China tightens rare earth regulations, policing entire supply chain

BEIJING – China tightens regulation in the rare-earth metals industry from mining to exports, the Ministry of Industry and Information Technology said on Friday, in part as its latest response to ongoing tensions with the US

While current regulations focus on the production level – such as mine development, smelting or separation – the draft law of the new rules seeks to manage the “entire industry chain” of precious ore, including refining, product transportation, and all the way to exports. to do.

The rules state that companies are obliged to follow export control laws and regulations regarding the export and import of rare-earth minerals. This suggests that Beijing may implement its new export control law implemented in December, which tightens state control over the flow of strategic materials.

The ministry said that it has started accepting public opinion on the draft rules. The rule is expected to come into force early this year.

The new rules will give Beijing greater control over the supply of materials that have become important for high-tech manufacturing worldwide. China accounts for more than 60% of global rare-earth production, and its exports hit a five-year low in 2020.

Rare earthy soils are transported to a port in China’s Jiangsu Province. © Reuters

An official of a foreign company operating in Japan said that while the US is moving to build a network of HEM’s partners in the tech front and elsewhere in China, “there are concerns that Chinese officials will use these new rules . “

The use of draft regulations prohibits the purchase and sale of rare-earth products that are illegally exploited and removed. According to the report of the news agency Xinhua, an industry official says that this will help stabilize the market, as well as protect industrial safety and the environment.

The document mentions that a tracking system will be installed for rare-earth products, enhancing the “closed-loop management” of the industrial chain.

The ministry said that regulatory responsibilities, project approval process and quota management are also covered by the 29-part draft.

Rare earth is essential for the powerful magnets found in electric vehicle-electric motors, among many other applications, including drones and missiles. Japanese companies, for example, use Chinese rare earths to make magnets for customers in the US and elsewhere.

China considers scarce earth a “strategic resource” that can be given to its advantage in international diplomacy. This was temporarily cut off by rare-earth exports to Japan in 2010, when Beijing claimed as Diaoyu and increased tension on the Senkaku Islands, administered by Japan.

As trade tensions with the US increased, China threatened to suspend rare-earth exports in 2019. And Beijing made similar threats last year over US defense contractor Lockheed Martin’s contract to upgrade air defense missiles in Taiwan.

The US, which relies on China for 80% of its rare-earth imports, and Australia is taking the initiative to create an alternative supply chain, despite challenges including ore quality and costs. Australian rare earth mining company Linas and US partner Blue Line are building a Texas processing facility that will handle heavy rare earths, such as the dispersium used in magnets.

According to a Japanese industry analyst, with a similar project in France, the Texas site is the only one of its kind without Chinese involvement.

Japan is also seeking an alternative supply of scarce imports, with the focus on reducing its dependence on Chinese imports from 58% to 50% or 2025.


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