The architecture of exclusion: critical minerals geopolitics and the November 2026 deadline

On 9 October 2025, China's Ministry of Commerce published its second critical minerals export control package of the year. The package extended licensing requirements to five additional rare earth elements (holmium, erbium, thulium, europium, and ytterbium), brought refining and magnet-manufacturing equipment within scope, and codified an extraterritorial dimension that applies Chinese regulatory authority to foreign-made products incorporating Chinese material or processing technology at any stage of their production (with provisions such as a 0.1% de minimis threshold). Most significantly, it introduced categorical denials for defence-related end use. For the first time, a major supplier had codified in regulatory form that exports of certain critical minerals would not be licensed for applications in defence manufacturing.

Implementation of the October package was suspended for one year, until November 2026 (formally around 10 November), following diplomatic signals and a Trump-Xi understanding. The suspension is not a retraction. The architecture has been built; only its activation has been deferred. For European and American defence procurement, the period between October 2025 and November 2026 is a planning window, not an indication that the risk has receded. Earlier April 2025 controls on seven medium and heavy rare earth elements remain in effect.

This article examines how critical minerals supply moved from being a commercially concentrated market to a politically deployed instrument of state policy, what the resulting exposure looks like, and why the structural depth of that shift means diversification can mitigate but cannot resolve the underlying problem.

How concentration became leverage

A previous article in this series established that the binding constraint in critical raw materials supply sits at the midstream, in processing and refining rather than at the mine. For rare earths, China processes over 85% of global supply. For lithium, Chinese refiners produce approximately 60% of the lithium compounds used in battery manufacturing. For cobalt, more than 70% of mine output is refined into battery-grade chemicals in Chinese facilities, regardless of where the cobalt was extracted.

The analytical move here is to recognise that this concentration is not, in itself, the strategic problem. It is the precondition for the strategic problem. Concentration becomes leverage only when a state chooses to exercise it, and the choice depends on geopolitical context, regulatory infrastructure, and political will. China has now demonstrably made that choice, and it has done so through instruments that are designed to be deployed flexibly, escalated incrementally, and sustained over time.

The dominance itself was built deliberately. Over three decades, sustained public investment, tolerance for environmental externalities that were not priced into production costs, and explicit industrial policy targeting vertical integration produced a midstream capacity advantage that the rest of the world has only recently begun to confront. The question now is no longer how China came to occupy the position it occupies. It is how supply security can be organised in a world where that position exists and is being actively used.

The 2023 to 2025 escalation

China's critical minerals export controls.

The pattern of Chinese export restrictions over the past three years is best understood as a sequence rather than a series of isolated measures.

In July 2023, China imposed export controls on gallium and germanium, citing national security and explicitly framed as a response to US semiconductor export restrictions. Graphite controls followed in December 2023. In December 2024, Beijing announced a complete ban on exports of gallium, germanium, and antimony to the United States specifically, while imposing heightened scrutiny on graphite exports based on end-use assessment. February 2025 brought controls on tungsten, tellurium, bismuth, indium, and molybdenum, a grouping that the International Energy Agency characterised as materials primarily used in defence and high-tech applications.

The most significant escalations came in two waves during 2025. In April, China announced with immediate effect export controls on seven medium and heavy rare earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. Exporters became required to obtain individual licences from the Ministry of Commerce. In October, the second package extended controls to five additional rare earths and to refining and magnet-manufacturing equipment, with the extraterritorial reach and codified defence-end-use denials described above.

Each step has been incremental, but the trajectory is consistent. Materials with the highest strategic value, the lowest substitutability, and the greatest concentration of Chinese midstream control have moved progressively into the scope of formal export licensing. The instruments themselves have become more sophisticated, more flexible, and more targeted at Western defence industrial capacity specifically. The European Central Bank assessed during this period that over 80% of large European firms were no more than three intermediaries away from a Chinese rare earth producer. The IEA reported that rare earth prices had risen to up to six times their pre-restriction levels in some cases.

The architecture of exclusion

What the October 2025 package actually does deserves closer examination, because two of its features distinguish it from anything previously deployed.

The first is the extraterritorial dimension. The package extends Chinese export licensing to foreign-made products that have used Chinese materials or processing technology at any stage of their production. This is, in regulatory terms, unprecedented in scope. It applies Chinese law to manufacturing decisions made in jurisdictions outside China, creating compliance uncertainty for projects throughout the value chain. A magnet manufactured in Germany using Chinese-processed dysprosium becomes subject to Chinese licensing on its export to a third country. A refining facility in France using Chinese-origin processing equipment falls within scope. The reach is broad and the precedent is significant.

The second is the codified defence-end-use denial. The October package introduces categorical refusal of export licences where the end use is defence manufacturing, regardless of jurisdiction. Previous restrictions operated through licensing discretion. This formalises the denial as policy. The implication for European defence procurement, in particular, is direct: programmes that depend on Chinese-origin rare earths, magnets, or processing inputs face the prospect of formal exclusion from supply once the package activates.

Implementation has been suspended until November 2026 in the context of broader trade discussions, particularly between Beijing and Washington. That suspension does not undo the regulatory architecture. It pauses its operation. For defence and industrial planners, the operational reading is that the suspension may be extended, may be lifted, or may be partially activated, and that the underlying capacity to invoke either at short notice is now permanently in place. (As of May 2026, the October measures remain suspended, while April 2025 licensing requirements continue.)

Beyond China, the second axis

Geopolitical exposure in critical raw materials is not a single-vector problem.

In late 2024, President Putin explicitly threatened to limit Russia's export of strategic materials, naming uranium, nickel, and titanium. Russia has historically been a primary supplier of aerospace-grade titanium for European supply chains and a significant supplier of nickel and palladium. The exposure is most acute in European aerospace, where titanium supply relationships had not been substantially reorganised even after February 2022. The prospect of coordinated pressure from both Eastern suppliers, applying restrictions concurrently rather than separately, is no longer a scenario for analytical exercises. It is a live planning consideration.

A third type of geopolitical risk emerges from jurisdictions where supply concentration is geological rather than the product of industrial strategy, but where governance conditions create their own vulnerabilities. The Democratic Republic of the Congo produces over 70% of global cobalt mine supply. Mine output is largely refined in China, but the upstream concentration in a single jurisdiction with limited institutional capacity, episodes of political instability, and significant artisanal mining outside formal regulatory frameworks creates risk that operates differently from state-deployed leverage. It is no less consequential.

The combination of these three types of risk—deliberate state coercion, episodic threat, and structural governance fragility—defines the actual geopolitical surface of critical raw materials supply. No single instrument addresses all three. Policy responses calibrated to one type can leave exposure on the other two unchanged.

The limits of diversification

Diversification has become the dominant policy response on both sides of the Atlantic, and it is necessary. It is also structurally limited in ways that are not always acknowledged in the political framing.

The constraints begin with timelines. As established before, mining projects typically require 10 to 15 years from exploration to production, and the European Court of Auditors has noted that some EU projects can take up to 20 years. New processing facilities require feedstock security, technical expertise, environmental permits, and long-term demand visibility, and most of the technical expertise in CRM processing is concentrated in firms and institutions with decades of operational experience, predominantly located in China or allied Asian economies.

The constraints continue with price. Chinese pricing power, documented by the Payne Institute and others, has driven prices for lithium, cobalt, nickel, and rare earths below the thresholds required to support new capacity outside China. Current NdPr oxide pricing (as of early-mid 2026) remains challenging for many non-Chinese producers despite recent volatility and rallies. This is not a coincidence. It is the operational logic of a market dominant supplier facing the prospect of new entrants, and it explains why direct US federal price floors (the MP Materials model described before) became necessary rather than optional.

The constraints conclude with the supply available outside China. Even where diversification succeeds, the absorbable non-Chinese capacity is finite at any given moment. The Solvay rare earth processing facility that opened in France in April 2025 was a significant European industrial achievement. The fact that significant volumes of its output were earmarked to US magnet manufacturers rather than European ones, citing stronger commercial commitment, illustrates the dynamic concisely. Successful upstream diversification can, paradoxically, reinforce a different concentration rather than resolving the original one. This is the cost of competing for the same limited pool of allied processing capacity rather than allocating it jointly.

Partnerships and the critical minerals geopolitics of alignment

The recognition that complete self-sufficiency is neither feasible nor desirable has driven both the EU and the US toward formal partnership architectures organised around values alignment rather than purely commercial criteria.

The European Commission has signed 14 strategic partnerships on raw materials over the past five years, with Canada, Chile, Ukraine, Kazakhstan, Zambia, and others. The Global Gateway provides an investment vehicle. The Forum on Resource Geostrategic Engagement, launched at the Critical Minerals Ministerial on 4 February 2026 with over 50 participating countries, succeeded the Minerals Security Partnership as the principal multilateral coordination framework. Joint Action Plans with the European Commission, Japan, and Mexico were announced at the same meeting.

The architecture is in place. The honest reckoning is that operational results have lagged the institutional design. The European Court of Auditors' Special Report 04/2026 found that EU strategic partnerships have not yet produced tangible diversification outcomes: imports from partner countries fell between 2020 and 2024 for approximately half of the critical raw materials examined. Some partnerships have missing or delayed implementation roadmaps and lack concrete supply projects. Partnership is a long-cycle instrument, and its effectiveness will be visible in 2030 indicators rather than 2026 ones.

The transatlantic question

The most consequential partnership question facing both the EU and the US is the one they share with each other. The paused EU-US critical minerals agreement of 2023 to 2024 was an early casualty of transatlantic misalignment on industrial and trade policy. The Inflation Reduction Act's domestic content requirements, retained under the current Administration despite other modifications, remain a source of friction. Section 232 investigations affect European interests directly. The Solvay and Less Common Metals cases illustrate the structural risk: that scarce non-Chinese midstream capacity is contracted out of European reach before European instruments are in place to compete for it.

What allied coordination would actually require is now reasonably clear. Joint allocation of non-Chinese processing capacity rather than competitive absorption of it. Aligned price support mechanisms. Mutual recognition of strategic project designations. Shared market infrastructure including reference pricing and demand aggregation. None of these is straightforward, but none is conceptually difficult. The question is whether the political will exists, on each side of the Atlantic, to treat allied supply security as a joint problem rather than a domestic one.

The February 2026 Ministerial offered the most explicit signal yet that both sides are willing to attempt the joint version. The thirty-day commitment to a memorandum of understanding between the United States, the European Commission, and Japan is one operational test. FORGE is another. Whether they advance beyond diplomatic signalling toward concrete operational coordination on the midstream—building on subsequent EU-US MoU developments—will define what kind of geopolitical position the West occupies when November 2026 arrives.

From exposure to architecture

Critical minerals geopolitics is not resolvable through any single instrument. It is the product of structural concentration in midstream capacity, a state-level decision to exercise that concentration as leverage, exposure on a second axis to other resource-rich jurisdictions, and the limits of what diversification and partnership can deliver within feasible timeframes. The policy and regulatory frameworks examined in the previous article are responses to this geopolitical reality, but they cannot dissolve it. They can shift exposure, structure risk, and create incentives for diversification, but they operate within rather than above the geopolitical surface.

Even where the geopolitics aligns and policy architectures support diversification, the project pipeline is filtered by a further set of constraints. The next article examines environmental and social constraints, including how social licence, indigenous rights, and ESG performance increasingly determine which projects can actually be built, on what timeline, and at what cost.

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This article is part of a series accompanying AAP Consulting's CRM hub, a structured resource examining the system behind critical raw materials supply. Organisations seeking to explore how the framework applies to specific jurisdictions, materials, or projects are invited to get in touch.

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