentagon is funding domestic magnet production to reduce military dependency.

There is also a growing push to extract rare earths from industrial waste and electronic scrap. Startups and established firms are racing to develop new processes. But innovation takes time. And scaling it takes even longer.

What Comes Next

The 1973 oil embargo changed global energy policy. It led to strategic petroleum reserves, alternative energy investment, and a hard look at energy independence.

The rare earth situation in 2025 is shaping up to be a similar moment. It is not a future risk. It is a present crisis. And while the West is taking steps to respond, the supply chain remains fragile.

This isn’t just a resource issue. It’s a question of control. The countries that secure access to rare earths will shape the next era of industrial and military power. The embargo has already started. It just didn’t come with a headline.

The time to prepare is now.

Stay Sharp,

Gideon Ashwood