China has announced new export controls on rare earth minerals in response to tariffs imposed by former President Donald Trump. These minerals are crucial for making electronics and batteries, and this move is seen as a way for China to limit U.S. access to these vital resources.
The Chinese government stated over the weekend that while it will keep its supply of rare earths stable for the rest of the world, access for the United States will be restricted. Currently, China is the leading producer of rare earth minerals, providing about 70 percent of the global supply. Specifically, it supplies around 60 percent of the raw materials but dominates nearly 90 percent of the processing and refining.
A decade ago, China controlled the entire market, but competition has increased as other suppliers ramp up production. In retaliation to this competition, China has set high production quotas to drive prices down and challenge its rivals.
On Sunday, China designated seven rare earth minerals for additional export controls, which could impact U.S. companies. While these controls do not explicitly ban exports to the U.S., past actions suggest that such announcements often lead to significant supply reductions.
Interestingly, two rare earths—neodymium and praseodymium—were not included in the new restrictions, as they are more readily available from sources outside China. The seven minerals under tighter controls are mainly sourced from China, and officials justified the measures by claiming these minerals have military applications, making them crucial for national security.
The China Nonferrous Metals Industry Association reassured businesses that as long as they do not harm China’s interests, normal operations and trade should continue without disruption.
In South Korea, which relies heavily on Chinese rare earths for its electronics sector, officials held a meeting to evaluate the impact of these restrictions. They believe that current stockpiles can last about six months for two of the restricted minerals and that manufacturing processes can adapt to lessen the need for others.
The South Korean trade ministry plans to seek alternative sources for the restricted minerals, potentially turning to Australia. They also intend to keep communication open with China to prevent delays in export approvals.
Australian companies are optimistic about the situation, seeing an opportunity to capture some of the market share that China currently holds. With China’s new export controls, Australian refiners are preparing to expand their presence in the rare earths market more quickly.