China has expanded its export restrictions on critical materials by banning shipments to 14 European companies, escalating tensions amid ongoing geopolitical disputes. The Chinese Ministry of Commerce announced the move on Friday, targeting firms involved in processing “dual-use” materials—products that have both civilian and military applications. This action follows a similar ban imposed last month on two American companies essential to the U.S. supply chain for rare-earth magnets.

The European companies affected specialize in transforming rare-earth metals and other minerals, such as antimony and tungsten, into alloys and specialty chemicals critical for manufacturing advanced products like rare-earth magnets, semiconductors, electric motors, and various high-tech equipment. These materials are widely used in sectors including automotive, offshore wind energy, robotics, drones, and defense.

China’s decision came a day after the European Union sanctioned 14 companies based in mainland China and Hong Kong due to their alleged involvement in supporting Russia’s military-industrial complex or facilitating the evasion of EU sanctions related to Russia’s war effort in Ukraine. The EU’s list also included Russian firms and companies from other regions.

Among the European firms targeted by China is Rheinmetall, Germany’s largest defense contractor, which has been a key player in the country’s efforts to bolster its military capabilities following Russia’s full-scale invasion of Ukraine in 2022. Military hardware production relies heavily on materials like tungsten and rare earths, which are now harder to obtain due to China’s export controls.

China has maintained a dominant position in the rare-earth metals market, controlling much of the global output and processing capacity. Since late 2024, Beijing has applied export restrictions on a range of critical minerals, including tungsten, antimony, gallium, and germanium. Additional curbs on seven rare-earth elements were introduced in April last year, with plans to restrict five more later this year.

The European Union and the United States have been prioritizing the development of domestic mining operations and refining capabilities to reduce reliance on China. However, advanced processing of rare-earth metals remains largely concentrated in Chinese facilities, posing challenges for Western industries.

Some targeted companies are small or medium-sized enterprises that possess scarce technical expertise outside China. Sindlhauser Materials, a German firm producing yttrium alloys used in advanced semiconductors, was among those listed. Yttrium and samarium, rare-earth elements crucial to semiconductor manufacturing, have seen sharp price increases following Chinese export restrictions. Sindlhauser did not comment on the ban.

Italy’s Lafert Group, a leading manufacturer of custom electric motors powered by rare-earth magnets and an important supplier to European industrial automation, was also affected. While China has tightened exports of rare earths and magnets, it continues to allow the shipment of fully assembled electric motors containing these magnets, a policy that encourages multinational companies to maintain or increase supply chains within China.

Neither Rheinmetall nor Lafert responded to requests for comment on the export restriction. The European Union Chamber of Commerce in China has previously criticized China’s broad interpretation of “dual-use” designations related to critical minerals, arguing that these measures unnecessarily restrict trade and complicate supply chains for European companies.