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Time of India
2 days ago
- Automotive
- Time of India
Demand destruction can help break China's rare earths chokehold: Andy Home
Beijing's restrictions on rare earth exports have brutally exposed the West's dependency on Chinese supplies of these esoteric metals and the permanent magnets they help power. But it's not as if we haven't been here before. China did the same in 2010. Western automakers have chosen to ignore the historical precedent and doubled down on a technology that remains almost totally beholden to Beijing's export whims. Now many of them are in full panic mode, with several already forced to halt production lines, demonstrating the outsize economic impact of niche metals such as dysprosium, which is used in neodymium-iron-boron (NdFeB) magnets. China's willingness to weaponise its dominance of the metals that power our modern world will accelerate the West's drive to build out its own supply chains. But part of the solution is to use less rare earth elements. The West can't control supply, but it can move the demand dial. THOSE WHO FORGET THE PAST... Beijing claimed its imposition of rare earth export quotas in 2010 was solely about clamping down on illegal domestic mines. It just happened to come after a collision between a Chinese trawler and a Japanese coast-guard vessel in disputed waters. If Japan was the target, the entire West felt the pain as prices of rare earths went stratospheric. Dysprosium oxide rose 26-fold in price between 2009 and 2012, according to consultancy Adamas Intelligence. China only backed down after a World Trade Organization panel ruled against it in 2014. Some automakers learnt the lesson. Japan's Nissan Motor Co launched a new version of its LEAF electric vehicle in 2012 with a motor containing 40% less dysprosium. Renault went further, developing an alternative motor without permanent magnets and therefore rare earths for its ZOE model in the same year. Indeed, Adamas estimates the share of EVs powered by rare-earth-free motors rose from less than 1% of global sales in 2010 to 12% in 2017. That, though, proved the peak. BUCKLE UP Rare earth prices fell and remained stable in the late 2010s. Western automakers largely pivoted back to permanent magnets. Around 97% of all EVs sold every year since 2017 use rare-earth powered motors, according to Adamas. This not only reflects the exponential growth in the EV market - particularly in China, which for obvious reasons has no rare earths phobia - but also the increasing number of magnets in the average new vehicle, whether pure battery or hybrid. As well as the serious business of actually powering the vehicle, there are multiple magnets in the tiny motors controlling heating, entertainment systems, braking and even reminding the driver to buckle up. This has heightened dependency on a country that not only produces around 95% of the world's NdFeB magnets but also controls the supply chains of the metals required to make them. PEACE TALKS China may have pulled its rare earth lever too hard this time around, quite possibly due to over-zealous bureaucracy at the Ministry of Commerce, which is responsible for separating out exports for military and civilian applications. Talks between Chinese and U.S. representatives entered their second day on Tuesday in an attempt to find a trade-off between China's restrictions on rare earths and U.S. restrictions on advanced semiconductors. Tariffs loom large in the background. Assuming some sort of deal can be done and Beijing loosens its grip on rare earth exports, the automotive industry's dependency isn't going away. Any wait for Western supply to catch up may be a long one. Although Western governments are pouring money into new projects, building a mine-to-magnet supply chain will take years. Moreover, civilian sectors will be second in line. The U.S. Department of Defense has been the single largest investor in the country's rare earths sector with the stated goal of being able to support "all U.S. defense requirements by 2027". In terms of must-have magnets, the speakers on your car radio don't quite compare with an F-35 fighter, which requires more than 900 pounds of rare earths. DEMAND DESTRUCTION Do new vehicles really require all the rare-earth powered technology currently being deployed in non-critical applications? An even bigger question is whether they require a rare-earth magnet even in the power train. Those companies such as Renault and BMW which learned the lesson from the past have developed alternative solutions for their EV motors, reducing the impact of the current supply shock. Plenty of other car companies have been looking to do the same, but in most cases the technology is still far from commercial production. China's latest rare earths restrictions should be a powerful incentive to accelerate the redesign process. Automakers may find engineered demand destruction works faster than building a new supply chain when it comes to escaping China's chokehold on rare earth magnets. It's not as if they haven't done it before.
Reuters
2 days ago
- Automotive
- Reuters
Demand destruction can help break China's rare earths chokehold: Andy Home
LONDON, June 11 (Reuters) - Beijing's restrictions on rare earth exports have brutally exposed the West's dependency on Chinese supplies of these esoteric metals and the permanent magnets they help power. But it's not as if we haven't been here before. China did the same in 2010. Western automakers have chosen to ignore the historical precedent and doubled down on a technology that remains almost totally beholden to Beijing's export whims. Now many of them are in full panic mode, with several already forced to halt production lines, demonstrating the outsize economic impact of niche metals such as dysprosium, which is used in neodymium-iron-boron (NdFeB) magnets. China's willingness to weaponise its dominance of the metals that power our modern world will accelerate the West's drive to build out its own supply chains. But part of the solution is to use less rare earth elements. The West can't control supply, but it can move the demand dial. THOSE WHO FORGET THE PAST... Beijing claimed its imposition of rare earth export quotas in 2010 was solely about clamping down on illegal domestic mines. It just happened to come after a collision between a Chinese trawler and a Japanese coast-guard vessel in disputed waters. If Japan was the target, the entire West felt the pain as prices of rare earths went stratospheric. Dysprosium oxide rose 26-fold in price between 2009 and 2012, according to consultancy Adamas Intelligence. China only backed down after a World Trade Organization panel ruled against it, opens new tab in 2014. Some automakers learnt the lesson. Japan's Nissan Motor Co (7201.T), opens new tab launched a new version of its LEAF electric vehicle in 2012 with a motor containing 40% less, opens new tab dysprosium. Renault ( opens new tab went further, developing an alternative motor, opens new tab without permanent magnets and therefore rare earths for its ZOE model in the same year. Indeed, Adamas estimates the share of EVs powered by rare-earth-free motors rose from less than 1% of global sales in 2010 to 12% in 2017. That, though, proved the peak. Rare earth prices fell and remained stable in the late 2010s. Western automakers largely pivoted back to permanent magnets. Around 97% of all EVs sold every year since 2017 use rare-earth powered motors, according to Adamas. This not only reflects the exponential growth in the EV market - particularly in China, which for obvious reasons has no rare earths phobia - but also the increasing number of magnets in the average new vehicle, whether pure battery or hybrid. As well as the serious business of actually powering the vehicle, there are multiple magnets in the tiny motors controlling heating, entertainment systems, braking and even reminding the driver to buckle up. This has heightened dependency on a country that not only produces around 95% of the world's NdFeB magnets but also controls the supply chains of the metals required to make them. China may have pulled its rare earth lever too hard this time around, quite possibly due to over-zealous bureaucracy at the Ministry of Commerce, which is responsible for separating out exports for military and civilian applications. Talks between Chinese and U.S. representatives entered their second day on Tuesday in an attempt to find a trade-off between China's restrictions on rare earths and U.S. restrictions on advanced semiconductors. Tariffs loom large in the background. Assuming some sort of deal can be done and Beijing loosens its grip on rare earth exports, the automotive industry's dependency isn't going away. Any wait for Western supply to catch up may be a long one. Although Western governments are pouring money into new projects, building a mine-to-magnet supply chain will take years. Moreover, civilian sectors will be second in line. The U.S. Department of Defense has been the single largest investor in the country's rare earths sector with the stated goal, opens new tab of being able to support "all U.S. defense requirements by 2027". In terms of must-have magnets, the speakers on your car radio don't quite compare with an F-35 fighter, which requires more than 900 pounds of rare earths. Do new vehicles really require all the rare-earth powered technology currently being deployed in non-critical applications? An even bigger question is whether they require a rare-earth magnet even in the power train. Those companies such as Renault and BMW ( opens new tab which learned the lesson from the past have developed alternative solutions, opens new tab for their EV motors, reducing the impact of the current supply shock. Plenty of other car companies have been looking to do the same, but in most cases the technology is still far from commercial production. China's latest rare earths restrictions should be a powerful incentive to accelerate the redesign process. Automakers may find engineered demand destruction works faster than building a new supply chain when it comes to escaping China's chokehold on rare earth magnets. It's not as if they haven't done it before. The opinions expressed here are those of the author, a columnist for Reuters. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab. (The views expressed here are those of the author, a columnist for Reuters.)
Yahoo
04-04-2025
- Business
- Yahoo
China hits back at US tariffs with rare earth export controls
By Lewis Jackson, Amy Lv and Eric Onstad BEIJING/LONDON (Reuters) -China placed export restrictions on key rare earth elements on Friday as part of its sweeping response to President Donald Trump's tariffs, potentially squeezing supply to the U.S. and the West of minerals vital to everything from defense to electric cars. China produces around 90% of the world's refined rare earths, a group of 17 elements used across the defense, electric vehicle, clean energy and electronics industries. The United States imports most of its rare earths, and most come from China. China has hit back hard, including not only mined minerals but finished products such as permanent magnets, which will be difficult to replace, analysts said. "Full-blown export restrictions on high-performance rare earth magnets containing dysprosium and/or terbium will hit foreign industries and defense sectors hard, creating a scramble for access to the limited sources of alternative supply – namely in Japan and South Korea," said Ryan Castilloux, founder of consultancy Adamas Intelligence. "In the near-term, importers are holding their breath waiting to see if they will be impacted. The cannons have been loaded but so far no one knows where they're aimed." Seven categories of medium and heavy rare earths, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium-related items, will be placed on an export control list as of April 4, according to a Ministry of Commerce release. The move, which affects exports to all countries, not just the U.S., is the latest demonstration of China's ability to weaponise its dominance over the mining and processing of the critical minerals. Beijing has already imposed outright bans on the export of three metals to the U.S. and slapped export controls on many others. The moves to restrict heavy rare earths are especially important because China has even tighter control over these elements, said David Merriman at consultancy Project Blue. "There is currently only one HREE (heavy rare earth element) focused operation outside of China, Myanmar and Laos," he said, adding that China has close involvement in supply chains from Myanmar and Laos. That mine, Serra Verde in Brazil, is currently shipping its product to China for processing, Merriman added. GALVANIZE WEST Friday's move is likely to galvanize efforts in the West to build alternative supply chains, according to Mercator Institute for China Studies analyst Jacob Gunter. "The more China pulls this trigger, even if it's limited to the United States, this will cause European companies and European governments and other countries and their governments to also think about, what's the risk of us also having these export controls put on us?" Beijing announced the controls late on Friday as part of a broader package of tariffs and company restrictions in retaliation for U.S. President Donald Trump's decision to hike tariffs against most Chinese products to 54%. Roughly three-quarters of the rare earths the U.S. imports came from China between 2019 and 2022, according to the U.S. Geological Survey. While the export controls stop short of an outright ban, Beijing can throttle shipments by restricting the amount of export licenses it issues. China had exported no antimony to European Union countries as of March after imposing export controls on the metal last September. China dominates the complex and dirty refining process for rare earths, which are common in the earth's crust, and controls mining and output via a quota system that it has progressively tightened. Sign in to access your portfolio
