Diplomats, automakers push Beijing to loosen rare earth magnet export restrictions

Reuters

2 days ago

BEIJING/NEW DELHI, June 3 (Reuters) - Diplomats, automakers and other executives from India, Japan and Europe were urgently seeking meetings with Beijing officials to push for faster approval of rare earth magnet exports, sources said, as shortages threatened to halt global supply chains.
A business delegation from Japan will visit Beijing in early June to meet the Ministry of Commerce over the curbs, according to a source familiar with the visit. European diplomats from countries with big auto industries have also sought "emergency" meetings with MOFCOM in recent weeks, a European official said.
India, where automakers warned last week they were close to shutting down, is organising a trip for auto executives in the next two to three weeks.
"This is an extremely urgent and critical time for the auto and electronics industry," Adam Dunnett, secretary general of the European Chamber of Commerce in China, told Reuters, saying some firms could stop production as soon as this week.
The European Union and Japanese missions in Beijing did not immediately respond to requests for comment.
The possibility of widespread shutdowns across the global auto industry demonstrates the enormous leverage Beijing has built over its decades-long rise to dominance in the rare earth industry.
China - which controls over 90% of global processing capacity for the magnets, used in everything from automobiles and fighter jets to home appliances - imposed export restrictions on seven rare earth elements and several magnets on April 4, requiring exporters to obtain licenses from Beijing.
The controls are widely viewed as a key source of diplomatic leverage because there are almost no alternatives outside China.
Beijing agreed to suspend or remove non-tariff countermeasures imposed on Washington since April 2 as part of the Geneva truce. But there has only been a slow trickle of approvals since then and Chinese government officials have declined to address the issue publicly.
U.S. Trade Representative Jamieson Greer last week accused Beijing of "slow-rolling" the removal of non-tariff countermeasures.
South Korea's industry ministry has asked China to issue more export licenses, an official told Reuters, as only a handful of companies had received licenses.
China's foreign ministry on Tuesday did not respond to a question on whether Beijing would speed up processing of export license applications. The Ministry of Commerce did not immediately reply to queries sent after business hours.
European firms alone have thousands of applications waiting for approval, said a source familiar with the matter.
State media reported last week that China was considering relaxing some of the curbs for European semiconductor firms and the Ministry of Foreign Affairs said last week it would strengthen cooperation with other countries over its controls.
However, rare-earth magnet exports from China halved in April due to a long and opaque application process for export permits.
"China won't blink but it will slowly and strategically provide exemptions," said a U.S. business figure briefed on the matter, who declined to be named for sensitivity reasons.
"It's a painful stress test of an already fragile relationship."