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On Thursday China dramatically expanded restrictions on its rare earth mineral exports ahead of a meeting set to take place between Chinese Leader Xi Jinping and President Donald Trump, scheduled for the end of October. Beijing is likely using the move as leverage for trade negotiations.
“[China added] five new elements and extra scrutiny for semiconductor users as Beijing tightens control over the sector,” Reuters said. “They expand controls Beijing announced in April that caused shortages around the world, before a series of deals with Europe and the U.S. eased the supply crunch.”
According to China’s Ministry of Commerce, foreign entities must now obtain a license to export products that contain more than 0.1% of domestically sourced rare earth minerals.
Now, a total of 12 rare earths have restrictions placed on their export by Beijing. China manufactures over 90% of the world’s processed rare earths and mines 70% of them. Notably, rare earths, as with any mined material, is generally only usable after processing to remove impurities.
“The White House and relevant agencies are closely assessing any impact from the new rules, which were announced without any notice and imposed in an apparent effort to exert control over the entire world’s technology supply chains,” a White House official told Reuters on Thursday.
Following the restrictions, the markets reacted. Shares of U.S. rare earths surged in response to the supply side decreasing.
“Ramaco Resources soared 12%, Energy Fuels surged nearly 8%, USA Rare Earth jumped more than 7%, and MP Materials rallied more than 6%. Lithium Americas popped more than 4% and Trilogy Metals rose more than 6%,” CNBC said.
Rare earth minerals are critical for the manufacturing of weapons systems, robotics, battery-powered vehicles and electronics.
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