Auto sector seeks government action on China rare earth magnet imports
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The automobile industry has sought government support in expediting approvals from the Chinese government for importing rare earth magnets used in various applications, including passenger cars.As per the industry sources, various domestic suppliers have already sought approval from the Chinese government through their local vendors in China.However, no approvals have been granted so far, sources said. China controls over 90 per cent of global processing capacity for the magnets, used across multiple sectors including automobiles, home appliances and clean energy.The Chinese government has put restrictions, with effect from April 4, mandating special export licences for seven rare earth elements and related magnets.
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Time of India
29 minutes ago
- Time of India
Explained: China's monopoly on rare earth minerals spooking the world; what does it mean for India & what is it doing?
China's firm grip on rare earths, essential components in the production of phones, automobiles and missiles, is giving a headache to countries world over, including India. (AI image) China's firm grip and worldwide monopoly on rare earth metals, essential components in the production of phones, automobiles and missiles, is giving a headache to countries world over, including India. Despite mounting pressure from countries including the US, EU and India, China remains steadfast in its stance regarding export limitations of these critical rare earths. Recent reports have highlighted increasing worries within the Indian automotive sector regarding the limited availability of rare earth magnets. These components are essential for electric vehicles and certain parts in conventional internal combustion engine vehicles. Furthermore, India's industrial sectors have expressed apprehension over China's decision to restrict rare earth exports, particularly germanium. This plays a vital role in the production of semiconductors, fibre optic cables and solar panels. Critical minerals and metals, including cobalt, copper, lithium, nickel and rare earth elements, are fundamental components in manufacturing environmentally friendly energy solutions, from wind power installations to battery-powered automobiles. What's China's hold on rare earths? China has established control over critical mineral deposits worldwide. Rare earth minerals comprise a collection of 17 metallic elements. While these elements are found across various countries, extracting them is expensive and environmentally damaging, resulting in substantial pollution. The International Energy Agency reports that whilst China produces 61 % of globally mined rare earths, it dominates 92% of worldwide production output. Following Premier Li Qiang's decree implementing export controls on rare earths, China has reportedly intensified these restrictions after US President Donald Trump levied 146% tariffs on Chinese exports. Recently Trump said that Chinese President Xi Jinping has allowed some rare earths to flow to the US. In a recent column in TOI, Tanmay Kumarr Baid & Pranay Kotasthane of Takshashila Institution argued that by restricting shipments, Beijing is lifting prices worldwide and incentivising countries to set up processing elsewhere. 'Once the capital is sunk into new refining in the rest of the world, even a later U‑turn by China cannot quickly claw these customers back,' they said. However, experts Ajit Ranade and Shardul Manurkar believe that China's rare-earth dominance is not a fragile or accidental monopoly, it is a product of deep, deliberate, and sustained strategy. 'Attempts to counter this dominance must acknowledge the scale of the challenge,' they say. Also Read | Move away from China: Shein & Reliance aim selling 'Made in India' clothes abroad; to list India-made clothes on US, UK websites How much does it impact India? The Indian automobile sector continues to face challenges as China maintains restrictions on critical rare earth magnet supplies, even though nine parts manufacturers received endorsements for their import requests from the Chinese embassy. The flow of supplies remains halted, pending approval from China's commerce ministry. These magnets play a crucial role in the production of electric vehicles and are essential for various automotive components, including gear mechanisms and drive trains. The Society of Indian Automobile Manufacturers delivered a presentation to Indian government officials on May 28, urging immediate dialogue between India and China to expedite stalled approvals and simplify the complex procedures. The automotive industry body emphasised the need for bilateral discussions to address these regulatory challenges, according to a Bloomberg report. Saurabh Agarwal, Partner & Automotive Tax Leader, EY India says, 'The recent actions by China have significantly disrupted global supply chains, particularly through their increasing export control over critical commodities. This underscores the urgent need for India, and indeed any nation, to foster a self-sustaining economy. We must prioritize developing our own critical mineral resources and building an end-to-end domestic supply chain, especially as the world shifts towards greater self-reliance. ' 'Given the current trajectory of our growing economy, it's imperative that the government introduces a Production-Linked Incentive (PLI) scheme specifically for rare earth magnets and critical mineral recycling. This will be crucial in the mid-term for establishing a robust domestic supply chain,' he tells TOI. 'In the short run, we must leverage our diplomatic channels to engage with the Chinese government and resolve the immediate challenges around export control licenses. This is essential to prevent production stoppages in our industries,' he adds. Also Read | 'No longer any question..': Donald Trump says China's Xi Jinping has agreed to let rare earth minerals flow to US; sign of thawing tensions What India is doing India is currently negotiating with China regarding the procurement of permanent magnets made from rare earth minerals, whilst simultaneously exploring alternative supply channels for these vital components, according to commerce and industry minister Piyush Goyal. The minister confirmed that the administration maintains regular communication with domestic industry stakeholders to accelerate the development of indigenous sources. "There is a concern... our embassy is in dialogue with them (China)... commerce and industry ministry is also working," Goyal said, adding that the government had already begun work on developing alternate sources. The minister addressed concerns regarding China's halt on permanent magnet exports to India, acknowledging its impact on the automotive sector, white goods and other industries. He mentioned that whilst some companies have submitted applications, they anticipate favourable responses for permanent magnet approvals. Additionally, the government is collaborating with Indian Rare Earths Ltd to accelerate domestic resource development, Goyal stated. When questioned about potential production-linked incentive schemes for magnets, Goyal confirmed discussions with the automotive industry and expressed confidence in finding a solution. He noted that ongoing dialogues with innovators and startups indicate their willingness to support funding requirements and price adjustments necessary to stimulate sector growth and expansion. Also Read | Economy in dire straits, India's Indus Waters Treaty blow: Can Pakistan avoid the 'begging bowl'? Regarding alternative solutions, the minister highlighted potential technological developments within India. Goyal emphasised the collaborative efforts between government, industry, startups and innovators. He acknowledged possible short-term challenges but expressed confidence in achieving success over medium to long-term periods. Goyal recently said that the world must acknowledge the dangers of critical minerals and their supply chains being concentrated in a few geographies, as this concentration could impede economic progress of countries. He said that India has initiated measures, including support for startups conducting research and development, to discover innovative and alternative solutions, he noted. This will help reduce "our over dependence and over reliance on certain critical minerals," Goyal said. Critical minerals like copper, lithium, nickel, cobalt and rare earth elements play a vital role in advancing clean energy technologies. These critical minerals are fundamental components in the manufacturing of wind turbines, electricity networks, electric vehicles and batteries. As countries worldwide accelerate their shift towards clean energy, the requirement for these essential minerals continues to rise. The government's initiative for recycling critical minerals, including copper, lithium, nickel, cobalt and rare earth elements, is approaching its conclusive phase, according to a mines ministry official's statement. The National Critical Mineral Mission (NCMM) has received Rs 1,500 crore in the Union budget for recycling critical minerals, Dinesh Mahur, Joint Secretary in the Mines Ministry has said. The government's earlier approval of the National Critical Mineral Mission, with a budget of Rs 16,300-crore and a total allocation of Rs 34,300 crore distributed across seven years, aims to boost self-sufficiency and expedite India's shift towards green energy. The mission, which seeks to encourage exploration of critical minerals domestically and in offshore regions, anticipates a substantial contribution of Rs 18,000 crore from public sector enterprises. The primary aims of this initiative include enhancing exploration activities, lessening dependence on imports, securing mineral deposits abroad, advancing processing technologies for these crucial minerals and establishing recycling mechanisms. Stay informed with the latest business news, updates on bank holidays and public holidays . 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Time of India
33 minutes ago
- Time of India
Rare earths are not rare: Chinese move can backfire
The myth of rarity of rare earths Live Events How China monopolised rare earths You Might Also Like: Why rare earths are the new battleground in US-China trade war China's rare earths move can backfire You Might Also Like: Urgency grows in Motown India as rare earth deadlock deepens, call goes out to govt for help (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel China's recent export controls on six rare earth elements (REEs) and rare earth magnets has sent the world in a tizzy. These products are used for several applications ranging from cleantech to weapons. The electric vehicle industry is hardest hit, giving out stress signals that many factories can even shut down if China doesn't loosen the curbs. The global supply chain for these elements is heavily dependent on China, which currently accounts for about 70 per cent of the world's mined REEs and roughly 90 percent of refined production. China also produces nearly 90 per cent of the world's rare earth magnets used in these curbs are not a complete ban on exports for the auto sector, companies must now seek prior government approval before shipping these materials out of China. This adds uncertainty and delay in the supply strategic use of rare earths as an economic weapon may offer short-term leverage, but it can run into risks in the long run. China may be controlling the present of rare earths, but it may not control their term 'rare earth elements' (REEs) is a misnomer. Comprising 17 metallic elements—including neodymium, dysprosium, and praseodymium—these materials are relatively abundant in the Earth's crust. Cerium, for example, is more common than copper. What makes them 'rare' is the difficulty in finding them in economically viable concentrations and the even greater challenge of separating them from each other, as they tend to occur in deposits are spread across the globe—from Australia and the U.S. to India, Brazil, and parts of Africa. Yet, almost all of global rare earth refining still happens in China. This isn't due to a lack of resources elsewhere; it's the result of decades of strategic policy decisions by Beijing and complacency from the rest of the dominance in the rare earth industry is not geological -- it is geopolitical. Beginning in the 1980s and accelerating through the 1990s, China deliberately cultivated rare earth mining and refining as a strategic industry. It offered subsidies, low-cost loans and lax environmental regulations, allowing it to undercut Western producers who were burdened by stricter standards and higher the early 2000s, China had effectively driven many competitors out of business. The Mountain Pass mine in California, once the world's leading rare earth producer, was shuttered in 2002 due to both economic and environmental pressures. This left China not only as the dominant supplier of rare earth elements but also as the global refinery for turning them into usable materials for magnets, batteries, and effect, China monopolized the middle and downstream segments of the value chain—where the true economic and strategic value lies. Refining and processing, not mining, is where pricing power, technological influence, and geopolitical leverage are many countries have rare earths deposits as well as the capability to refine them, China's gambling on a rare leverage it has on the world. It can use it sparingly and then step back but a hard stance will only cost it dearly. By restricting rare earth exports, China aims to pressure foreign industries and governments, especially those pushing back against its strategic and technological ambitions. This tactic, however, is not without this weaponization creates powerful incentives for other countries to invest in their own rare earth infrastructure. The US, Europe, Japan, Australia and India have already begun allocating significant resources to rebuild rare earth supply chains. Australia's Lynas Rare Earths has ramped up production, and the US government has designated rare earths as critical minerals, channeling funding toward domestic refining is expediting steps to boost domestic availability of critical minerals. Changes to the Mines and Minerals (Development and Regulation) Act are being fast-tracked. Besides regulatory tweaks, the centre is also expecting commercially viable domestic production of rare earth permanent magnets in small quantities later this year. After the fourth meeting of the India-Central Asia Dialogue held in New Delhi last week, India and five central Asian countries have expressed interest in joint exploration of rare earths and critical is also working on alternate sources for magnets derived from rare earth minerals , commerce and industry minister Piyush Goyal said while speaking to reporters in Germany a few days ago. "In a way, it's a wake-up call for all those who have become over-reliant on certain geographies. It's a wake-up call for the whole world that you need trusted partners in your supply chain,' the minister said. On alternative sources, the minister said these could also be some technologies that India is developing. "The government, the industry and startups and innovators are all working as a team and we are confident that there may be a problem in the short run but we will emerge winners in the mid to long runs," he move will surely accelerate innovation in material science. Companies are increasingly investing in rare-earth-free alternatives, such as ferrite magnets or advanced electric motor designs that reduce or eliminate the need for REEs. Long-term, this could shrink global dependence on rare earths altogether, diminishing China's other countries begin producing their own rare earths and developed technology to produce magnets as well as alternatives, China will start losing export markets and also its leverage on other countries. Much of its rare earth industry is export-oriented, particularly in the high-value-added processing and magnet manufacturing sectors. As buyers diversify or localize supply chains, Chinese producers could find themselves facing overcapacity and declining global current disruption may well be a turning point. What is happening is not just a scramble for resources, but a deeper strategic pivot. Countries are beginning to view rare earths not as a commodity, but as a national security asset. Governments are deploying industrial policy, economic incentives and international cooperation to ensure secure and sustainable the short term, China's dominance in refining will continue to cause pain for sectors dependent on these inputs such as electric vehicles. But in the medium to long term, the very act of leveraging this dominance could cause its erosion. Chinese rare earth monopoly will fracture under the weight of its own power play. It's possible that China soon eases export curbs since it knows the risk of overplaying its hand. But the world has realised China's intent to weaponize critical supply chains and it will keep trying to break its China dependence.
Time of India
an hour ago
- Time of India
Chinese beauty brands explore foreign M&A to spur growth
Some of China's top beauty brands such as Proya and S'Young are exploring acquisitions of smaller foreign rivals to expand their portfolios and replicate the success of global leaders like L'Oreal or Estee Lauder amid slowing growth at home. While still relatively unknown internationally, these Chinese brands have found significant domestic success, even capturing market share from global players. But a prolonged property crisis and concerns about wage growth and employment security have dampened consumer spending in China - posing new challenges to their continued growth. Proya Cosmetics ' founder, Hou Juncheng, said last month that the company's 10-year plan aims to position the firm among the top ten globally, a goal that would require an annual revenue of at least 50 billion yuan ($7 billion). To do so, the Hangzhou-based Proya plans "to acquire some European brands with history and technology", local media reports cited Hou as telling shareholders at a meeting. Proya, which specialises in science-backed skincare at mass market price points, became the first Chinese beauty player to surpass 10 billion yuan in annual revenue in 2024. In comparison, Japan's Shiseido, currently ranked tenth globally, raked in $6.9 billion and market leader L'Oreal generated over $45 billion in revenue last year. S'Young and Ushopal , two prominent Chinese beauty groups, have already made strides in international acquisitions. S'Young owns French skincare brand Evidens de Beaute and U.S.-brand ReVive, while Ushopal added French brand Payot to a portfolio that includes British skincare label ARgENTUM and French fragrance Juliette has a gun. William Lau, a partner at Ushopal, said the company plans to acquire one to two new brands annually. Analysts say buying foreign brands can help Chinese beauty firms diversify revenue streams and reduce reliance on the domestic market, but they also note that some similar efforts by Chinese fashion groups had missed expectations in the past. The beauty and personal care market is projected to generate a revenue of $677.19 billion globally in 2025, versus $41.78 billion in China, German data provider Statista estimates. Chinese brands are likely to target premium-positioned European skincare, fragrance or haircare brands with valuations under $500 million, said Gregoire Grandchamp, co-founder of Next Beauty China, who has advised Chinese groups on global deals. "In coming years, there will be a big Chinese company that will be the Chinese L'Oreal, Estee Lauder, Shiseido, or Amorepacific," Grandchamp predicted. Global M&A 'Very Difficult' Acquisitions have long been a growth strategy for beauty giants. L'Oreal's $2.5 billion purchase of Australian brand Aesop in 2023 added a premium, natural cosmetics brand to its portfolio, while Estee Lauder's $2.8 billion acquisition of Tom Ford in 2022 helped boost its array of high-end perfumes. Chinese beauty brands aim to borrow from this M&A playbook, but there are concerns about their ability to operate brands outside their home turf. In the fashion space, state-owned textile giant Ruyi once made headlines for snapping up foreign brands and touting its ambition to become "China's LVMH" only to see those international deals unwound by creditors in a few short years. But Ushopal's Lau says these challenges are not unique to Chinese groups, citing examples like Shiseido's buyout of Drunk Elephant to L'Oreal's purchase of some Chinese brands that struggled to meet expectations. "Global acquisitions are very difficult" in general and part of the problem is that companies often try to localise brands too quickly after a deal, he said. "One of the reasons you buy a brand is because it's an amazing brand, so if you then redo the entire DNA of the brand, what's the point of buying it?" he added. Mark Tanner, founder and managing director of Shanghai-based marketing and research agency China Skinny, said: "Opening doors to the Chinese market and capital injections, rather than a wholesale management takeover" are more likely to succeed.
