A Chinese trawler collided with two Japanese coast guard vessels near the Senkaku Islands on September 7, 2010. The Japanese coast guard arrested the captain. By September 21, rare earth shipments from China to Japan had stopped moving through Chinese ports. The Chinese government denied an embargo. The Japanese Ministry of Finance survey showed the shipments had stopped anyway. That is the precedent every 2026 critical minerals pitch rests on, and it is worth pulling apart because the version that lives on landing pages compresses it to a sentence.
The 2010 Japan Embargo
China produced roughly 97 percent of the world’s rare earth elements in 2010. Half of those exports went to Japan, which used them in hybrid cars, wind turbines, and guided missiles. In July 2010, two months before the trawler collision, China’s Ministry of Commerce announced a 40 percent cut to its global rare earth export quota for the second half of the year. That was the underlying supply tightening.
After the collision and the arrest, the export machinery stopped. Japanese importers reported that shipments of rare earth elements had stalled at Chinese ports since around September 21, held up by increased paperwork and inspections. Chinese customs officials were halting shipments, industry executives told reporters at the time. A Commerce Ministry spokesman said China had not issued any measures intended to restrict rare earth exports to Japan and called the reports unfounded. The denial and the stalled shipments happened at the same time.
The price response was immediate. Cerium oxide went from $4.70 per kilogram in April 2010 to $36 per kilogram by October. Global rare earth prices quadrupled. Japan’s response was structural. The government surveyed its importers, pushed domestic recycling, partnered with Mongolia to develop new mines, and Japanese companies set up processing factories in Vietnam. The lesson the episode taught was that a single supplier with 97 percent of production could interrupt a supply chain by slowing paperwork at customs — and the effect was real.
China’s Current Dominance
The geographic concentration has tightened, not loosened, since 2010. The International Energy Agency’s Global Critical Minerals Outlook 2026 puts the average share of the top refining country at roughly 72 percent in 2025, up from 70 percent in 2023. For rare earths, China’s share of refining was over 90 percent in 2023 and dropped to roughly 85 percent in 2025 after new projects in the United States and Malaysia came online. The IEA projects that share could fall to 70 percent by 2035 if every announced project materializes on schedule.
For manganese, nickel, and graphite, virtually all supply growth between 2023 and 2025 came from the dominant supplier. For graphite anode material, the chokepoint is narrower than the mine share. China accounts for virtually all growth in battery-grade synthetic graphite anode production. The processing step is where the dependency lives, not the mining step.
The 2025 export controls were the second time China used that position. On April 4, 2025, the Chinese government introduced export licensing on seven heavy rare earth elements. Export volumes dropped sharply in April and May. Automakers in the United States, Europe, and beyond struggled to source permanent magnets. Some were forced to reduce utilization rates or temporarily shut down production lines. In October 2025, China expanded the controls to cover internationally-made products containing rare earths sourced from China or produced using Chinese technologies. The expanded measures were suspended until November 2026. The IEA estimates that full implementation could put roughly $6.5 trillion per year of downstream production outside China at risk across automotive, high-tech, defense, and energy sectors.
U.S. Vulnerability
The U.S. Department of Energy added nickel, cobalt, copper, and manganese to its critical minerals list in 2022. The 2025 update kept them there. Those four metals are the same four that sit in a polymetallic nodule on the Clarion-Clipperton Zone seafloor. The dependency that the list documents and the deposit that the Hidden American Inheritance pitch points to are the same four metals.
Defense is where the dependency turns into a national security argument. The defense sector runs on cobalt for high-temperature aerospace alloys, tungsten for armor-piercing rounds, rare earths for permanent magnets in guided munitions and fighter motors, and titanium for airframes. The IEA’s 2026 risk framework ranks gallium, magnet rare earths, yttrium, graphite, tungsten, tellurium, cobalt, and germanium among the minerals most exposed to disruption, scored on supply concentration, substitution potential, and strategic application. Most are refined in China. Most are already under some form of export restriction.
The tech sector runs on the same metals. Semiconductor manufacturing uses gallium and germanium. AI data centers use copper for the cabling and rare earths for the cooling fans and power conditioning. EV batteries use nickel, cobalt, and graphite anodes. The U.S. has the demand and the refining is the gap.
The U.S. Response
The policy response has three layers. The Defense Production Act has been invoked multiple times since 2022 to fund domestic processing capacity for critical minerals. The CHIPS Act directed funding toward semiconductor manufacturing, which pulled demand for gallium and germanium into the policy frame. The Inflation Reduction Act tied EV tax credits to critical mineral sourcing, requiring an increasing percentage of battery minerals to come from the U.S. or free-trade partners. The April 2025 executive order on offshore critical minerals opened a fourth pathway, accelerating seabed mining permitting under the Deep Seabed Hard Mineral Resources Act. The Trump seabed mining executive order piece walks through that policy architecture in detail.
The U.S. Strategic Petroleum Reserve has a critical minerals analog. The executive order directed agencies to assess a roughly $12 billion critical minerals stockpile. The framework for the stockpile exists on paper. The stockpile itself does not exist at scale. The Department of Defense maintains limited strategic inventories of specific materials under the National Defense Stockpile program, but the critical minerals stockpile contemplated by the 2025 order is a different order of magnitude.
Seabed Mining as the Alternative Supply Chain
Seabed mining is the supply-chain answer the 2026 pitches are built on, and the question of whether it actually answers the dependency is what separates the thesis from the headline. The Clarion-Clipperton Zone holds an estimated hundreds of millions of tonnes of polymetallic nodules containing nickel, copper, cobalt, and manganese. A nodule does not have to be separated from rock the way a terrestrial ore body does. The collection problem is a vacuum problem, not a smelting problem.
The chokepoint that the 2010 embargo exploited was refining capacity, not mining capacity. Japan in 2010 had no domestic rare earth refining. The world in 2026 has limited non-Chinese refining for most critical minerals. The IEA notes that outside China, only a handful of suppliers provide battery-grade graphite and rare earth processing equipment, often with significantly higher costs and long lead times. The bottleneck is the refinery.
A U.S. seabed mining operation that lifts nodules from the Clarion-Clipperton Zone but ships them to a Chinese refinery for processing has reproduced the 2010 dependency at a different point in the chain. Glomar Minerals and Cobalt Blue Holdings announced plans in early 2026 to build a U.S. refinery for nodule processing, targeting commercial production before 2029. The refinery is the actual strategic asset and the nodules are the feedstock. The pitch that points only at the seafloor is pointing at half the supply chain.
For a fuller picture of the deposit and the companies working it, the polymetallic nodules investment guide walks through the geology, the technology, and the regulatory landscape. The U.S. Extended Continental Shelf explainer covers the sovereignty claim that overlaps with the Clarion-Clipperton Zone. For the broader critical minerals investment thesis, the critical minerals stocks 2026 piece maps the field.
Where This Leaves the Dependency
The 2010 embargo is the precedent. The 2025 export controls are the current instance. The dependency runs through refining, not mining, and the seafloor is the proposed answer to a problem that the proposed answer does not yet solve. The refinery is the bottleneck the pitch does not usually mention, and it is the piece of the supply chain that has to be built before the deposit stops being theoretical. A reader arriving from a 2026 critical minerals pitch sees a national security argument, and the argument has real force, and the force runs all the way through the supply chain until it hits the processing step that the pitch does not usually mention. The dependency is real, and the alternative supply chain is the work that has not been done.
See the guides index for more publisher and thesis explainers.