The evolving landscape of trade controls on Critical Minerals and Rare Earth Elements

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The evolving landscape of trade controls on Critical Minerals and Rare Earth Elements

The evolving landscape of trade controls on Critical Minerals and Rare Earth Elements

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June 26, 2025

Critical Minerals and Rare Earth Elements (REEs) are one of the latest sectors receiving global attention due to three key developments: intensifying trade controls; widespread supply chain disruptions; and escalating national security priorities.

What are Critical Minerals and REEs?

Critical Minerals are a subset of mined and processed elements that form a key part in civilian, dual-use and military goods, and industrial processes.

The UK government defines Critical Minerals as minerals with "high economic vulnerability and high global supply risk", including 18 minerals with high criticality for the UK such as lithium, magnesium and REEs (among others).¹

REEs are a set of 17 metallic elements including cerium, praseodymium and neodymium (among others) that share common chemical properties.

The UK government has also previously identified a "watchlist" of minerals that are deemed to be increasing in criticality, including iridium, manganese, nickel, phosphates and ruthenium. These minerals have been identified as being critically vulnerable in the event of unexpected market or supply shocks, or evolving demand and supply trends.

Why are Critical Minerals important?

Global demand for Critical Minerals is at an all-time high, with Critical Minerals and REEs being used in a wide range of goods and sectors such as:

clean energy technologies e.g. lithium batteries (including for the powering of electric vehicles) and wind turbines;
defence and military capabilities e.g. aerospace, strategic materials and systems such as F35A fighter jets and nuclear submarines; and
electronic applications e.g. semi-conductors, mobile phones and medical devices.

As global trade tensions intensify, jurisdictions have increasingly looked to secure resilient and sustainable access to Critical Minerals or use their geographical access to such resources as leverage in negotiations with trading partners.

Access to Critical Minerals is therefore subject to complex and volatile supply chains, particularly due to geographic dominance, with China accounting for 69% of the world's production of REEs in 2023.

An overview: how are Critical Minerals and REEs controlled?

Governments have been implementing a number of different trade controls in relation to trade in Critical Minerals.

Tariffs: Whilst tariff policies are in the global spotlight, jurisdictions have so far been reluctant to impose tariffs on the import of Critical Minerals.

In April 2025, the US Administration announced "reciprocal tariffs" on almost all goods imported into the US from the rest of the world. Notably, certain Critical Minerals have been excluded from the US tariff regime, likely due to the US reliance on the import of those particular Critical Minerals.

Export controls: Jurisdictions often impose controls on the export of military and dual-use goods, software and technology. As these controls often include Critical Minerals and their ancillary material and equipment, entities must comply with regulatory standards e.g. obtaining and complying with export licences prior to the export of certain goods.

For example, the UK imposes export controls on:

Military List 8: Energetic materials and related substances (including certain degrees of magnesium and tungsten);
Category 1: Special materials and related equipment (including enriched lithium and lithium isotype separation equipment); and
Category 2: Materials processing (including certain silicon and silicon oxides).

Export bans: On top of these export controls, and as demonstrated in the current global discourse on tariffs, jurisdictions can increase trade controls to restrict or ban the export of Critical Minerals, or restrict access to listed entities. For example, China recently banned the export of Critical Minerals to the US.

While the US and China have since bilaterally agreed to reduce trade barriers between the two countries, China is understood to have a slow approval process for export licences related to Critical Minerals² and often requires the disclosure of confidential information.³

Sanctions: Jurisdictions have also utilised sanction regimes to control the trade of Critical Minerals with particularly problematic jurisdictions.

For example, the UK restricts the export, supply and delivery to, and the making available of certain Critical Minerals in, Russia. This includes certain specifications of magnesium, copper, manganese and REEs.⁴

Similarly, in the EU, it is prohibited to sell, supply, transfer or export certain Critical Minerals to Russia and it is prohibited for an EU entity to participate in the extraction of several Critical Minerals including REEs in Russia.⁵

US Section 232 investigation: In response to China's leverage over Critical Minerals and REEs, and the risks it presents to the US economy, the US has launched an investigation under Section 232 of the Trade Expansion Act 1962 into the national security risks posed by US reliance on imported processed Critical Minerals and derivative products. Where a positive determination is made, the US Administration has authority to implement further trade measures.
UK National Security and Investment Act 2021 (NSIA): The NSIA empowers the UK government to identify and potentially intervene in acquisitions of entities and assets in, or linked to, the UK where those acquisitions may have an adverse impact on UK national security. Subject to certain criteria, the UK government may need to be informed about acquisitions in sensitive areas of the economy such as: advanced materials; critical suppliers to government; and military and dual-use, which can include Critical Minerals. The UK government has previously expressed an interest in establishing Critical Minerals as a separate sensitive area under the Act.⁶

EU Critical Raw Materials Act 2024 (CRMA): The CRMA⁷ aims to secure the EU's supply of raw materials. It applies to 34 critical raw materials, 17 of which are strategic raw materials including REEs. The EU has set ambitious targets, including the extraction of at least 10% of its strategic raw materials domestically.
EU Conflict Minerals Resolution 2017: Tin, tantalum, tungsten and gold are also subject to the EU Conflict Minerals Regulation, which requires EU importers to source these minerals from responsible and conflict-free sources.

Impacts on supply chains, national security and investment

The measures described above have caused global disruption including:

Global market disruption

Impacts have included:

Supply chain disruption: Businesses face delays obtaining Critical Minerals, potentially leading to stoppages/delays in production.
Price increases: With reports that European tungsten prices have increased to their highest levels since 2013.
Increase in competition: As importers may seek alternative suppliers (where available).

National security concerns

Securing access to Critical Minerals has key national security implications for all jurisdictions, including:

Critical Minerals, with particularly high purity, are "found in military systems ranging from the simplest firearm to F35A fighter jets and nuclear submarines". The UK government recognises that sustained disruption to the supply of Critical Minerals would over time reduce the UK's freedom of action.⁸
Foreign jurisdictions may use control of Critical Minerals as leverage on other geopolitical issues.

Innovation and investment

The current uncertainty may lead to delays in initial innovation and investment.

However, in the long term, businesses may increase research and development to find substitutes for Critical Minerals and develop more efficient extraction and processing technologies to increase resilience in their existing supplies of Critical Minerals.

Current and future government responses to these concerns

Governments have, or may explore, a variety of options to address the impacts:

Increase in domestic production

As mentioned, jurisdictions have started to take steps to diversify their Critical Mineral supplies. For example:

the US Section 232 investigation;
the CRMA which has set ambitious targets related to the EU's consumption of raw materials.

It is worth noting that the UK government plans to release a new Critical Mineral strategy in spring 2025, targeted towards the delivery of the UK industrial strategy and its eight core growth sectors.

Diversified international production

The US has explored diversified sources of Critical Minerals, including:

two non-binding agreements to establish cooperation on Critical Minerals and a rare earth supply chain with Saudi Arabia;
recently signing the United States-Ukraine Reconstruction Investment Fund which, at the conclusion of conflicts, may provide further resources; and
critical mining in Greenland, although this faces significant environmental difficulties.

The UK has also:

announced that it is supporting projects overseas that provide Critical Minerals in major UK industries; and
signed non-binding agreements with Saudi Arabia, Australia, Kazakhstan and Zambia in relation to access to Critical Minerals.

Next steps for UK and EU businesses

Businesses can prepare for global trade disruption in a variety of ways including:

Business continuity plans: Plan for further disruption in Critical Mineral supply chains, such as developing mitigation strategies for high-priority risks and ensuring diverse commercial relationships.
Risk assessment: Identify and assess regulatory risks and supply chain disruption impacts.
Flexible contract and policy frameworks: Review and strengthen force majeure clauses and develop clear policies for contractual disruptions.
Regulatory engagement: Proactively monitor legal and regulatory developments and assess how it affects the business.
Horizon scanning: Monitor and assess geopolitical risks to supply chains.
Outsourcing: As the situation develops, seek specialist advice on changes to the business.

If you have any queries about any of the above matters, then please reach out to one of our team.