Latest news with #CriticalMineralsSecurityProgram
Mint
4 hours ago
- Business
- Mint
Critical minerals will remain a problem in US-China talks. These industries are at risk.
Critical minerals will likely remain a source of leverage for Beijing in trade talks with the U.S., even if President Donald Trump's Thursday call with Xi Jinping speeds up the flow of rare earths to feed auto, industrial and other supply chains. The issue dates back to early April, when China imposed restrictions on exports of the metals as part of its retaliation against Trump's imposition of tariffs of up to 145% on its exports to the U.S. In mid May, after negotiators met in Geneva, the U.S. said China had agreed to lift the restrictions as the countries agreed to a 90-day pause on levies that were choking off trade between them. The problem is that while China is allowing exports of rare earths, used in magnets that go into automobiles, for example, companies that want to export them need licenses. Companies say they aren't easy to get, though Reuters reported on Friday that Beijing had granted temporary licenses to suppliers of the big three U.S. auto makers. Its report cited people familiar with the matter. A spokesperson from the Chinese embassy said he wasn't aware of the situation specifically related to the licensing, reiterating that the export control measures are in line with international common practices, nondiscriminatory, and not targeted at specific countries. While only a fraction of the members of the American Chamber of Commerce in China—mostly technology and industrial companies—were affected by rare-earth export restrictions, three-quarters of those said their supplies would run out within three months, according to a survey from the trade group. While the survey found that Chinese suppliers to U.S. companies had recently been granted six-month export licenses, they noted continued uncertainty because there is a large backlog of license applications. Gracelin Baskaran, a mining economist and director of the Critical Minerals Security Program at the Center for Strategic and International Studies, said about 25% of licenses applied for have been given out, but that they aren't being processed fast enough. Part of that is due to the administrative task. China is the source of 100% of the rare-earth processing capability in the world, so it is issuing licenses for exports not just to the U.S., but for many other countries. But it could also be part of the negotiations. 'China has made it very clear it's not satisfied with the 90-day tariff pause and looking for a more durable solution to the tariff conundrum," said Baskaran, noting the deflationary impact of the tariffs on China's economy. 'It's not in their incentive to give out licenses quickly as their economy is in a downward spiral. These licenses are their leverage." The U.S. had been the dominant rare-earth producer until the 1990s, but China steadily took market share, ramping up production to levels that made it unprofitable for others, forcing them out, Baskaran said. A similar phenomenon is currently under way in nickel, she U.S. has been producing rare earths in California and is building out separation and processing capabilities, with companies like MP Materials boosting their refining abilities. 'It's a perfectly solvable problem and one the U.S. is working at warp speed to address," Baskaran said. 'It's not a forever problem." That said, it could continue be a source of pain, leaving the U.S. vulnerable in talks with China. An array of industries reliant on these critical minerals, from autos to electronics, semiconductors, and defense, are likely to suffer. Write to Reshma Kapadia at
Yahoo
16 hours ago
- Business
- Yahoo
China's rare-earth delays causing 'shock' to US industries
Auto production and defense firms are bracing for delays as China slow-walks rare earth export permits, sparking fresh supply chain concerns. Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS), joins Catalysts to explain how limited Chinese export approvals are rippling through US industries dependent on these materials. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Axios
3 days ago
- Business
- Axios
Tax breaks for EV battery plants could disappear in budget battle
Whipsawing tax policies in Washington threaten to put billions of dollars in manufacturing investments at risk across the U.S. battery belt from Michigan to Georgia. Why it matters: New battery plants are less viable without lucrative tax credits that a Democrat-controlled Congress approved in 2022, but which the new Republican majority aims to undo. Losing those battery subsidies would compound manufacturers' other woes, from tariffs on key components to uncertain consumer demand. Catch up quick: The manufacturing subsidies, established under the Inflation Reduction Act, were designed to help seed a domestic battery supply chain and cut reliance on Chinese imports. While some U.S. investments were already in the works, the tax credits turbocharged those efforts, with an additional $67 billion in battery facilities announced over the last three years, according to the Alliance for Automotive Innovation's EV investment dashboard. The credits are worth billions of dollars annually, slashing the costs of battery production by nearly one-third, which could help make EVs more affordable. Driving the news: Ford Motor's executive chair, Bill Ford, warned of what might happen if the House budget bill's restrictions making it harder to access those tax breaks were to become law. A $3 billion Ford battery plant in Marshall, Michigan, now 60% complete, would be "imperiled," risking 1,700 jobs, he said at a policy conference last week in Michigan, per Reuters. "We made a certain investment based upon a policy that was in place. It's not fair to change policies after all the expenditure has been made, " Ford said. Zoom in: The House budget bill passed last month effectively killed those credits by tightening the eligibility requirements such that they're unworkable, industry experts tell Axios. It would bar tax credits for batteries produced with components from China or minerals processed in China, which controls 90% of global refining. It would also prohibit credits for batteries made in the U.S. under a Chinese licensing agreement — a direct hit on Ford, which plans to license tech from China's leading battery manufacturer, Contemporary Amperex Technology Co., Limited (CATL). What they're saying:"Tightening the eligibility requirements in essence eliminates the majority of projects eligible," says Gracelin Baskaran, a mining economist who is director of the Critical Minerals Security Program at the Center for Strategic and International Studies. The bill's language is ambiguous and overly broad, according to analysts at The Tax Law Center at NYU Law, but the practical effect is likely a chill on U.S. investments — the opposite of what lawmakers say they're trying to achieve. Yes, but: Other provisions, including tax write-offs for R&D and capital equipment, could benefit manufacturers. Some companies could also be fairly insulated from the latest policy moves. General Motors, for example, has been investing heavily in North American mining and processing companies in recent years to protect its supply chains from risk. South Korea's LG Energy Solution, which has three U.S. battery plants and five joint ventures in North America, could also benefit, a spokesperson says. What to watch: The big worry for some manufacturers is that they wind up saddled with stranded assets — costly factories that are underutilized or never completed. "It's inevitable that some number of them will decide not to complete their plants because the economics no longer work," Ethan Zindler, a policy analyst at BloombergNEF, tells Axios. More than $14 billion in clean energy investments in the U.S. have been canceled or delayed this year, AP reported, including a Freyr Battery plant in Georgia and a Kore Power battery plant in Arizona. Weak EV demand forecasts, not just policy signals, also likely played a factor.
India.com
20-05-2025
- Business
- India.com
F-35 fighter jet will not fly, missiles will fail...China threatening US due to...
Why is China threatening US that Fighter F-35 will fail? Know here World's two biggest economic superpowers, the US and China have never seen eye-to-eye. The ongoing tariff war is the latest example. US President Donald Trump had imposed a 145 percent tariff on China. In response, China had imposed a 125 percent tariff on US goods. A deal was recently signed between the officials of both the countries in Geneva. Under this, both have reduced tariffs on each other. This arrangement is currently for 90 days. But there continues to be a lack of trust between the two countries and given this, this deal is not expected to last long. For example, China maintains control over the export of rare earth. This is an important weapon for China in future negotiations with the US. Under the trade deal in Geneva last week, China promised to remove the non-tariff measures imposed on the US. Now companies are trying to find out whether this promise applies to rare earth minerals as well. China imposed export control on these minerals on April 4 including magnets made from rare earth elements which are very important. They are used in iPhones, electric vehicles, fighter aircraft like the F-35 and missile systems. And hence China has complete control over their supply. According to a CNN report, after returning from trade talks in Geneva, US Trade Representative Jamieson Greer tried to ease concerns about this. He said in an interview that China has agreed to lift the export ban on rare earth. Greer said that China has agreed to remove those measures. If they do not do so, the situation will change. While there are no signs that China has lifted its new export controls, experts and industry insiders say Chinese authorities are tightening them even further. Gracelyn Bhaskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS), said China's export licensing system could last for a long time. This will give Beijing an advantage in future trade talks with the US. It gives China the power to decide which companies or countries can access its real earth minerals and magnets.
Yahoo
20-05-2025
- Business
- Yahoo
China isn't getting rid of its controls over rare earths, despite trade truce with US
Despite a 90-day truce in its trade war with the United States, China appears to be maintaining tight control over its rare earth exports – preserving a key source of leverage in future negotiations amid intensifying strategic rivalry with Washington. As part of last week's trade agreement in Geneva to temporarily roll back tariffs, China pledged to suspend or remove the 'non-tariff' countermeasures it imposed on the US since April 2. That has left businesses scrambling to find out whether that promise applies to China's export controls on seven rare earth minerals and associated products, which were imposed on April 4 as part of its retaliation against US President Donald Trump's 'reciprocal' tariffs on Chinese goods. Magnets made of these heavy rare earth elements are an essential part of everything from iPhones and electric vehicles to big-ticket weapons like F-35 fighter jets and missile systems. Yet their supply is completely dominated by China. Fresh off the plane from the trade talks in Geneva last week, US trade representative Jamieson Greer sought to ease concerns surrounding this potential vulnerability. In a Fox News interview, he answered affirmatively when asked whether China had agreed to lift its export restrictions on rare earths as part of the truce. 'Yep, the Chinese have agreed to remove those countermeasures,' Greer said. 'If they don't do those things, we're going to be back in a different situation. But I expect they'll remove them.' However, there's little sign to suggest China is removing its newly imposed rare earth export control regime. If anything, according to experts and industry insiders, Chinese authorities appear to be strengthening implementation and ramping up oversight. The system, introduced in April, does not ban exports outright, but requires government approval for each shipment. That had caused weeks long holdups as companies navigated the new regime, fueling fears among a wide range of American industries from automobile to defense. 'I would not be shocked to find that Mr Greer is expressing what he hopes will happen versus what has actually been negotiated to happen,' said Jon Hykawy, president of the Toronto-based industry advisory firm Stormcrow Capital. 'These controls are intended … to ensure that China does not run short of some materials that are needed for domestic Chinese priorities,' said Hykawy. Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS), said China's export licensing regime is 'here to stay' and 'may stay for a long time,' allowing Beijing to retain its leverage in future trade talks with the US. If the US were to turn around and renege on their tariff policy, China can easily withhold the required licenses, she said, adding that the licensing policy is dynamic by design, giving Beijing the power to decide which companies or countries can access its rare earth minerals and magnets at any given time. Following the Geneva talks, China's Commerce Ministry removed 28 US firms from its dual-use export control list and pulled 17 American companies from another trade and investment backlist. But the ministry made no mention of any changes to the exports control on rare earth minerals and magnets. A spokesperson for the ministry said she had 'no information to share' on whether China is lifting the export controls at a regular news conference last Friday. Instead, Chinese authorities launched a crackdown on the smuggling of critical minerals – a broader category of resources that include rare earth elements. On May 12, the day US and China announced the tariff cuts, Chinese export regulators convened a meeting with authorities from multiple mineral-rich provinces with the aim to 'prevent the illegal outflow of strategic minerals' and 'strengthen oversight across every link of the production and supply chain.' On the same day, Yuyuan Tantian, a social media account affiliated with state broadcaster CCTV, said in a post that 'China's rare earth export controls are continuing.' Meanwhile, after weeks of delay, China has started to issue export permits for rare earth magnets – a development that experts say shows the new licensing system is up and running, rather than restrictions being eased. Two Chinese rare earth magnet producers told CNN they had recently received licenses for exporting products containing dysprosium and terbium – elements that are often added to create more heat resistance in high-performance magnets commonly used in the automobile, aerospace and military industries. The approvals are granted under a 'one batch, one license' rule, meaning a new permit is required for each shipment and cannot be reused, according to the companies. One of the companies received its first export license for a shipment heading to Southeast Asia. It has since been granted several other licenses for exports to Europe, including the carmaker Volkswagen in Germany. 'We haven't received any indications about the (export control) system easing up,' a person close to the company told CNN. Volkswagen said in a statement that its suppliers have received indications that 'a limited number of export licenses have been granted.' Baskaran, from CSIS, said that instead of lifting the export controls on rare earths, China removed 28 American firms from its export control list. That means those companies, mostly aerospace and defense firms, are no longer banned from accessing dual-use materials from China, and their Chinese suppliers can now apply for export licenses for rare earth magnets. But it remains to be seen whether Beijing will ultimately give out licenses to American defense firms. China's rare earth export controls were 'specifically designed to hit the US defense industry, and I cannot envision China stepping back from that,' said Thomas Kruemmer, director of the Singapore-based mineral and metal supply chain firm Ginger International Trade and Investment. Under the new rules, exporters must include information about end-users in their applications, which take up to 45 working days to be approved. 'I am sure that in case of defense contractors, the Chinese Commerce Ministry will raise pesky questions, which the Americans may be unwilling to answer or may need Pentagon permission to answer,' Kruemmer said. 'This way they can conveniently delay the issuance of dual-use product export licenses beyond the self-set 45-day deadline, perhaps even beyond this 90-day (truce) window. And it still has the option to reject the license applications anyway.' The licensing rules can also offer China visibility into where the rare earth magnets end up. 'You can still get the material, but you have to fill out paperwork, describe to China who the end user is. You're going to give all this information and then (China) can see inside your downstream customer base and use and look for further vulnerability,' said James Kennedy, president of Three Consulting, a rare earths consultancy based in St Louis, Missouri. 'So it's very smart. They get a looking glass into what you're doing.' For decades, the US and other countries have been dependent on China's supply of rare earth minerals, which are difficult, costly and environmentally polluting to extract and process. China accounts for 61% of global mined rare earth production, but its control over the processing stage is much higher at 92% of the global output, according to the International Energy Agency. The April export controls are far from the first time Beijing has leveraged its dominance in the industry. In 2010, China halted shipments of rare earths to Japan for nearly two months over a territorial dispute. In late 2023, it imposed a ban on rare earth extraction and separation technologies. Beijing has also curbed exports of other critical minerals that are vital to the economy and global supply chains – including outright bans on the shipments of gallium, germanium, antimony and so-called superhard materials to the US. 'China's control over rare earths, cobalt, gallium and all these critical materials is a geopolitical weapon of never-before measured and seen effect,' Kennedy said. 'And at the end of the day, what this does is, it creates a lot of uncertainty. And that in itself is a powerful weapon.' Baskaran said that by granting some of its first export licenses of rare earth magnets to Volkswagen, China is sending a pointed geopolitical message. 'Germany is at the height of geopolitical crossfire. The US is unhappy that Germany has been overtly quite friendly with China. So, by giving it one of the first licenses, China is sending a very positive signal in the Chinese-German relationship,' she said. 'In this era of rising tension between the world's two geopolitical superpowers, the licensing system may stay as a larger form of power.' CNN's Joyce Jiang contributed reporting.
