Summary
The global critical minerals landscape is undergoing a dramatic acceleration of strategic policy and supply chain fragmentation. China has made its most consequential move to date by expanding its rare earth export controls to include a form of the "Foreign Direct Product Rule" (FDPR), targeting military and advanced tech supply chains globally. In response, the U.S. has doubled down on domestic production with a key investment in a major North American lithium project. Meanwhile, tight supply signals in the copper market are intensifying, pushing the metal back into the spotlight. These developments signal a deepening fracture between Western and Chinese-controlled supply chains.
Key Points
China Expands Rare Earth Export Controls with ‘FDPR’ Rule
China's Ministry of Commerce (MOFCOM) has implemented its strictest-ever rare earth and permanent magnet export controls. The new rules, effective December 1, 2025, introduce a form of the "Foreign Direct Product Rule" (FDPR), requiring foreign firms to obtain a Chinese export license for magnets and semiconductor materials that contain even 0.1% Chinese-origin rare earth content or were produced using Chinese technology. Crucially, the policy explicitly aims to deny export licenses for any product connected to foreign militaries or the defense sector.
https://www.taylorwessing.com/en/insights-and-events/insights/2025/10/chinas-expanded-export-controls-on-rare-earths Taylor Wessing
U.S. Finalizes Stake in Lithium Americas’ Nevada Project
The U.S. Department of Energy (DoE) has finalized a previously planned direct equity investment, acquiring a significant minority stake in Lithium Americas Corp. (LAC). The capital injection is tied to the construction and accelerated development of the Thacker Pass lithium mine in Nevada, aiming to create a cornerstone domestic supply of battery-grade lithium carbonate for the North American electric vehicle (EV) supply chain.
https://www.energy.gov/articles/energy-department-announces-actions-secure-american-critical-minerals-and-materials-supply DoE Announcement
https://www.theglobeandmail.com/business/article-us-department-of-energy-restructures-lithium-americas-deal/ The Globe and Mail
Copper Supply Deficit Worsens for 2025/2026
Fresh data from industry consultants shows that the refined copper market deficit is tightening faster than previously forecast. After the September 2025 temporary operational pause at a key Indonesian mine, the expected 2025 deficit has been revised up to 120 kilotonnes (kt). This supply squeeze is exacerbating concerns over the long-term supply required for global electrification and grid infrastructure upgrades.
Australia Pushes for Japanese Critical Minerals Investment
Australia's Resources Minister, Madeleine King, formally called for further Japanese investment in critical minerals supply chains at a recent economic conference in Perth. The move, framed as seeking a more "reliable and predictable market," is an explicit response to the increasing use of "arbitrary export bans or regulations," clearly referencing China's recent rare earth curbs.
Why It Matters
The Full Weaponization of Supply Chain Control
China's FDPR-like rule on rare earths marks a geopolitical escalation. It not only tightens China's grip on the world's supply of key materials but also forces foreign manufacturers, particularly those in defense, aerospace, and advanced semiconductors, to fully redesign or prove the China-free origin of their supply chains to avoid regulatory and supply disruption risk.
State Equity Becomes the Go-To Tool
The U.S. investment in Lithium Americas, following similar equity stakes in MP Materials and Trilogy Metals, cements a new Western industrial policy playbook. Governments are moving beyond grants and subsidies to become active co-owners in strategically vital projects, tying state interests directly to project success and production volume.
The Price of Copper Scarcity
The growing copper deficit forecast for the next two years signals a structural supply problem facing the energy transition. Copper is fundamental to every aspect of electrification, and an accelerating deficit will exert significant upward pressure on prices, increasing the cost basis for EVs, renewable energy projects, and new grid infrastructure globally.
Watchlist Companies & Entities (with Links)
Company / Entity | Context | Homepage / Link |
Glencore plc / Mount Isa & Townsville Operations | Beneficiary of the A$600M Australian support package; key to Australia’s downstream copper processing. | |
Trilogy Metals Inc. (TMQ) | Now partly U.S.-backed; poised for potential acceleration in Ambler development. | |
Lithium Americas Corp. (LAC) | Secured a significant equity investment from the U.S. DoE for the Thacker Pass lithium project. | |
Critical Metals Corp. (CRML) | REE explorer in Greenland; benefiting from China's export controls, recently secured new offtake. | |
MP Materials (MP) | America's only fully integrated rare earth producer; strategic partner for U.S. magnet production. | |
NioCorp Developments Ltd. | Developing the Elk Creek project for Niobium, Scandium, Titanium, and potential Rare Earths. | |
ICSG (International Copper Study Group) | Its forecasts ($9,000-$10,500/tonne range) influence investment in copper mines and hedging strategies. |
Critical Minerals Spotlight
Rare Earth Elements (REEs) — The target of the most aggressive policy action yet. Focus is on magnet-grade REEs (Nd, Pr, Dy, Tb), where non-Chinese processing and manufacturing capacity is the weakest link.
Lithium — The U.S. investment reinforces lithium's status as a top-tier strategic mineral, critical for the EV and energy storage sectors.
Copper — Moving from a commodity discussion to a national security concern due to deficits and its indispensability for the power grid and defense electronics.
Action Points
Review Supply Chain Audits: Companies must immediately assess their component supply chains for any exposure to the new Chinese 0.1% FDPR rule, especially in magnets and sensors, and prepare full-traceability documentation.
Monitor Lithium Funding: Watch for any further U.S. or allied government equity/debt packages targeting shovel-ready lithium and nickel projects as the DoE accelerates its capital deployment.
Hedge Copper Risk: Given the tightening deficit, manufacturers and investors should review their copper price exposure and hedging strategies in anticipation of sustained high prices.
Track Australia-Japan Deals: Look for firm announcements on Japanese capital deployment into Australian critical minerals processing projects, particularly those for battery metals, as part of the broader anti-fragmentation effort.
This briefing is for informational purposes only and is not legal, investment, or policy advice. Information is believed accurate at time of publication. Sources are publicly available.