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Criticality and geopolitics: Weaponised supply and the policy response

Understanding Commodities / Module 8: Criticality and geopolitics Part 4 of 5

Weaponised supply and the policy response

Concentration becomes geopolitics when a supplier uses it. Oil set the template in 1973, and the consumer response, the IEA and emergency stocks, remains the best-tested defence. China's rare earth cuts in 2010 and its licensing controls since 2023 extend the pattern to minerals. Importers answer with stockpiles, subsidies and trade rules, and each answer has a cost.

4.1 The 1973 oil embargo set the template for a resource weapon and for the consumer response

On 17 October 1973, during the Arab-Israeli war, Arab oil ministers meeting in Kuwait agreed to cut production 5% below the September level and by a further 5% each month until their aims were met, while supplying friendly states in full. Within days Saudi Arabia and others halted all shipments to the United States, and the Netherlands was also embargoed. Yergin stresses why the cuts mattered more than the bans: oil can be rerouted around a ban on one country, as in 1956 and 1967, but a production cut lowers the total available.

At the worst point, in December, available Arab oil was 5 million barrels a day below early October. Other producers added 600,000 barrels a day, so the net loss was 4.4 million: about 9% of free-world supply but 14% of internationally traded oil. America's spare capacity, the West's security margin in every earlier crisis, had gone. Panic buying did the rest. An Iranian auction drew bids above US$17 a barrel, and the posted price went from US$2.90 in mid-1973 to US$5.12 in October and US$11.65 in December.

With governments unprepared, the oil companies shared the shortfall by a rule of equal suffering, diverting non-Arab oil to embargoed countries. Adjusted for growth, Japan lost 17% of supply, the United States 18% and Western Europe 16%. The embargo ended in March 1974.

The lasting response was institutional. The Washington Energy Conference of February 1974 led to an emergency sharing programme and the International Energy Agency, set up in Paris that year. Member countries that import oil must hold stocks of at least 90 days of the previous year's net imports; in mid-2019 members held about 4.5 billion barrels. Coordinated releases came in 1991, 2005 and 2011.

  • Yergin (1991), The Prize · pdf pp. 255, 1049, 1061-1064, 1073-1074, 1079-1081, 1088, 1091
  • Radetzki & Wårell (2021), A Handbook of Primary Commodities · pdf pp. 206-207, 212-213

4.2 China's 2010 rare earth cuts turned market concentration into a diplomatic instrument

China came to dominate rare earths by producing cheaply under lax environmental rules. Mountain Pass in California, which supplied about 70% of the world in the 1980s, closed in 2002 after low prices and wastewater leaks. From 2004, as its own demand grew, China discouraged exports with quotas and duties. Pitron puts the quota at 65,000 tonnes in 2005 and 50,000 by 2009, with exports of about 30,000 tonnes in 2010.

On 7 September 2010 a Chinese trawler collided with Japanese coastguard vessels near the disputed Senkaku (Diaoyu) islands, and its captain was detained. On 22 September, by Pitron's account, rare earth deliveries to Japan stopped. China denied any embargo; Humphreys dates the resumption to the end of November. Prices exploded: lanthanum oxide, about US$5,500 a tonne at the start of 2010, peaked at US$153,560 in July 2011.

The physical loss was modest: Tilton and Guzmán put the export cut at about 16% of world supply. What spread was fear, which drove stock-building, speculation and new projects. High prices made recovery from Ukrainian uranium tailings economic, adding some 3,000 tonnes in 2011, and revived mines in the US and Australia. Prices then fell back, and by 2017 Molycorp, owner of Mountain Pass, was in bankruptcy court facing Chinese-backed investors.

The legal response ran through the WTO, whose rules allow export restrictions only to relieve shortages, protect health or conserve exhaustible resources. A panel ruled against Chinese restrictions on nine other raw materials in July 2011. The US, the EU and Japan filed on rare earths, tungsten and molybdenum in March 2012. China cited environmental damage and noted that its quotas had never been fully used. The panel ruled in March 2014 that the quotas served industrial policy, not conservation, and China removed them in January 2015.

  • Humphreys (2015), The Remaking of the Mining Industry · pdf pp. 210-214
  • Scheyder (2024), The War Below · pdf pp. 104-106, 112
  • Pitron (2020), The Rare Metals War · pdf pp. 72-76, 90-91
  • Tilton & Guzmán (2016), Mineral Economics and Policy · pdf pp. 190-191
  • Radetzki & Wårell (2021), A Handbook of Primary Commodities · pdf pp. 71, 204

4.3 Since 2023, export controls have spread to gallium, germanium, graphite and antimony

China's newer controls work through licences rather than quotas. A licence requirement lets the state approve, delay or refuse each shipment by buyer and end use, a precise instrument. The USGS lists Chinese licensing for gallium, germanium and graphite (2023), antimony and magnesium materials (2024), and bismuth, indium, molybdenum, tellurium, tungsten, rare earths and battery and graphite anode technologies (2025), with silver from 2026.

The sequence escalated. Gallium and germanium licences were required from 1 August 2023, graphite from 1 December 2023 and antimony from 15 September 2024. In December 2024 China banned exports of gallium, germanium and antimony to the United States. In February 2025 it added bismuth, indium, molybdenum, tellurium and tungsten. On 4 April it controlled seven rare earth elements, including dysprosium and terbium, and on 9 October five more. After a 30 October agreement with Washington, China on 7 November suspended the October measures for a year, and on 9 November suspended the US-specific ban on gallium, germanium and antimony until 27 November 2026. Licensing and the April controls stayed.

Prices register the effect. Antimony averaged US$9.80 a pound in August 2024, when restrictions were announced, US$18.10 in December and US$27.50 in June 2025, before easing to US$20.30 in November. The USGS attributes the more than doubling of antimony, bismuth and germanium prices in 2025 to export restrictions.

Other producers use export controls to capture processing or support prices. Indonesia banned nickel ore exports in 2020 and bauxite and copper concentrate in 2023; Zimbabwe banned lithium ore in 2022. In February 2025 Congo (Kinshasa) suspended cobalt exports, citing low prices, then in October replaced the ban with quotas: 18,125 tonnes for the rest of 2025 and 96,600 tonnes a year in 2026 and 2027, including 9,600 tonnes for a state stockpile. Its mine output in 2025 was about 230,000 tonnes, on USGS estimates.

4.4 Importers answer with stockpiles, supplier choice and industrial policy, each at a cost

The oldest defence is a stockpile. After the Second World War and the Korean War the United States built stocks of some 80 commodities, worth about US$6.7 billion by 1973; the tin stock equalled a year of world consumption. Then about 90% was declared surplus, and by 2010 only 28 commodities worth US$1.4 billion remained. Radetzki and Wårell list the problems: sizing stocks for imagined wars, buying in tense markets and selling in calm ones, decay and obsolescence, and rigid release rules. The National Defense Stockpile now holds 54 commodities at 10 sites, and 2025 legislation provided US$2 billion for critical mineral stockpiling. The IEA oil stock is the success story: flexible, collective and, by an IEA estimate, worth US$3.9 trillion in avoided damage over 30 years.

The second defence is choosing suppliers. Japan and Germany long preferred long-term contracts and loans to independent producers over owning foreign mines, which were often nationalised. In the 1990s German toolmakers paid more for tungsten from Russia, Austria and Portugal rather than depend on China. Futures help little: they hedge price, not quantity, and most critical minerals trade over the counter.

The third is industrial policy. The Inflation Reduction Act of 2022 tied US electric vehicle tax credits to minerals from the United States or its free trade partners; Scheyder notes that Bolivia picked China's CATL to develop its lithium partly because it has no such agreement. In 2025 the US Department of War spent about US$1 billion on stockpiles, equity stakes and loans. The EU's Critical Raw Materials Act (Regulation 2024/1252, in force since 23 May 2024), built on the 2023 list, sets 2030 benchmarks for strategic raw materials: EU extraction of at least 10% of annual consumption, processing of 40% and recycling of 25%, with no single third country supplying more than 65%. It caps permitting for strategic projects at 27 months for mines and 15 for processing or recycling. All such efforts meet the same obstacles: US mine permits that take 7 to 10 years, against about two in Canada, and local opposition.

  • Radetzki & Wårell (2021), A Handbook of Primary Commodities · pdf pp. 205-213
  • Pitron (2020), The Rare Metals War · pdf pp. 92-93
  • USGS Mineral Commodity Summaries 2026, Significant Events, Trends, and Issues web ↗ · pdf p. 13
  • USGS Mineral Commodity Summaries 2026, U.S. Critical Minerals Update web ↗ · pdf pp. 28-29
  • Scheyder (2024), The War Below · pdf pp. 22, 28-29, 303
  • European Commission (2023), Study on the Critical Raw Materials for the EU 2023 web ↗ · pdf pp. 5-6
  • European Parliament (2024), Legislative Train: European Critical Raw Materials Act web ↗ · web
  • Humphreys (2015), The Remaking of the Mining Industry · pdf p. 209

See it in the table

U UraniumCu CopperNi NickelMo MolybdenumW TungstenSi SiliconAg SilverLi LithiumCo CobaltGr GraphiteREE Rare earthsMg MagnesiumSb AntimonyBi Bismuth

Check your understanding

Why did Yergin judge the Arab production cuts of 1973 more effective than bans on named countries?

Oil is fungible. Companies could move non-Arab oil to embargoed countries, as they had in 1956 and 1967, but no one could replace barrels that were never produced.

What did the WTO panel conclude in March 2014 about China's rare earth export quotas?

The panel found China could not use the GATT exceptions under its accession terms and, in any case, had not shown the quotas were necessary for conservation. China removed them in January 2015.

Congo (Kinshasa) set its cobalt export quota at 96,600 tonnes a year for 2026-27. Compared with 2025 mine output of about 230,000 tonnes, that is roughly:

96,600 / 230,000 is about 0.42, a deep cut in exportable supply from a country that mined about 73% of the world total in 2025 on USGS estimates.
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