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China has begun to allow some rare earth shipments under new export control rules, but the slow rhythm of the approval threatens the interruption in global supply chains, according to industry participants.
Beijing at the beginning of April placed export restrictions on seven elements of rare earths and permanent magnets that are vital for products ranging from electric vehicles to wind turbines, humanoid robots and combat planes.
Exporters, industry groups based in China and supply chain experts said that after weeks late, the Beijing Ministry of Commerce had approved some licenses for exports to Europe, but at a pace too slow to meet demand.
“The window to avoid significant damage to production in Europe is closing rapidly,” said Wolfgang NabedeMark, a member of the Executive Board of the Federation of German Industries, known as BDI.
American manufacturers, including Tesla, Ford and Lockheed Martin, have expressed concern about new Chinese export controls in recent investor reports.
A European industry executive in China, who asked not to be appointed, said the current delays were “unsustainable” for foreign manufacturers.
“What I am witnessing in the field is that there is really incompetence; they underestimated what the impact would be and what I would need to prepare at the level of work.”
The extension of China of their controls in rare earth exports was an response to the radical tariffs announced by the president of the United States, Donald Trump, on April 2.
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The controls, which require exporters to obtain licenses from officials of the Ministry of Commerce for shipments of the seven directed rare and permanent magnets that are made of them, highlighted the geopolitical leverage conferred by China’s domain over the supply of global minerals.
It is not clear if China has begun to approve exports to the US. Since the two economic superpowers agreed to a high tariff fire this month.
Yantai Zhenghai’s magnetic material, an exporter based in the province of East Shandong in China, said he had received export licenses and had “resumed” the orders of some clients.
Separately, two people familiar with the situation said that at least one shipment to the German operations of the Volkswagen car manufacturer had been approved.
VW said that their supply of pieces containing rare earths was stable, and that their suppliers had been granted a “limited number of these [export] licenses ”.
The China Ministry of Commerce did not respond to a request for comments.
There are generalized fears in the industry that China’s licenses bureaucracy will be overwhelmed as the number of applications increases.
European companies “were not sure how to prove” that their shipments would not be re -exported to the US. UU., Which would violate the license conditions, said the European Executive.
Elon Musk, Tesla’s chief, told investors last month that China had sought guarantees that the rare earthly magnets needed for Robot Arms would not be used for military purposes. “That is an example of a challenge there. I am sure we will overcome these problems,” he said.
Rajesh Jejurikar, executive director of the Indian conglomerate Mahindra & Mahindra’s Auto Unit, said the process to obtain the final use certification, aimed at guaranteeing supplies is not used for the weapons, “it is not clear at this time.”
A manager of Chengdu Galaxy Magnets, who sells permanent magnets, said that stopping shipments related to the army was a concern for Chinese authorities. She said her company was helping customers submit statements to the authorities for export approval, but requests for “army related” were not allowed.
“Exports for non -military applications could still be affected,” he said, asking not to be named.
Permanent magnets are used in combat aircraft such as Lockheed F-35, and new controls are expected to cause short-term problems and be changes in long-term supply chain.
Lockheed’s financial director, Evan Scott, told investors this week that the company had enough rare earth material for the year and expected US authorities to prioritize Lockheed’s supply “given the importance of our programs.”
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Cameron Johnson, an expert in manufacturing and supply chain and partner of Tidalwave Solutions in Shanghai, said he believed that some large companies with long -standing links with China had been able to access the country’s rare land before their license requests were approved. “There is still material that comes out.”
Cory combs, associate director of the consultant based in Beijing, Trivium China, said that “there was certainly no evidence” that China had “cut off everyone.”
Given the high the high the temporary fire of the 90 days of the US rate, Combs said that he expected the Ministry of Commerce to grant more approval, but warned that uncertainty remained. “Everyone wants MOFCOM to provide clarity. But China’s strategic leverage is based partly on the ability to attract the export control lever to the extent that the United States does not provide a satisfactory agreement.”
Experts said that the latest rare earth controls would add impulse to Western efforts to reduce their dependence on China.
