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Business Standard
23-05-2025
- Business
- Business Standard
Imports of permanent magnets from China resume, 30 consignments cleared
Imports of rare earth or permanent magnets from China — used in cars, electric motors, magnetic sensors, and electronics such as speakers and headphones — have resumed after India began issuing certificates assuring compliance with riders. Officials said the Directorate General of Foreign Trade (DGFT) has issued around 30 certificates confirming that these magnets will not be used for defence applications or re-exported to the US. The move follows concerns raised by Indian importers over disruptions in the supply of permanent magnets due to China's introduction of new export controls issued last month. These controls affect seven rare earth elements and related magnets — materials critical to the production of electric vehicles (EVs), wind turbines, fighter jets, and advanced electronics. Also Read Last week, importers approached the DGFT, the ministries of external affairs, commerce, and heavy industries, and the Prime Minister's Office. 'After a meeting between the above-mentioned ministries, it was decided that DGFT will assure that importers are meeting the condition for domestic consumption and not for defence purposes or US re-export,' a senior government official said. 'DGFT has begun issuing such certificates, especially in the case of individual importers, and it has so far cleared around 30 applications for permanent magnet imports from China,' the official added. China's move follows sweeping tariffs announced by US President Donald Trump. While the tariffs apply to all US trading partners, China has been especially targeted by the Trump administration's new trade policy. The export restrictions were imposed under China's rights as a signatory to the international Non-Proliferation of Nuclear Weapons Treaty, which permits the regulation of "dual-use" items — goods that can be used for both civilian and military purposes. As trade tensions escalated between China and the US, suppliers in China began restricting the export of these magnets. Although rare earth elements are found in several countries, China dominates global supply, accounting for 61 per cent of production and 92 per cent of processing, according to the International Energy Agency. Processing rare earth is expensive and environmentally hazardous due to radioactive by-products. As a result, many countries have scaled back or abandoned domestic production, making the world heavily reliant on China not just for raw supply, but also for refinement and distribution.
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Business Standard
19-05-2025
- Business
- Business Standard
How China's slow approval of rare earths is threatening supply chains
China's sluggish approval of rare earth exports is threatening to disrupt global supply chains, the Financial Times reported, with exporters and industry bodies warning that delays are already affecting European manufacturers and could soon hit other major economies including India. While the Chinese commerce ministry has started granting some export licences, reportedly to select European-bound shipments, the pace is far too slow to meet industrial demand. 'The window to avoid significant damage to production in Europe is rapidly closing,' Financial Times quoted Wolfgang Niedermark of the Federation of German Industries (BDI) as saying. An unnamed European executive based in China described the delays as 'untenable' and said officials had 'underestimated' the operational requirements of enforcing the restrictions. Why did China impose export controls on its rare earth minerals? Beijing introduced new export controls in early April on seven rare earth elements and related permanent magnets, materials crucial for the production of electric vehicles (EVs), wind turbines, fighter jets, and advanced electronics. The move followed sweeping US tariffs, announced by President Donald Trump. While tariffs were announced on all US trade partners, China has been especially targeted by the Trump administration's new trade policy. The tariff announcement marked an escalation in ongoing trade tensions between the two powers. How is China controlling rare earth mineral exports? The restrictions come under China's rights as a signatory to the international Non-Proliferation of Nuclear Weapons Treaty, which allows it to regulate exports of "dual-use" items. The applies to products that can be used for both civilian and military applications. Also Read How does China export restrictions impact global supply chains? Rare earth elements like terbium, dysprosium, and samarium are critical to modern industry. They are essential for manufacturing everything from electric motors and MRI scanners to laser surgery devices and precision-guided military systems. But it is not their scarcity that makes them so strategically important — it's China's grip over the supply chain. While rare earths are found in several countries, China accounts for 61 per cent of global production and 92 per cent of processing, according to the International Energy Agency. Processing rare earths is expensive and environmentally hazardous due to their radioactive by-products, which has led most other countries to scale back or abandon domestic production. As a result, the world is highly reliant on China not just for supply, but also for refinement and distribution. By tightening its control over exports, Beijing is effectively deciding who can access these essential materials and when. Which other countries can process rare earth minerals? While Japan has begun reviving its rare earth industry, the US and othe rnations, including India, remain deeply dependent on Chinese exports. Trump in April ordered the US Commerce Department to identify strategies for boosting domestic production, but progress has been slow. Impact on auto industry Global automakers, including Tesla and Volkswagen, as well as US defence contractors like Lockheed Martin, have already raised concerns about the export delays. With four Chinese rare earth magnet producers, some of whom supply global giants like Volkswagen, recently granted export licences, there is hope of some relief. But experts warn that these approvals are selective and fail to address the broader risk of disruption. Impact of China's rare earth minerals on India The pressure is also being felt in India, where EV manufacturers are facing potential shortages of rare earth magnets used in electric motors, power steering systems, and braking units. Industry sources told The Indian Express that Chinese suppliers are now demanding undertakings that the magnets won't be used for military purposes. There is also growing pressure on Indian carmakers to buy entire electric motor assemblies from China, rather than sourcing just the magnets, as a way to bypass red tape. These magnets, especially neodymium-iron-boron (NdFeB) magnets, are critical to EV performance due to their strength and efficiency. Any disruption in their supply could delay production timelines and increase costs, particularly damaging for India's price-sensitive EV sector.
