Export restrictions are meant to create leverage. They can also create incentives for customers to leave.

China’s recent controls on critical materials and processed minerals illustrate the tradeoff. China has used export licenses and restrictions across a range of materials important to semiconductors, magnets, batteries, defense systems, and advanced manufacturing. The measures can create immediate pressure on customers that depend on Chinese processing capacity.

They can also speed up the response China is trying to prevent. Customers begin qualifying substitutes, looking for new suppliers, redesigning products, and funding processing capacity outside China.

Japan is already seeing the effects. Shipments from China of seven categories of controlled rare earth materials fell 51 percent year over year in the first half of 2026, according to Chinese customs data reported by Nikkei. The decline was larger than the reduction in China’s overall rare earth exports. Other data points to even sharper declines in some heavy rare earth imports. 

The United States is now using a similar toolset from the other side.

Washington has tightened controls on exports of advanced AI chips to China. In May, the Commerce Department clarified that export license requirements for advanced chips apply to Chinese-headquartered companies operating through overseas subsidiaries. The guidance was intended to close a route through which Chinese firms could buy controlled chips outside mainland China.

The United States has also moved to restrict exports of recoverable critical minerals and materials in scrap, end-of-life products, and industrial waste. A July 2026 Presidential Determination under the Defense Production Act gives the Commerce Department authority to limit exports of materials such as black mass from batteries, end-of-life rare earth magnets, manufacturing swarf, and other scrap containing critical minerals.

The logic is familiar. Keep strategic assets at home. Deny a rival access. Build domestic resilience.

But restrictions alone do not create capacity.

The United States still faces a major gap in recycling, separation, refining, and conversion of recovered materials into usable feedstocks. It is possible to retain black mass, magnets, and other scrap within the country while still lacking sufficient domestic capacity to recover, separate, refine, and return those materials to manufacturers at commercial scale.

Mining is important. Recycling is important. But refining and processing remain the bottleneck.

A country cannot build a resilient supply chain simply by preventing material from leaving its borders. It also needs the ability to identify what is in the material, determine whether recovery is economical, process it to the required grade, qualify it for use, and redeploy it into domestic manufacturing.

This is where resource nationalism can become self-defeating. If material is retained but cannot be converted into usable inputs, companies may face higher inventory costs, more waste, limited buyer options, and continued dependence on foreign processing. The strategic value remains trapped in the scrap stream.

The better question is not whether a country should restrict exports. It is whether it has built the capability needed to make those restrictions effective.

What Is Missing

The critical-materials sector needs better intelligence across products, manufacturing, recycling, and supply chains.

Companies and governments need to know:

• What materials are embedded in products, manufacturing scrap, end-of-life equipment, and waste streams.
• Where those materials are located and in what form.
• Which materials can be recovered economically.
• Which recovery, separation, refining, and processing pathways are viable.
• Which substitutes can be qualified before a supply disruption occurs.
• Which suppliers, geographies, facilities, and applications are exposed.

This is not only a data problem. It is a decision problem.

A manufacturer deciding whether to redesign a component, qualify a substitute, retain a scrap stream, or change suppliers needs more than a list of critical minerals. It needs evidence on composition, process capability, cost, availability, lead time, qualification requirements, and geopolitical exposure.

What Xtrium Is Focused On

Xtrium is focused on the information gap between a material in a product or waste stream and its next useful application.

That includes understanding material composition, recovery pathways, processing options, alternative materials, supplier networks, and geographic risk. The goal is to help organizations make better decisions before a restriction, supply disruption, or qualification deadline forces a reactive response.

Resource nationalism cuts both ways. It rewards countries and companies that build real processing capability, not just those that impose restrictions.

A resilient critical-materials ecosystem depends on the ability to see, value, recover, process, and redeploy materials before they become someone else’s strategic advantage.