The raw materials noose is tightening
China is imposing export controls on one commodity after another. In August, gallium and germanium were added to the list of export goods subject to mandatory reporting; since December, companies exporting the battery material graphite must also apply for a permit. China is planning the same for the export of silver, tungsten, and antimony. Since the beginning of November, we have been aware that China is planning the same for rare earths. As of Tuesday, we know the exact date: starting this Friday, traders wishing to ship rare earths abroad must submit comprehensive reporting to the relevant authority.
Will we continue to receive our rare earths?
As soon as we became aware of the controls and the potential export bans associated with rare earths, we immediately sought discussions with our Chinese suppliers. This morning, the all-clear came: while the export controls would mean a significant increase in administrative effort, they would still be able to supply us with these elements that are so important for industry.
Another rather defensive show of force
When it comes to the reasons for these new controls on rare earths, China may be throwing up smokescreens. According to the Ministry of Commerce of the People’s Republic of China (MOFCOM), the aim is supposedly to gain a precise understanding of import and export trends and to conduct foreign trade in an orderly manner. By collecting comprehensive economic data such as volume and price, the Chinese authorities would be able to formulate an appropriate export policy and thereby increase the competitiveness of the Chinese economy. However, it can be assumed that China already has such data. The idea that additional export controls are needed for this sounds, at the very least, implausible. It is far more likely that China is using this leverage to usher in the next round of the trade conflict with the United States—which, just like the previous export controls, is likely to have consequences for Europe as well.
Heavy rare earths are the most sought-after
As a trader, we sell the four heavy rare earths that are in high demand across a wide range of industries: dysprosium oxide, gadolinium oxide, terbium oxide and scandium oxide. In addition, we offer the light rare earth neodymium oxide, which is used as the number-one magnet metal in the motors of electric cars, wind turbines and military vehicles. It also enables the development of high-performance lasers. Should China ultimately decide to turn export controls into export bans, our industry would therefore face a serious problem.