Key points
- Export controls cover all countries, not just US
- Rare earth magnets covered by export controls
- Manufacturers scrambling for access outside China
- China’s move seen as opening salvo in US trade spat
ISLAMABAD: In response to China’s curb on exports of rare-earth minerals and high-performance magnets, prospective buyers are urgently seeking alternatives.
These export controls cover all countries, not just the US, which has locked horns with global manufacturing giant China over retaliatory tariffs.
Responding to tariffs imposed by Washington, China earlier this month began ordering restrictions on the exports of seven rare earth minerals – most of which are known as “heavy” rare earths, which are crucial to the defence sector.
According to BBC, these are less common and are harder to process than “light” rare earths, which also makes them more valuable.
From 4 April, all companies now have to get special export licences in order to send rare earths and magnets out of the country.
“Dual-use products”
That is because, as a signatory to the International Treaty on the Non-Proliferation of Nuclear Weapons, China has the ability to control the trade of “dual-use products”.
According to the Centre for Strategic and International Studies (CSIS), this leaves the US particularly vulnerable, as there is no capacity outside China to process heavy rare.
China produces around 90 per cent of the world’s rare earths, a group of 17 elements used across the defence, electric vehicle, energy and electronics industries, according to Reuters.
The United States has only one rare-earth mine and most of its supply comes from China.
Potential consequences
According to a report from the Financial Times, China’s recent export controls on rare earth materials could lead to automotive production shutdowns, as inventories of essential magnets could be depleted within months if Beijing fully halts exports.
The restrictions announced by China on April 4 cover seven rare earth elements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—as well as related products such as permanent magnets.
A US Geological report notes that between 2020 and 2023, the US relied on China for 70 per cent of its imports of all rare earth compounds and metals.
This means that the new restrictions have the ability to hit the US hard, BBC reported.
Military use
Heavy rare earths are used in many military fields such as missiles, radar, and permanent magnets.
A CSIS report notes that defence technologies, including F-35 jets, Tomahawk missiles and Predator unmanned aerial vehicles, all depend on these minerals.
It adds that this comes as China “expands its munitions production and acquires advanced weapons systems and equipment at a pace five to six times faster than the United States”.
