The Chinese authorities have issued visas to companies that are seeking to source rare earth magnets and their contacts with the government agencies in Beijing clearing these exports are on, commerce secretary Sunil Barthwal said Thursday.
Critical for EV and high-tech manufacturing
He said that the efforts are on to address the issue of supply of these magnets that are a key input for manufacturers of electric vehicles. “The companies are also trying to find ways and means by which their supply chains are not impacted,” he added.
The Chinese Ministry of Commerce and General Administration of Customs in early April had announced the decision to implement export controls in certain rare earth elements. These export controls came on April 4 in response to the tariff war inaugurated by US President Donald Trump through reciprocal tariffs on all the trade partners of the US. China was specifically singled out for harsher tariffs than most other countries.
Export licensing and supply chain risks
Now exporters of seven rare earth minerals and magnets have to seek license to export these items which are crucial in auto, defence, semiconductors, aviation, defence and other critical sectors. The licenses are issued once the Chinese authorities are satisfied that these dual use minerals will be used for the purposes it was declared and not in other strategic areas.
China controls 70% of Rare Earth Elements (REE) production and 90% of processing. Delays in REE shipments for Indian auto OEMs can impact electric, Internal Combustion Engine (ICE) and hybrid vehicle production starting in July 2025, particularly higher-end models that depend on REE-based technologies.
Various domestic suppliers have already sought approval from the Chinese government through their local vendors in China to source the rare earth magnets and submitted the end-use certificates to support their case.