China Expands Rare Earths Export Controls Ahead of Trump-Xi Talks

China’s Expanded Rare Earth Export Controls

China has expanded its rare earth export controls, adding five new elements. Holmium, erbium, thulium, europium, and ytterbium are now restricted. The Ministry of Commerce’s new measures particularly target the semiconductor industry. This move comes amid rising global dependence on Chinese rare earths.

China dominates the global rare earth market, producing over 90% of the processed materials used in key industries like electric vehicles (EVs) and military applications. The additional controls reinforce China’s strategy to maintain its market dominance. Foreign companies must comply with new export regulations if they use Chinese materials.

The expanded restrictions, first announced in April, caused global shortages. While agreements with the US and Europe have alleviated some issues, tensions remain. These new regulations could disrupt supply chains, particularly for industries dependent on semiconductors.

Impact of China’s Rare Earth Export Restrictions

These restrictions come just ahead of the Trump-Xi talks later this month. The White House is closely monitoring the situation. US officials are assessing the impact of the new export rules. With the US seeking alternative rare earth supplies, these regulations add complexity to global trade.

The new regulations not only affect rare earth elements but also refining technologies. Foreign companies using Chinese materials will now need an export license, even if no Chinese firms are involved. This mirrors US export controls on semiconductor equipment to China, heightening geopolitical tensions.

China’s dominance in rare earth production has raised concerns worldwide. Countries like the US, EU, and Japan are looking for alternative supply chains. The new controls will take effect on November 8, while foreign company rules begin on December 1.

SuperMetalPrice Commentary:

China’s expanded rare earth export controls highlight its strategic dominance in a crucial sector. These measures underscore China’s central role in the global supply chain for materials essential to modern technologies like electric vehicles and military applications. By targeting semiconductor industries, China aims to assert further control amid growing geopolitical tensions.

These developments could drive Western countries to reduce reliance on Chinese materials. While efforts to secure alternative supplies are underway, China’s market position remains formidable. The next few months could see more volatility in rare earths markets, with potential disruptions to supply chains and prices.