China has sharply tightened restrictions on exports of rare earths and related technologies, so that foreign companies will need Beijing’s approval to export products containing some of the minerals.
The measures will also introduce further restrictions on the export of rare earths for “dual use” technologies that could be used in sensitive industries like defence.
“Some overseas organisations and individuals have illegally obtained rare earth technology from China, produced rare earth-related items, and provided them to users in sensitive military and other fields, or used them for military and other sensitive purposes,” China’s commerce ministry said on Thursday. “This has caused significant damage or potential threats to China’s national security and interests and has had an adverse impact on international peace and stability,”
[ Car makers sound alarm as China turns off tap on mineral suppliesOpens in new window ]
The latest restrictions are similar to export controls introduced by the United States to prevent Chinese companies from buying advanced microchips and the machines that make them. The Chinese move comes ahead of an expected meeting between Xi Jinping and Donald Trump on the margins of an Asia-Pacific Economic Cooperation (Apec) summit in South Korea at the end of this month.
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China mines almost 70 per cent of the world’s rare earths and accounts for about 90 per cent of their processing. The minerals and the magnets they produce are used in manufacturing everything from cars and jet engines to consumer electronics and advanced weapons systems.
China has exploited its dominant position in rare earths during trade negotiations with the US, introducing an export licensing system last April. The impact of these export controls were a factor in Trump’s decision to lower the tariffs he imposed on Chinese goods and to open negotiations with Beijing.
Both sides have described talks in Geneva, London and Madrid as productive and Washington and Beijing will both wish to see further progress before the summit later this month. Apart from trade conditions, the talks are understood to include the prospect of a huge package of Chinese investment in the US.
The new rules introduce export licenses for technologies used in the mining, processing and smelting of rare earths and in the manufacturing of magnets. Chinese suppliers will have to issue compliance notices to foreign buyers of items deemed to have both civilian and military uses.
The European Union is the biggest buyer of Chinese rare earth magnets and European manufacturers have complained about the impact of export controls. China agreed to speed up the issuance of export licenses to EU companies but the European Chamber of Commerce in China said last month that delays were still causing supply chain bottlenecks.
“Obtaining export licences for rare earth elements is currently the most pressing issue for many of our members, with the agreed EU-China mechanism so far only easing the situation for some,” European Chamber President Jens Eskelund said.
“Companies need a long-term sustainable solution, with a clear, predictable and reliable process, so they can make their sourcing decisions with certainty. This would also go some way to alleviating EU-China trade tensions.”
