GANZHOU, China China has suspended exports of a wide range of minerals and critical magnets, threatening to interrupt the supply of essentials for automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.
The shipments of magnets, indispensable for assembling cars, drones, robots and missiles, were interrupted in many Chinese ports while the Chinese government elaborates a new regulatory system. Once implemented, the new system can permanently prevent supply to certain companies, including US military contractors.
Official repression is part of China’s retaliation for the sharp increase in fees imposed by President Donald Trump, which began on April 2.
On April 4, the Chinese government ordered restrictions on the export of six heavy rare land metals, which are refined exclusively in China, as well as rare land magnets, of which 90% are produced in the country. These metals and special magnets made with them can now only be exported from China with special export licenses.
However, China has barely began to establish a system to issue these licenses, causing concern among industry executives that the process can drag on and that current inventory of minerals and products outside China can run out.
If factories in Detroit and other places run out of powerful rare land magnets, this can prevent the assembly of cars and other products with electric motors that depend on these magnets. Companies vary widely in the size of their emergency stocks for contingencies like this, making it difficult to predict the moment of production interruptions.
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The so -called heavy rare land metals covered by export suspension are used in essential magnets for many types of electric motors. These engines are crucial components of electric cars, drones, robots, missiles and spacecraft. Gasoline -powered cars also use electric motors with rare land magnets for critical tasks such as direction.
Metals are also used in chemicals for the manufacture of jet, lasers, car headlights and certain types of ignition candles. In addition, these rare metals are vital ingredients in capacitors, which are electrical components of computer chips that feed artificial intelligence servers and smartphones.
Michael Silver, president and CEO of American Elements, a Los Angeles -based chemical supplier, said his company was informed that he would take 45 days for export licenses to be issued and exports of rare land metals and magnets were resumed. Silver said his company has increased its inventory last winter, anticipating a trade war between the United States and China, and can fulfill its existing contracts while awaiting licenses.
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Daniel Pickard, chairman of the Critical Mineral Advisory Committee at the US and the Department of Commerce Representative, expressed concern about the availability of rare land.
“Can control or prohibition of export can have serious effects in the US? Yes,” he said.
Pickard, leader of international trade and national security at the Buchanan Ingersoll & Rooney law firm, said that a rapid resolution of the rare land is necessary as a sustained export interruption can undermine China’s reputation as a reliable supplier.
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In a potential complication, the China Ministry of Commerce, which issued new export restrictions together with the General Customs Administration, has banned Chinese companies from having any relationship with an increasing list of US companies, especially military contractors.
An American mining leader, James Litinsky, MP Material CEO and CEO, said that rare land supplies for military contractors are a particular concern.
“Drones and robotics are widely considered the future of war, and based on everything we are seeing, the critical inputs for our future supply chain are interrupted,” he said.
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MP Materials has the only rare land mine in the United States – the California desert Mountain Pass, near the Nevada border – and expects to start trade production in Texas at the end of the year for General Motors and other manufacturers.
Some Japanese companies maintain sufficient rare land stocks for more than one year, having been harmed in 2010, when China imposed a seven -week embargo on rare land exports to Japan during a territorial dispute.
But many American companies keep little or no stock because they do not want to immobilize capital in inventory of expensive materials. One of the metals subject to new controls, disciplihood oxide, is negotiated for $ 204 per kilogram in Shanghai, and much more outside China.
Rare land magnets represent a small portion of China’s total exports to the United States and other countries. Thus, interrupting shipments causes little economic impact on China while having potential for major effects in the United States and elsewhere.
Chinese customs staff are blocking heavy metal exports from rare land and magnets not only to the United States, but to any country, including Japan and Germany. The application of the new export license requirement, however, has been irregular so far among different Chinese ports, said executives from the rare land industry.
Most, but not all, rare land magnets include heavy rare land metals, which are needed to prevent magnets from losing their magnetism at high temperatures or some electric fields. Some rare land magnets are made only of light rare land and are not subject to export restrictions. Customs employees in some Chinese ports are tolerating magnet exports if they contain only minimal traces of heavy rare land metals and if the magnets are not intended for the United States.
Employees of other Chinese ports are adopting a more rigorous posture, requiring exporters to take tests to prove that any batch of magnets do not contain heavy rare land metals before magnets can be loaded on an export ship.
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