Chinese export restrictions: threat of delays for rare earths!

Chinese export restrictions: threat of delays for rare earths!

In a crucial step, China has introduced a new export licensing process that will impact rare earth exports. Companies must now submit an application to the Ministry of Commerce through their province's trade department, causing significant delays in the approval process. This information comes from Berlin government circles and was published in a recent report by Table.Media published.

The immediate implementation of these regulations caught many companies unprepared. They were unable to adapt to the extended processing times, which raised additional questions about security of supply. An additional aspect of this problem is the European Union's dependence on raw materials from China.

Additional export restrictions

In the past, China has already imposed export controls on antimony and other critical raw materials such as gallium and germanium. On August 15, 2024, China's Ministry of Commerce announced that antimony export controls will take effect on September 15, 2024. In addition to being important for flame retardants and lead-acid batteries, antimony also has military applications. China contributed about 48% of global antimony production in 2023. These measures followed announcements in the context of US restrictions on semiconductor technology, as reported on the website of the Institute for Rare Earths explained.

Global antimony prices rose to over $22,000 per ton at the end of July 2024, an increase of about 100% since the beginning of the year. This also impacts the tungsten supply chain, as China produces approximately 80% of the world's tungsten supply. Experts warn that export controls could soon follow for tungsten.

The EU and its raw materials strategy

The EU has taken an important step to reduce dependence on exports from third countries with the Critical Raw Materials Act (CRMA), which came into force in May 2024. The CRMA stipulates that by 2030, ten percent of annual EU consumption must be mined within the EU, 40% processed and 25% of processing waste recycled. However, the targets are becoming increasingly questionable due to the new export restrictions from China.

A promising development took place in Norway, where Rare Earths Norway discovered the largest deposit of rare earths in Europe. This deposit, known as Fen, has an estimated 559 metric tonnes of 1.57% rare earth oxides and could supply up to 10% of EU demand by 2031. But there are many challenges, especially when it comes to processing and recycling. In 2023, almost 21,000 tonnes of permanent magnets were discarded in Europe, of which less than 1% was recycled.

Geopolitical instabilities, such as those observed in the Democratic Republic of Congo, also endanger the diversification of the offering. Experts are considering introducing a fifth pillar for the CRMA, which could include an advisory board and an EU strategic reserve for rare earths.

In summary, the development of China's export restrictions not only shows the need for a more flexible EU policy, but also raises fundamental questions about future raw material security, which are becoming increasingly urgent due to geopolitical tensions and increasing dependence on critical materials.