Beijing is sending a strong signal in the global competition for rare earths: Further key technologies for their refinement and processing will no longer be exported. The measure, which is attributed to national security reasons, could have a negative impact on global efforts to establish their own value chains. At the same time, it once again emphasises the importance of the latter for the rest of the world.
China is consolidating its dominance in the rare earth industry by officially banning the export of specific technologies for refining and processing these raw materials as of yesterday. The Chinese customs authority justifies this step with national security interests, in analogy to existing restrictions on gallium and germanium, as reported by Reuters. While export bans on rare earth technologies have been in place for some time, new bans have now been imposed in key areas: Among other things, the People's Republic now no longer permits the export of technologies for the production of rare earth magnets, as the industry service Fastmarkets reports. As a result, the export of expertise across the entire magnet value chain is severely restricted. This strengthens China's position in the market, especially in the processing of raw materials.
First signs of an impending ban was announced in April 2023, which already caused concern in the Japanese government at the time. China dominates the global market for neodymium and samarium-cobalt magnets. These are crucial components for the ongoing energy and transport transition. The new export regulations are not aimed at the direct export of rare earth products. Rather, the aim could be to hamper efforts to develop value chains outside China, as Bloomberg surmises. In Western countries, the new regulations could have a major impact on magnet projects of important companies in this sector such as Neo Performance, MP Materials or Vacuumschmelze (VAC). At the same time, the new bans once again emphasise the importance of having their own value chains in Western countries. Around 90 per cent of rare earths are processed in China. The country therefore has technologically leading machinery and equipment as well as the expertise to Rare earths to separate them, use them to manufacture alloys and produce permanent magnets.
"In November 2023, the Chinese Ministry of Commerce issued new export rules for rare earths that require exporters to disclose comprehensive information, including purchase contract and shipping data. China is now once again tightening the rules for exporting the technology required along the entire value chain. In conjunction with the sovereignty over production quotas, the consolidation of Chinese industry that has been steadily progressing for years and the resulting closer integration with companies, I see this as a further step in a long-term strategy and less of a concrete provocation in the trade dispute."
