America Won't Sell China Jet Engines

The Hindenburg wasn't supposed to be full of hydrogen.

The Germans designed it for helium, the gas that doesn't burn. But in the 1930s the United States had pretty much all the helium in the world, and a 1927 law banned exporting it. Washington was worried other countries would use it for military airships.

So the Germans filled the biggest aircraft ever built with hydrogen instead.

On May 6, 1937, coming in to land at Lakehurst, New Jersey, the Hindenburg caught fire and was gone in well under a minute. Thirty-six people died, 13 passengers, 22 crew and one man on the ground. The other 62 on board got out.

After the crash, Congress changed the law to allow helium exports for peaceful use, and Germany lined up a purchase for its next airship. Then Hitler annexed Austria in March 1938, and Interior Secretary Harold Ickes refused to sign off on the sale.

Germany never got its helium, and that was the end of the passenger airship.

I bring it up because this is an old story. When one country has all of something and another country's best machines can't run without it, the one holding the supply gets to make the rules.

Back then the material was helium, and today it's a rare earth most people have never heard of.

A Ceramic Coat Thinner Than a Credit Card

On Monday, in China Just Cut Japan Off Again, I told you Beijing has cut Japan's supply of a rare earth called yttrium by 98% this year. Today I want to walk you through where that metal actually goes.

Start with a jet engine.

The gas coming out of the combustor in a modern turbine can be hotter than the melting point of the metal blades spinning in it.

What keeps those blades from melting is a ceramic coat thinner than a credit card, plus cooling air blown through tiny holes in the metal.

That ceramic is zirconia. On its own, zirconia cracks as it heats and cools. Mix in about 7% yttrium oxide and it stops cracking.

NASA engineers figured that out in the 1970s, and every big jet engine and gas turbine built since has leaned on it.

Without that 7% of yttrium, the coating cracks, and the engine's done.

Last December, the CEO of GE Vernova, which makes the gas turbines that power plants and now data centers run on, told investors the company had enough yttrium on hand to last "into next year." He also said it was working with the U.S. government to get more.

This summer, an engineer at Oerlikon Metco, which makes those coatings for engine builders, told IEEE Spectrum the on-again, off-again supply had "thrown us upside down."

And last month the Financial Times reported that U.S. officials have told Beijing they won't export the engines China's new C919 airliner needs.

The reason, according to the FT, is that the yttrium shortage has limited how many engines the U.S. can make.

The United States, with all its money, is holding back jet-engine exports over a white powder that costs $9 a kilo on the other side of the Pacific.

The Powder on the Walls of Every Chip Factory

Now take a chip.

Circuits get etched into silicon wafers with plasma, a superheated gas that eats almost anything it touches, including the walls of the chamber it's made in.

The chambers get lined with yttrium oxide, one of the few materials the plasma won't chew through, and most of the world's advanced chips pass through one.

The list goes on from there. Yttrium-iron garnet filters tune radar and electronic-warfare systems. The tiny ceramic capacitors that go into phones and servers by the hundreds use it. So does the crystal inside YAG lasers.

And a radioactive form of it, yttrium-90, gets loaded into glass beads smaller than the width of a hair and injected into the artery feeding a liver tumor.

None of these uses needs much yttrium, but none of them works without it.

Why Nobody Just Opens a Yttrium Mine

Which raises the obvious question. If the stuff costs 130 times more outside China, why doesn't somebody over here just dig it up?

Because there's no such thing as a yttrium mine. Yttrium comes out as a byproduct of separating the heavy rare earths from ores that also carry thorium and uranium.

Both are radioactive.

Processing them means handling radioactive waste at industrial scale, year after year, and Western countries have spent decades making those permits close to impossible to get.

China did the opposite. It built the plants, lived with the mess, and locked up the ore. The Stimson Center estimates that Myanmar supplied at least 60% of China's rare-earth imports from 2017 to 2024.

A lot of that is heavy-rare-earth clay dug out of Kachin State, in the middle of a civil war, and trucked across the border.

So when a Western company says it'll produce yttrium, what it's really promising is a heavy-rare-earth separation plant, a license to handle the radioactive leftovers, and ore to feed it.

The first projects outside China with both a date and the money behind them are pointing at 2027 and 2028.

Until then, the price is whatever China says it is, on both sides of the border.

The Pentagon Asked for It by Name

Earlier this year, the Pentagon asked its suppliers for new sources of 13 critical minerals, with $100 million to more than $500 million on offer per project.

Yttrium was on the list, along with samarium, gadolinium and tungsten.

In February, the administration had already launched a $12 billion critical-minerals stockpile backed by the Export-Import Bank.

Whatever happened at the polls yesterday, or is still being counted this morning, it doesn't change where yttrium comes from. The plants take years, the permits take longer, and China has both.

One Move: Search for Two Words

Here's your one move this week, and it takes about ten minutes.

Pick a manufacturer you own. An aerospace company, a chipmaker, a carmaker, anyone who builds physical things.

Pull up its latest annual report (the 10-K, free on the company's investor page or at sec.gov) and search for the phrase "sole source" or "single source."

Companies have to disclose, in the risk section, when they depend on one supplier for something they can't easily replace. Count how many times the phrase shows up, and read the sentences around it.

Then do the same for a competitor.

You won't find the word yttrium. What you will find is how many places that business is at the mercy of one supplier. If it were me, I'd rather own the one with the shorter list.

On Friday I'll go through who's actually building yttrium supply outside China, and sort out the ones with a date and money behind them from the ones with a press release.

Then next week, Premium Members get where I'd put money.

Two Kinds of Readers

If you've read this far, you're probably one of two kinds of readers.

The first kind wants to understand what's going on, and these essays are for you. They'll always stay free.

The second kind wants to do something about it, and that's what Premium is for.

Here's the difference, in one trade we closed a month ago. In April 2025, in the middle of the tariff crash, we told Premium Members to buy a shipping company at $4.03. It doubled this past April and we pulled our original stake out, and on October 2 we sold the rest at $10.10.

Every $1,000 that followed that recommendation came back as about $2,520, dividends included.

You didn't need to understand tanker rates to collect that. You needed the name and the price, and somebody telling you when to sell. And that was one trade out of fourteen.

14 closed trades since Premium launched. 14 winners. Average gain 83.5%, against 37.75% for the S&P 500 over the same periods.

You're reading about that shipping trade a month after we sold it. Premium Members got the buy alert at $4.03.

Today's Premium section is the same kind of thing. I go through our two rare-earth positions and tell you exactly what I'm doing with each one.

And next week's alert, the one with the new name in it, goes to Premium Members only.

Premium is $35 a month or go for yearly for a discount. If that's the kind of reader you are, it's all below.

Double D

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