Rare Earth Mineral Deal With China Extends Only 6 Months, Signaling a Huge Weakness In The Trump Trade Deal With China

Real Photo Of What US Economy Will Look Like If We Don't Get Consistent Source of Rare Earth Minerals

 

China’s dominance of the global rare earths supply chain won’t dwindle easily, even if Beijing decides to approve more export licenses through deals with Europe and the U.S.

Three Shenzhen-listed Chinese companies this month said that Beijing approved their exports of magnets with rare earths — metals critical for cars, defense, semiconductors and other industrial products. But another firm, Baotou INST Magnetic New Materials, said last month the export licenses can only be used for one shipment.

In Europe, automotive industry groups have said that, in the case of magnets and heavy rare earths, long-term export licenses from China were only valid for a maximum of six months.

Diversifying away from Chinese sourcing of rare earths is likely to be “extremely difficult” and, at best, a limited long-term solution, according to a Tuesday note from Rico Luman, senior sector economist for transport and logistics at Dutch bank ING.

China is the undisputed leader of the critical minerals supply chain, producing roughly 60% of the world’s supply of rare earths and processing almost 90%, which means it is importing these materials from other countries and refining them.

“Europe currently produces no rare earths, and the U.S. has only recently begun small-scale production of neodymium and praseodymium. However, both regions hold only a fraction of global reserves, limiting their ability to scale up,” Luman said.

Already, European automakers and U.S. high-tech businesses in China have halted production or warned of a shortage this summer.

GRTWT.