China loosely control over magnets and relieves automakers

Automotive and electronics companies celebrate the partial resumption of Chinese magnet exports, essential for electric motors

Beijing’s dominance over rare land minerals gives advantage against commercial tensions China has begun to resume exports of rare land magnets after weeks of downtime, bringing relief to automakers and companies dependent on these components. A measure of April 4 determined that the export of certain rare land materials and products that contain them would require license.

Implemented during the US and China trade war, the rule has become one of the most worrying points of the conflict for western manufacturers.

Rare land magnets are essential for electric vehicle engines and other products, and China has almost the global monopoly of this market. The country extracts about two thirds of these minerals and processes approximately 90% of the world supply.

After weeks of uncertainty – with fears of a total block – some companies began receiving export licenses.

A representative of a Chinese magnet manufacturer said some companies have already obtained one or two licenses, with more expected releases in the coming weeks. An automotive supplier in Shanghai reported similar experience, citing that the China Ministry of Commerce approved licenses for two lots of components with magnets for German companies.

Volkswagen has confirmed evidence that subcontractors received limited licenses. Two sources in the sector said US companies also began to be served.

Strategic control

Experts warn that the process is not yet normalized, and the Chinese government’s intentions remain unclear. Defense -related companies are under extra scrutiny. Prolonged delays in licenses can affect production chains, with Beijing keeping total control.

“It’s like a tap. They decide when exporting and when not, with absolute control,” said Neha Mukherjee, an analyst at Benchmark Mineral Intelligence.

April rules require government approval to export magnets with “heavy rare lands” – even used in military applications.

The measure arose at the height of the US-China commercial tension, but was not presented as retaliation for Trump’s new taxes. Restrictions apply to all countries, not just the US.

Temporary relief?

The reason for recent flexibility is uncertain. Although US and China announced a commercial truce on Monday (20), sources of the sector suggest that licenses reflect only the end of 45 business days for requests for requests.

“It is impossible to scale the volume of requests they received,” said Thomas Kruemmer, Singapore -based analyst.

Disciprós and terb magnets are considered strategic, used from F-35 fighters and missiles to iPhones and electric cars.

Global dependence

China built decades of dominance in this sector, leaving Western manufacturers without alternatives – and giving Beijing a geopolitical weapon. Companies like GM have closed agreements to buy new US factories, but scale production will still take years.

Last month, automakers ran to map components that use rare lands. Some identified dozens of pieces with these minerals, usually in the form of permanent magnets.

Elon Musk, CEO of Tesla, mentioned in a conference call that the lack of these magnets could delay the optimus humanoid robot:

“We hope to get permission from the magnets. China wants guarantees that they will not be used militarily – which obviously will not be,” he said.

With information from The Wall Street Jornal*