China approves rare earth exports after US trade talks

Against the backdrop of high-level negotiations over China’s export controls of rare earths, US businesses are provided some relief, even though it may be only for now.

China has approved “a certain number” of export permits for rare earth elements and related items, its commerce ministry said recently, after US President Donald Trump declared that Beijing would supply to the US companies those key elements and the magnets made from them following trade talks in London.

Export controls of the minerals apparently eclipsed tariffs in the latest round of trade negotiations between Beijing and Washington, after China imposed permitting requirements on seven rare earth elements in April, threatening to halt production of cars, robots, wind turbines and other high-tech products in the US and around the world.

Negotiators from the two governments said they reached a framework to move forward, with details yet to be agreed to by Trump and Chinese President Xi Jinping, but businesses welcomed the developments, even though uncertainties persist.

Rare earth elements are some of the most sought-after critical minerals. Despite the name, they aren’t actually rare, but it is hard to find them in high enough concentrations to make mining them economical. They are also difficult to extract from the ore, and China over the past several decades has built dominance in the processing capacity, supplying nearly 90% of the world’s rare earths.

In the heat of the tariff war with Trump, Beijing had announced permitting requirements for seven heavy rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium, citing the need to “better safeguard national security and interests and to fulfill global duties of non-proliferation.”

The elements China has restricted, such as terbium and dysprosium, are key ingredients needed to make permanent rare earth magnets withstand high temperatures. That is crucial for a variety of uses in electric vehicles, wind turbines and military uses like jet engines and nuclear submarines.

Some of the other rare earths needed for those magnets are produced at the only operating US rare earths mine run by MP Materials in California, but China remains the only source of nearly all of what’s known as the heavy rare earths. MP Materials previously sent the heavy rare earths that it mines to China for processing but it halted that in April amid the tariffs. The company is working to expand its own processing capability as soon as possible, and it is building a new magnet plant in Texas.

Early this month, the European Association of Automotive Supplies said the industry was “already experiencing significant disruption” due to China’s export restrictions on rare earths and magnets, with the shutdown of several production lines and plants across Europe.

However, even though there is an agreement for now, it is expected that supply cut-offs will remain an ever-present threat. Plus, China will probably not approve exports in sufficient quantity to allow US customers to stockpile, said an analyst.