China Tightens Grip on Rare Earth Exports, Impacting Global Supply Chains

On Thursday, China took a significant step to tighten its hold on the rare earth sector by expanding export controls, specifically targeting processing technology and unauthorized overseas collaborations. This move demonstrates China's intent to further restrict exports, particularly to foreign defense and semiconductor industries.

The Ministry of Commerce's recent announcement builds on sweeping controls initiated in April, which had led to significant global shortages before negotiations with Europe and the U.S. allowed for some shipments to resume. China, responsible for over 90% of the world's processed rare earths, understands the critical role these 17 elements play in advanced technologies like electric vehicles, aircraft engines, and military radars.

In addition to restricting technology exports for rare earth magnets, China has expanded limitations to certain magnet components and assemblies. With its leadership in rare earth technology, China now mandates that export of equipment used to recycle rare earths requires a license. The ministry has clarified that no licenses will be granted for overseas defense applications, with semiconductor-related requests assessed on a case-by-case basis. As China's rare earth shipments gradually increase, the ministry assures that licensing facilitation measures will be implemented to address accessibility concerns, while also stipulating that Chinese companies cannot engage in unauthorized foreign partnerships involving rare earths.

(With inputs from agencies.)