New Restrictions on Rare Earth Materials Could Impact Global Supply Chains and Offer Opportunities for Pakistan’s Untapped Mineral Resources
Key Takeaways:
i) China’s export controls on rare earth materials could lead to supply chain disruptions and price increases.
ii) Pakistan possesses significant untapped rare earth reserves, presenting a potential economic opportunity.
iii) China’s dominance in the rare earth market gives it considerable geopolitical leverage.
MONEY MATTERS EXCLUSIVE ANALYSIS:
Islamabad, Pakistan – April 14, 2025 – China’s recent imposition of export controls on medium and heavy rare earth materials is set to reshape global supply chains, potentially impacting various sectors, including Pakistan’s burgeoning technology and defense industries. The move, effective April 4, 2025, requires exporters to obtain licenses for specific rare earth elements, raising concerns about supply disruptions and price volatility.
The export controls, announced by China’s Ministry of Commerce (MOFCOM) and General Administration of Customs, cover a range of rare earth materials, including oxides, alloys, compounds, and mixtures of elements like Samarium, Gadolinium, Terbium, and Dysprosium. This action is expected to have immediate and strategic consequences for global industries reliant on these materials, from electric vehicles and renewable energy to defense and electronics.
Pakistan, with its growing focus on technological advancement and defense capabilities, is particularly vulnerable to fluctuations in the rare earth market. These elements are crucial for manufacturing radars, guidance systems, communication satellites, and anti-missile defense systems. However, this situation also presents a unique opportunity for Pakistan, which possesses significant, largely untapped reserves of rare earth elements, particularly in Balochistan.
The export controls, announced by China’s Ministry of Commerce (MOFCOM) and General Administration of Customs, cover a range of rare earth materials, including oxides, alloys, compounds, and mixtures of elements like Samarium, Gadolinium, Terbium, and Dysprosium
While Pakistan has considerable mineral wealth, it has historically remained on the periphery of the global rare earth market. However, with the global demand for these elements projected to increase significantly, Pakistan could leverage its resources to attract foreign investment, forge strategic partnerships, and establish itself as a key player in the global supply chain. Prime Minister Shehbaz Sharif has emphasized the importance of harnessing Pakistan’s mineral wealth to reduce dependence on international financial institutions.
China’s Belt and Road Initiative (BRI), including the China-Pakistan Economic Corridor (CPEC), has further strengthened its position in the region, with Chinese companies actively involved in mining projects in Pakistan.
China currently dominates the rare earth market, controlling approximately 60% of global production and 85% of processing capacity. This dominance gives China considerable geopolitical leverage, as demonstrated by its previous use of export restrictions during trade disputes. China’s Belt and Road Initiative (BRI), including the China-Pakistan Economic Corridor (CPEC), has further strengthened its position in the region, with Chinese companies actively involved in mining projects in Pakistan.
The new export controls are likely to accelerate efforts by other countries to diversify their sources of rare earth materials. This could benefit Pakistan if it can develop its mining sector and establish itself as a reliable alternative supplier. However, this will require significant investment in exploration, technology, and policy reforms to ensure transparency and attract foreign investment.
