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Economic Times
7 days ago
- Automotive
- Economic Times
China's rare earth chokehold tests the mettle of global industry
TIL Creatives China's Rare Earth Mining Power. Global concern over China's control of critical mineral exports intensified this week, as a growing list of automakers and governments sounded the alarm over mounting supply disruptions. Beijing's decision to impose strict curbs on rare earth magnet exports, which are vital for electric and petrol vehicles, defence equipment, and clean energy systems, has begun to strain global production lines and diplomatic ties restrictions, which took effect on April 4, mandate special export licences for seven rare earth elements (REEs) and related magnets, citing national security and non-proliferation concerns. According to the International Energy Agency and the United States Geological Survey (2025), China still produces 60% of the world's REEs and controls a staggering 90% of global refining critical materials, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, are essential in electric motors, braking systems, smartphones, aerospace components, and missile supply crunch is already prompting global manufacturers and trade bodies to seek urgent interventions. As Reuters reported, diplomats, automakers, and industry executives from India, Japan, and Europe are urgently seeking meetings with Chinese officials to expedite stalled export licences. A Japanese business delegation is expected in Beijing in early June, while European envoys have requested 'emergency' meetings on the Financial Times previously reported that the licensing process has led to delays lasting weeks or even months, affecting European manufacturers and placing countries like India and South Korea on high alert. Wolfgang Niedermark of the Federation of German Industries (BDI) warned that Europe has a rapidly closing window to prevent serious disruptions, according to the Financial Times. On Tuesday, Hildegard Müller, head of Germany's powerful automotive lobby, echoed that concern. 'If the situation is not changed quickly, production delays and even production outages can no longer be ruled out,' she said, as reported by Read: Global alarms rise as China's critical mineral export curbs takes hold India, the world's third-largest automobile market, is among the hardest-hit nations. The Society of Indian Automobile Manufacturers (SIAM) warned in early April that component inventories could run out by June. Though Maruti Suzuki, India's largest passenger carmaker, had earlier claimed there was no immediate impact, concerns have grown louder across the of Maruti's export-focused models, such as the Jimny, Fronx, and the upcoming e-Vitara electric SUV, rely heavily on Chinese-supplied magnets. Meanwhile, Bajaj Auto has warned that any further delays could seriously impact India's electric vehicle production, as reported by car and component manufacturers told govt officials last week that auto production could grind to a halt within days due to Chinese export restrictions. This comes after rare earth magnet consignments remain stranded at Chinese ports due to licence bottlenecks, according to light of this, SIAM and the Automotive Component Manufacturers Association (ACMA) are expected to send a delegation to China next week to seek expedited the Ministry of Heavy Industries is preparing a stakeholder meeting to discuss the formation of a domestic rare earth magnet industry. Proposals under consideration include public-private partnerships and production-linked is concerning is that Indian firms are reportedly being asked by Chinese suppliers to purchase entire motor assemblies to bypass red tape. This significantly increases costs, The Indian Express reported. Prolonged disruption could derail India's electric mobility targets. SIAM warned on May 19 that although production has not yet stopped, the risk remains. Also Read: Magnet crisis: Auto giants rush to China for rare earth rescue The United States, which sources over 61% of its rare earth imports and 93% of yttrium compounds from China, according to USGS data, is bracing for severe shortages. On June 2, The Economic Times reported that Tesla and General Motors have flagged the risk of production consultant Michael Dunne said that China could bring American automotive assembly plants to a standstill, reported ET.A May letter from the Alliance for Automotive Innovation, which represents GM, Toyota, Volkswagen, Hyundai, and others, urged the Trump administration to address the crisis. 'Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components,' the group warned, listing everything from throttle bodies and sensors to speakers and power steering systems, reported Pass, the United States' only operating rare earth mine, still depends on Chinese processors. Even MP Materials' upcoming facility in Texas will only produce 1,000 tonnes annually by 2027. In comparison, China produces 300,000 tonnes, according to has reduced its reliance on Chinese REEs from 98% to 46.3%, according to the European Commission, but current stockpiles may last only until mid-2025. Carmakers such as BMW and Volkswagen and aerospace firms like Airbus are reviewing long-term supply which still imports 60% of its rare earth elements from China, has attempted to reduce exposure through strategic investments in Australia's Lynas Rare Earths. Lynas is the largest producer of separated rare earths outside China. However, Japan's electronics and electric vehicle sectors remain vulnerable to supply to the Korea Institute of Geoscience and Mineral Resources (KIGAM), Korea's imports of 37 rare minerals from China amounted to 7.03 billion dollars in 2023. This marks a 3.3-fold increase from 2.13 billion dollars in 2018. China's share of Korea's rare mineral imports grew from 23% to 36%, with its dependency on Chinese imports for major minerals now surpassing 50%.Even Australia, despite possessing significant rare earth reserves, sends 90% of its heavy REEs to China for processing, as reported by the Australian Financial Review. While Lynas Rare Earths leads in separated REE production outside China, it still sends certain oxides to China for final refining. Australia is expected to remain reliant on Chinese REE refining capabilities until at least 2026. Also Read: A new era of trade warfare has begun for the US and China Beyond the economic fallout, the export curbs also offer China a strategic advantage. Beijing now requires end-user disclosures as part of the export licensing process, giving it deeper insight into global industrial ecosystems. The issue is now surfacing at the highest diplomatic levels. US President Donald Trump and Chinese President Xi Jinping are expected to discuss the export ban during a scheduled call this week, according to White House spokeswoman Karoline Leavitt. 'Our administration officials continue to be engaged in correspondence with their Chinese counterparts,' she said. Trump has accused Beijing of violating the Geneva trade agreement due to the slow pace in easing restrictions. This is not the first time China has weaponised rare earths. In 2010, it briefly cut off exports to Japan during a territorial dispute, prompting Tokyo to diversify its supply sources and invest in refining abroad. Other nations, however, failed to act decisively. The United States attempted to reduce its reliance, but domestic processing projects stalled and manufacturers resisted higher China's grip is tighter than ever. Its state-controlled refining sector dictates the flow of rare earth magnets that are crucial for a wide range of strategic industries, from electric vehicles to military Frank Fannon, a former US Assistant Secretary of State and now a minerals consultant, put it: 'We have a production challenge, and we need to leverage our whole-of-government approach to secure resources and ramp up domestic capability as soon as possible. The time horizon to do this was yesterday.'Once again, China has pulled the same lever. And once again, the world finds itself unprepared.
Time of India
7 days ago
- Automotive
- Time of India
China's rare earth chokehold tests the mettle of global industry
Global concern over China 's control of critical mineral exports intensified this week, as a growing list of automakers and governments sounded the alarm over mounting supply disruptions. Beijing's decision to impose strict curbs on rare earth magnet exports, which are vital for electric and petrol vehicles, defence equipment, and clean energy systems, has begun to strain global production lines and diplomatic ties alike. The restrictions, which took effect on April 4, mandate special export licences for seven rare earth elements (REEs) and related magnets, citing national security and non-proliferation concerns. According to the International Energy Agency and the United States Geological Survey (2025), China still produces 60% of the world's REEs and controls a staggering 90% of global refining capacity. The critical materials, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, are essential in electric motors, braking systems, smartphones, aerospace components, and missile technology. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. The supply crunch is already prompting global manufacturers and trade bodies to seek urgent interventions. As Reuters reported, diplomats, automakers, and industry executives from India, Japan, and Europe are urgently seeking meetings with Chinese officials to expedite stalled export licences. A Japanese business delegation is expected in Beijing in early June, while European envoys have requested 'emergency' meetings on the issue. The Financial Times previously reported that the licensing process has led to delays lasting weeks or even months, affecting European manufacturers and placing countries like India and South Korea on high alert. Wolfgang Niedermark of the Federation of German Industries (BDI) warned that Europe has a rapidly closing window to prevent serious disruptions, according to the Financial Times. Live Events On Tuesday, Hildegard Müller, head of Germany's powerful automotive lobby, echoed that concern. 'If the situation is not changed quickly, production delays and even production outages can no longer be ruled out,' she said, as reported by Reuters. Also Read: Global alarms rise as China's critical mineral export curbs takes hold India on edge India, the world's third-largest automobile market, is among the hardest-hit nations. The Society of Indian Automobile Manufacturers (SIAM) warned in early April that component inventories could run out by June. Though Maruti Suzuki , India's largest passenger carmaker, had earlier claimed there was no immediate impact , concerns have grown louder across the sector. Many of Maruti's export-focused models, such as the Jimny, Fronx, and the upcoming e-Vitara electric SUV, rely heavily on Chinese-supplied magnets. Meanwhile, Bajaj Auto has warned that any further delays could seriously impact India's electric vehicle production, as reported by Reuters. Indian car and component manufacturers told govt officials last week that auto production could grind to a halt within days due to Chinese export restrictions. This comes after rare earth magnet consignments remain stranded at Chinese ports due to licence bottlenecks, according to Reuters. In light of this, SIAM and the Automotive Component Manufacturers Association (ACMA) are expected to send a delegation to China next week to seek expedited clearances. Additionally, the Ministry of Heavy Industries is preparing a stakeholder meeting to discuss the formation of a domestic rare earth magnet industry. Proposals under consideration include public-private partnerships and production-linked incentives. What is concerning is that Indian firms are reportedly being asked by Chinese suppliers to purchase entire motor assemblies to bypass red tape. This significantly increases costs, The Indian Express reported. Prolonged disruption could derail India's electric mobility targets. SIAM warned on May 19 that although production has not yet stopped, the risk remains. Also Read: Magnet crisis: Auto giants rush to China for rare earth rescue A global squeeze The United States, which sources over 61% of its rare earth imports and 93% of yttrium compounds from China, according to USGS data, is bracing for severe shortages. On June 2, The Economic Times reported that Tesla and General Motors have flagged the risk of production stoppages. Automotive consultant Michael Dunne said that China could bring American automotive assembly plants to a standstill, reported ET. A May letter from the Alliance for Automotive Innovation, which represents GM, Toyota, Volkswagen, Hyundai, and others, urged the Trump administration to address the crisis. 'Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components,' the group warned, listing everything from throttle bodies and sensors to speakers and power steering systems, reported Reuters. Mountain Pass, the United States' only operating rare earth mine, still depends on Chinese processors. Even MP Materials' upcoming facility in Texas will only produce 1,000 tonnes annually by 2027. In comparison, China produces 300,000 tonnes, according to Bloomberg. Europe has reduced its reliance on Chinese REEs from 98% to 46.3%, according to the European Commission, but current stockpiles may last only until mid-2025. Carmakers such as BMW and Volkswagen and aerospace firms like Airbus are reviewing long-term supply arrangements. Japan, which still imports 60% of its rare earth elements from China, has attempted to reduce exposure through strategic investments in Australia's Lynas Rare Earths. Lynas is the largest producer of separated rare earths outside China. However, Japan's electronics and electric vehicle sectors remain vulnerable to supply disruptions. According to the Korea Institute of Geoscience and Mineral Resources (KIGAM), Korea's imports of 37 rare minerals from China amounted to 7.03 billion dollars in 2023. This marks a 3.3-fold increase from 2.13 billion dollars in 2018. China's share of Korea's rare mineral imports grew from 23% to 36%, with its dependency on Chinese imports for major minerals now surpassing 50%. Even Australia, despite possessing significant rare earth reserves, sends 90% of its heavy REEs to China for processing, as reported by the Australian Financial Review. While Lynas Rare Earths leads in separated REE production outside China, it still sends certain oxides to China for final refining. Australia is expected to remain reliant on Chinese REE refining capabilities until at least 2026. Also Read: A new era of trade warfare has begun for the US and China Strategic high ground Beyond the economic fallout, the export curbs also offer China a strategic advantage. Beijing now requires end-user disclosures as part of the export licensing process, giving it deeper insight into global industrial ecosystems. The issue is now surfacing at the highest diplomatic levels. US President Donald Trump and Chinese President Xi Jinping are expected to discuss the export ban during a scheduled call this week, according to White House spokeswoman Karoline Leavitt. 'Our administration officials continue to be engaged in correspondence with their Chinese counterparts,' she said. Trump has accused Beijing of violating the Geneva trade agreement due to the slow pace in easing restrictions. China played its hand in 2010 This is not the first time China has weaponised rare earths. In 2010, it briefly cut off exports to Japan during a territorial dispute, prompting Tokyo to diversify its supply sources and invest in refining abroad. Other nations, however, failed to act decisively. The United States attempted to reduce its reliance, but domestic processing projects stalled and manufacturers resisted higher costs. Today, China's grip is tighter than ever. Its state-controlled refining sector dictates the flow of rare earth magnets that are crucial for a wide range of strategic industries, from electric vehicles to military hardware. As Frank Fannon, a former US Assistant Secretary of State and now a minerals consultant, put it: 'We have a production challenge, and we need to leverage our whole-of-government approach to secure resources and ramp up domestic capability as soon as possible. The time horizon to do this was yesterday.' Once again, China has pulled the same lever. And once again, the world finds itself unprepared.
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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.
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First Post
18-05-2025
- Business
- First Post
China's rare earth export curbs are stirring global supply chain fears
China's new controls require exporters to submit end-use certifications to ensure materials are not used for military purposes or re-exported to the United States— a key condition under the licensing terms read more A mining machine is seen at the Bayan Obo mine containing rare earth minerals, in Inner Mongolia, China. File photo/Reuters China has begun approving limited exports of rare earth elements under its new licensing regime, but delays in processing have raised alarm among global manufacturers about potential disruptions to critical supply chains. Beijing introduced export controls in early April on seven rare earth elements and related permanent magnets essential to products such as electric vehicles, wind turbines, fighter jets, and humanoid robots. The move was widely seen as a response to a sweeping tariff package announced by US President Donald Trump on April 2. STORY CONTINUES BELOW THIS AD While Chinese commerce officials have since granted some export licenses— including to companies supplying customers in Europe— industry participants say the approvals have been too slow and too limited to meet demand. 'The window to avoid significant damage to production in Europe is rapidly closing,' Financial Times quoted Wolfgang Niedermark, a board member of the Federation of German Industries, as saying. Volkswagen confirmed that its German operations had received rare earth supplies, noting that a 'limited number' of licenses were issued to its suppliers. Other European manufacturers said they were still struggling to navigate China's export bureaucracy, with one unnamed executive calling the delays 'untenable.' The new controls require exporters to submit end-use certifications to ensure materials are not used for military purposes or re-exported to the United States— a key condition under the licensing terms. Several exporters and buyers said the requirements were unclear and difficult to fulfill. Rajesh Jejurikar, head of the automotive division at India's Mahindra & Mahindra, said the certification process remained opaque. A manager at Chengdu Galaxy Magnets said her company was assisting clients with statements for export approval, but any applications related to military use were categorically rejected. The controls have prompted concern from major US companies, including Tesla, Ford, and Lockheed Martin. Lockheed, whose F-35 fighter jet uses rare earth magnets, said it has adequate supplies for now, and expects the US government to prioritise access. STORY CONTINUES BELOW THIS AD Some suppliers say limited material continues to flow. Yantai Zhenghai Magnetic Material, based in eastern China, confirmed it had resumed taking orders after receiving export licenses. Other sources said certain long-standing clients were still receiving shipments even before formal approvals were granted. 'There is still material going out,' said Cameron Johnson, a supply chain expert at Tidalwave Solutions in Shanghai. However, questions persist over whether China has resumed exports to the U.S. since both countries agreed to a temporary 90-day ceasefire in their tariff dispute. Analysts say Beijing's strategic advantage lies in maintaining uncertainty. 'Everyone wants Mofcom to provide clarity,' said Cory Combs of Trivium China, referring to China's Ministry of Commerce. 'But China's strategic leverage relies partly on the ability to pull the export control lever to the extent that the US does not provide a satisfying deal.' With no full resolution in sight, experts say the episode will likely accelerate Western efforts to diversify supply chains and reduce dependence on Chinese rare earths. STORY CONTINUES BELOW THIS AD
