China halts critical mineral, magnet exports as trade war intensifies

Ganzhou, China: China has suspended exports of a wide range of critical minerals and magnets, threatening to choke off supplies of components central to car makers, aerospace manufacturers, semiconductor companies and military contractors around the world.

Shipments of the magnets, essential for assembling everything from cars and drones to robots and missiles, have been halted at many Chinese ports while the Chinese government drafts a new regulatory system. Once in place, the new system could permanently prevent supplies from reaching certain companies, including American military contractors.

The heavy rare earth metals covered by the export suspension are used in magnets essential for many kinds of electric motors, including EVs.Credit: Bloomberg

The official crackdown is part of China’s retaliation for US President Donald Trump’s sharp increase in tariffs that started on April 2.

On April 4, the Chinese government ordered restrictions on the export of six heavy rare earth metals, which are refined entirely in China, as well as rare earth magnets, 90 per cent of which are produced in China. The metals, and special magnets made with them, can now be shipped out of China only with special export licences.

But China has barely started setting up a system for issuing the licences. That has caused consternation among industry executives that the process could drag on and that current supplies of minerals and products outside China could run low.

If factories in Detroit and elsewhere run out of powerful rare earth magnets, that could prevent them from assembling cars and other products with electric motors that require these magnets. Companies vary widely in the size of their emergency stockpiles for such contingencies, so the timing of production disruptions is hard to predict.

The so-called heavy rare earth metals covered by the export suspension are used in magnets essential for many kinds of electric motors. These motors are crucial components of electric cars, drones, robots, missiles and spacecraft. Petrol-powered cars also use electric motors with rare earth magnets for critical tasks such as steering.

The metals also go into the chemicals for manufacturing jet engines, lasers, car headlights and certain spark plugs. And these rare metals are vital ingredients in capacitors, which are electrical components of the computer chips that power artificial intelligence servers and smartphones.

Michael Silver, chair and chief executive of American Elements, a chemicals supplier based in Los Angeles, said his company had been told it would take 45 days before export licences could be issued and exports of rare earth metals and magnets would resume.

This article originally appeared in The New York Times.