Shortly after the US government tightened its restrictions on Chinese entities, China appeared to retaliate by limiting the export of technology related to rare earth elements. This move can potentially hinder Western countries' endeavors to establish a rare earth supply chain that is less dependent on China.
On December 21, the Ministry of Commerce of China updated its catalog for technologies under export control, and rare earth processing technologies will be subject to export curbs.
According to the revised document, technologies for refining, processing, and utilizing rare earth elements, coded 083201J, encompass technologies for rare earth extraction and separation, production technology for rare earth metals and alloys, samarium-cobalt, neodymium-iron-boron, cerium magnet preparation techniques, and preparation technology for rare earth borate oxy-calcium.
China said in a press release that the revision was a specific measure to adapt to changes in technological development and improve technical trade management. It aims to create favorable conditions for promoting international economic and trade cooperation while safeguarding the country's economic security and development interests.
China dominates the rare earth supply chain, a sector crucial to various industries, from clean energy to defense. China is responsible for approximately 60% of global rare earth mining production and almost 90% of processing and refining. The strategic control of this resource has been a persistent concern for governments, particularly the US and Japan.
While the regulations won't directly impact the shipment of rare-earth products, they are aimed at thwarting attempts to cultivate this industry beyond China's borders. This move can impede other nations in a sector controlled by Beijing.
China's move came days after the US added 13 Chinese entities to the Unverified List. In October, China unveiled graphite restrictions days after the US updated its chip export curbs against China in the same month. When the Netherlands government announced a new export ban on DUV equipment in June 2023, China also announced the export restrictions on germanium and gallium.
Global rare earth production and reserves (metric tons) | |||
Country | 2021 Production | 2022 Production | Reserves |
US | 42,000 | 43,000 | 2,300,000 |
Australia | 24,000 | 18,000 | 4,200,000 |
Brazil | 500 | 80 | 21,000,000 |
Burma | 35,000 | 12,000 | NA |
Burundi | 200 | NA | NA |
Canada | NA | NA | 830,000 |
China | 168,000 | 210,000 | 44,000,000 |
Greenland | NA | NA | 1,500,000 |
India | 2,900 | 2,900 | 6,900,000 |
Madagascar | 6,800 | 960 | NA |
Russia | 2,600 | 2,600 | 21,000,000 |
South Africa | NA | NA | 790,000 |
Tanzania | NA | NA | 890,000 |
Thailand | 8,200 | 7,100 | NA |
Vietnam | 400 | 4,300 | 22,000,000 |
Other countries | 60 | 80 | 280,000 |
Total | 290,000 | 300,000 | 13,000,000 |
Source: USGS, December 2023
