Yttrium Rationing Exposes Western Vulnerability as Chinese Rare Earth Chokehold Tightens Despite Trade Detente

The rare earth crisis has moved beyond supply concerns into active production constraints. Yttrium prices have surged 60% since November alone, now trading at 69 times their year-ago levels, yet China shipped only 17 tons of yttrium products to the US in eight months following April's export controls compared to 333 tons beforehand. Two North American firms producing high-temperature engine coatings have already paused production due to shortages, with one deliberately turning away smaller customers to preserve supplies for major engine manufacturers including GE Aerospace and Pratt & Whitney. Another coating supplier ran out of material entirely and ceased selling yttrium oxide products. The shortage is particularly acute because yttrium has no substitutes; without its application in protective coatings, jet engines and industrial turbines cannot operate safely at extreme temperatures.

Scandium presents an equally troubling bottleneck for semiconductor advancement. The US currently produces zero domestic scandium while relying entirely on Chinese supplies, with global production limited to only tens of tons annually. Major US chipmakers are experiencing delays in obtaining Chinese export licenses for scandium, directly threatening the production of advanced 5G components used in smartphones and base stations. Unlike yttrium's aerospace concentration, scandium deprivation could cascade across the entire semiconductor ecosystem at a moment when the industry already struggles with production backlogs.

The geopolitical dimension sharpens the crisis. Trump and Xi are scheduled to meet in Beijing in March specifically to discuss continuation of China's rare earth export pause, yet Beijing appears to be using licensing delays and quota restrictions as leverage rather than honoring the spirit of the October agreement. Chinese customs has intensified screening of rare earth shipments destined for US firms, creating uncertainty that compounds supply chain paralysis. This targeted approach suggests China is deliberately managing scarcity to maintain its 90% refining dominance and 70% of global mined output rather than simply allowing market forces to determine allocation. The aerospace and semiconductor sectors, both critical to US defense capabilities, now face the hard reality that Chinese benevolence is neither guaranteed nor sustainable.

Western diversification efforts are accelerating in response. MP Materials' Texas magnet plant investment and the British Columbia government's fast-tracked permitting for three critical minerals projects, including Defense Metals' Wicheeda rare earth development, signal growing institutional commitment to breaking China's chokehold. However, these projects require years to reach meaningful production volumes, leaving the US and its allies exposed to continued supply weaponization in the near term.