China tightens grip on rare earths industry, bans key technology exports for national security

In a move to safeguard its dominance in the rare earths sector, China, the world's leading processor of these critical materials, has officially prohibited the export of technology crucial for extracting and separating rare earths.

According to Reuters, the ban, announced on Thursday, is anticipated to have an impact on "heavy rare earths," vital for electric vehicle (EV) motors, medical devices, and weaponry, where China currently holds a virtual monopoly. Rare earths, a group of 17 metals, are indispensable for manufacturing magnets used in EVs, wind turbines, and electronics.

China's commerce ministry-initiated discussions in December last year, seeking public input on the potential addition of this technology to its "Catalogue of Technologies Prohibited and Restricted from Export."

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The move aligns with the country's broader efforts to tighten regulations on the export of critical minerals, citing national security and public interest as primary objectives.

Reuters cited Nathan Picarsic, the co-founder of the geopolitical consulting firm Horizon Advisory, who highlighted the significance of this development, stating, "This should be a clarion call that dependence on China in any part of the value chain is not sustainable."

The ban underscores China's commitment to maintaining its market dominance, sparking concerns and intensifying the global race to secure alternative rare earth processing capabilities.

As China asserts control over its rare earth technology, the West faces challenges in reducing dependence on Chinese rare earths, constituting nearly 90 per cent of global refined output. Western countries, including the US and Europe, are striving to establish their rare earth processing operations.

The struggle is particularly pronounced in heavy rare earths, where China excels and has recently banned the export of production technology for rare earth metals, alloy materials, and certain rare earth magnets.

Shares of MP Materials, a Western rare earth company, surged more than 10 per cent following China's announcement. MP Materials has been gradually increasing rare earth processing in California. Ucore Rare Metals, another player in the sector, reported the completion of commissioning a facility for testing its rare earths processing technology, partly funded by the US Department of Defence.

Experts suggest that the ban's impact may impede the development of heavy rare earth separation capacity outside China. While the West is making strides in processing "light" rare earths, including neodymium and praseodymium, the challenge remains in reducing reliance on China for critical elements like dysprosium.

(With inputs from Reuters)

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