China tightens rules on rare earth materials

The State Council is an important governing body in China, comparable to the government cabinet. Therefore, her statements are extremely important. Last year, China also introduced measures to protect and track exports of germanium and gallium, widely used in the chipmaking sector.

The materials in question include praseodymium, neodymium, terbium and dysprosium, all of which are known for their magnetic properties. Neodymium, for example, is often used in permanent magnets to increase the magnetic field density – if such a permanent magnet is then used in an electric motor (permanent magnet synchronous machine, PSM), the power density of the motor increases. Rare earth elements are also used in generators (for example, wind turbines).

A traceability information system is to be created for the four rare earths listed. Companies must use the system to report how much rare earth they mine, process or export. Product flows must be recorded “truthfully,” according to an announcement over the weekend.

China is the world’s most important source of these raw materials. According to a German publication Trade paper notes that Germany currently imports 94 percent of its rare earth metals from China. More than 60 percent of global mining takes place in China, with processing accounting for as much as 87 percent. Reuters estimates that EU demand is projected to increase six-fold in the decade to 2030 and seven-fold by 2050.

Last fall, China restricted the export of graphite used to produce batteries. Export permits have been issued for some “highly sensitive” types, all of which are geared more towards battery production. For other, less sensitive types of graphite (used e.g. in the steel industry), export controls have been abolished.

At a stage when negotiations with the EU on controversial tariffs for electric vehicles are underway, it is particularly important to address the issue of rare earth elements. However, export controls on graphite for batteries were already seen in this context: a few weeks before Beijing announced its measures, the EU opened an anti-dumping investigation into imports of electric cars from China – in other words, the basis for the special tariffs announced in June.

reuters.com, handelsblatt.com (in German)