China has suspended the export of a wide range of essential minerals and magnets, threatening to cut off supplies of components needed by car manufacturers, aerospace companies, semiconductor firms, and military contractors worldwide, writes The New York Times.
Supplies of magnets needed for assembling everything — from cars and drones to robots and missiles — have been halted at many Chinese ports while the Chinese government develops a new regulatory system that could permanently ban supplies to some companies, including American military contractors.
The official restrictions are part of China's countermeasures to the sharp increase in tariffs by US President Donald Trump on April 2.
The Chinese government has imposed restrictions on the export of six 'heavy' rare earth metals, which are fully processed in China, as well as rare earth magnets, 90 percent of which are produced in China. Now these metals and special magnets made from them can only be exported from China with special export licenses. However, as the licensing system is still being developed, the process may be delayed, and current supplies of minerals and products outside China may end.
The so-called 'heavy' rare earth metals subject to the export suspension are used in magnets needed for many types of electric motors. These motors are crucial components of electric vehicles, drones, robots, missiles, and spacecraft. Gasoline-powered cars also use electric motors with rare earth magnets for control. As the publication notes, if car factories run out of powerful rare earth magnets, it will halt the assembly of cars and other products with electric motors.
The metals are also part of the chemicals used in the production of jet engines, lasers, car headlights, and some spark plugs. Additionally, these rare metals are vital components of capacitors, which are electrical components of computer chips powering AI servers and smartphones.
Chairman and CEO of MP Materials James Litinsky stated that the supply of rare earth metals for military contractors is of particular concern. 'Drones and robotics are considered the future of warfare, and it seems that critical sources for our future supply chain are closed,' he said.
Rare earth magnets make up a tiny fraction of the total volume of Chinese exports to the US and other countries. Thus, the cessation of supplies causes minimal economic pain to China while posing significant consequences for the US and other countries.
Until 2023, China produced 99% of the world's 'heavy' rare earth metals, and since last year it has become a monopolist. China also produces 90% of nearly 200,000 tons of rare earth magnets per year, which are much more powerful than ordinary iron magnets.