China has announced a series of new rare earth regulations aimed at securing its supplies for national security purposes. These regulations, issued by the State Council on Saturday, encompass rules on the mining, smelting, and trade of critical materials essential for products ranging from electric vehicle magnets to consumer electronics.
According to the regulations, rare earth resources are state-owned, and the government will oversee the industry’s development. China, the world’s leading producer of rare earths, accounts for nearly 90% of global refined output. The new rules, effective from October 1, mandate the establishment of a rare earth product traceability information system. Enterprises involved in mining, smelting, separation, and export of rare earth products must maintain accurate records of product flow and enter this data into the traceability system.
This move follows China’s introduction last year of export restrictions on germanium and gallium, crucial for the chip-making sector, citing national security concerns. Additionally, China banned the export of technology for making rare earth magnets and the extraction and separation of rare earths. These actions have raised concerns about potential supply restrictions escalating tensions with the West, particularly the United States, which accuses China of economic coercion—a claim Beijing denies.
The regulations come at a time when the EU is set to impose provisional tariffs on Chinese electric vehicles on July 4, citing unfair state subsidies. Both sides have indicated plans for talks regarding the proposed tariffs. The EU has ambitious 2030 targets for domestic production of minerals vital for the green transition, especially rare earths, anticipating a sixfold increase in demand by 2030 and a sevenfold increase by 2050.
