Rare earth exports from China grind to a halt amid trade tensions

2025-04-14 general

Beijing, Monday, 14 April 2025.
China, the source of 90% of refined rare earth elements, has reportedly halted exports. This action could trigger supply chain disruptions. The move is viewed as retaliation against increasing tariffs. Affected industries include automotive, semiconductors, and aerospace. Companies dependent on these materials, such as Nvidia, ASML, and TSMC, may face challenges. The export restrictions require exporters to apply for licenses from China’s Ministry of Commerce. The processing time could take six to seven weeks, or even longer.

Immediate market reactions

The restrictions, initiated on April 4, 2025, target seven rare earth elements and related materials [2]. These include materials vital for high-tech sectors like defense, energy, and electric vehicles [2]. The halt in exports has raised concerns about potential supply shortages [7]. A Chinese rare earth trader estimates a 60-day wait for shipments, potentially depleting inventories outside China [2]. For US clients, obtaining export licenses could prove especially difficult [2].

Impact on affected companies

The export suspension could disrupt production in Detroit and other manufacturing hubs [1]. Factories may face challenges in assembling products with electric motors if rare earth magnet supplies dwindle [1]. The exact timing of disruptions is unclear, depending on companies’ stockpile sizes [1]. TSMC’s expansion in AI chip manufacturing relies on these materials [4]. The company’s plans to increase AI chip production by 30% by the end of 2025 could be affected [4].

Alternative suppliers emerge

Amidst the trade war escalation, Australian mining companies such as Lynas Rare Earths and Northern Minerals have seen their stock prices surge [8]. Lynas and Northern Minerals shares jumped over 10% in the past week, contrasting with the decline in other Australian mining stocks [8]. Investors are betting on these companies becoming long-term suppliers to Western buyers [8]. Iluka Resources, another Australian firm, aims to provide a stable source of critical minerals [8].

US response and long-term strategies

The US government is reportedly drafting an executive order to stockpile deep-sea metals [3][5]. This initiative aims to counter China’s dominance in battery minerals and rare earth supply chains [3]. The plan seeks to create readily available resources within US territory for future use, especially in potential conflicts or import restrictions [3][5]. This move underscores the long-term strategic importance of securing rare earth supplies outside of China [5].

Bronnen

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