Good News for EU Automotive Industry: China Relaxes Rare Earth Export Restrictions Slightly
China relaxes export controls on rare earth elements
China, the global leader in processing rare earths, is showing a somewhat more lenient approach in the export of these crucial materials to the EU. The People's Republic has reportedly increased the number of export licenses for European companies, aiming to prevent a larger crisis, according to the EU Chamber of Commerce.
In the ongoing dispute over export controls on rare earths and magnets vital for numerous industries, there seems to be a glimmer of hope, with the EU Chamber of Commerce reporting an improvement in the situation. The surge in export licenses for European companies is claimed to be a response to urgent cases.
Previously, in early April, Beijing imposed export controls on seven key metals during the ongoing trade dispute with the US. This meant that companies outside China had to go through a complicated application process to acquire export licenses for these vital raw materials.
European companies, however, have faced difficulties with the application process due to lengthy procedures and lack of transparency, according to Jens Eskelund, the chamber's president. These hurdles have negatively affected production lines in Europe and other countries.
Industries across Germany, Europe, Japan, and the US are already struggling due to the indispensable role of rare earths in motors and sensors. The automotive industry has already experienced initial production stoppages, with Suzuki halting production of its best-selling model, the Swift, and European suppliers reporting the first line shutdowns.
China's Ministry of Commerce explained Beijing's actions by stating that rare earths are "dual-use goods," meaning they can be used for both civilian and military purposes. Export controls for such materials are common internationally, said spokeswoman He Yongqian.
U.S. President Donald Trump expressed his displeasure with China's resource policy after a conversation with Chinese President Xi Jinping. However, China did not mention rare earths in its statement following the call. The Foreign Ministry in Beijing declined to comment on Trump's remarks, referring to the People's Republic's previous stance on the issue.
Meanwhile, India is focusing on enhancing domestic production capabilities for rare earth magnets, aiming to reduce dependence on Chinese shipments in response to China's export controls. This strategy aligns with broader efforts to secure strategic minerals crucial for various industries.
The increased export licenses could potentially bolster supply stability, support innovation in the automotive sector, and mitigate dependence on a few key suppliers for European companies. However, a more detailed analysis of the situation is required to accurately assess the impact.
Source: ntv.de, chl/dpa
- China
- Rare Earths
- EU
Additional Insights:
- China has approved some rare earth export license applications, including for suppliers serving major US carmakers [1][2].
- The demand for medium and heavy rare earth elements is surging, driven by sectors such as robotics and new energy vehicles [1][2].
- China has implemented export control measures to protect national security and align with international practices [1].
[1] https://www.freepressjournal.in/world/china-is-exporting-rare-earth-to-us-car-makers-to-counter-trade-war[2] https://www.scmp.com/economy/china-economy/article/3101850/china-stopped-exporting-rare-earths-us-trade-war-economists-say[3] https://www.bloombergquint.com/global-economics/2021/04/14/india-synthetic-rare-earth-startup-begins-production-of-neodymium-iron-boron-metal
- The surge in export licenses for European companies, as reported by the EU Chamber of Commerce, could potentially bolster supply stability for small and medium-sized undertakings (SMEs) in the automotive sector, which heavily rely on rare earths for innovations in motors and sensors.
- The ongoing dispute over export controls on rare earths and magnets has negatively affected production lines in Europe and other countries, with industries such as robotics and new energy vehicles, which require medium and heavy rare earth elements, being particularly impacted, leading to possible production stoppages in SMEs.
