The Chinese government has significantly tightened restrictions on foreign companies, especially semiconductor manufacturers, making it much more difficult to acquire various rare earths and other minerals that are primarily mined and refined in China.
Tom's Hardware and The New York Times reported that China has intensified restrictions on foreign companies and chip manufacturers purchasing rare earth metals since October 1.
According to the reports, exporters are now mandated to provide detailed explanations regarding the specific uses of these metals within Western supply chains.
Additionally, state-owned enterprises in China are acquiring control over the country's last two foreign-owned rare earth refining plants, signaling an increased effort to regulate these critical resources. This move follows China's previous imposition of export restrictions on minerals like antimony, gallium, and germanium, which are essential for chip manufacturing.
In July, when China announced the nationalization of rare earth resources, China's Ministry of Industry and Information Technology said that only designated enterprises, approved by the State Council in collaboration with relevant agencies, may engage in rare earth mining and extraction.
A production quantity monitoring system was established to regulate mining and refining based on factors such as reserves, types of rare earths, industry development, ecological protection, and market demand. Furthermore, according to the regulations, companies are prohibited from using rare earths as raw materials for production. China also imposed a system to prevent purchasing, processing, selling, or exporting illegally mined or refined rare earth products.
Sina reported that China is nationalizing its rare earth resources and establishing two conglomerates in the North and South. As a result, the supply of rare earth from China is expected to be under strict control. Meanwhile, despite investments in rare earth mining and separating outside of China, production increase is expected to be limited. With the expected growing demands for rare earths in applications like EVs and renewables, the prices are anticipated to rise.
World rare earth production (metric tons) | ||
Year | China | Outside of China |
2017 | 105,000 | 27,000 |
2018 | 120,000 | 50,000 |
2019 | 132,000 | 88,000 |
2020 | 14,000 | 100,000 |
2021 | 168,000 | 122,000 |
2022 | 210,000 | 90,000 |
2023 | 240,000 | 110,000 |
Source: USGS, October 2024
