Beijing prohibits the supply of Chinese dual-use goods to, among others, MP Materials and USA Rare Earth. The implications for the development of alternative rare earth value chains remain to be seen.
China has added 10 additional U.S. companies to its export control list, immediately banning the export of dual-use goods to them. This also applies to indirect shipments routed through third countries. The measure was announced on Monday by the Chinese Ministry of Commerce. The decision affects, among others, MP Materials and USA Rare Earth, which in recent months have received U.S. government funding to build a domestic rare earth supply chain. The move may be a response to a recent comparable U.S. action targeting several Chinese companies with alleged military links, Reuters reports.
The expansion of the list is justified on national security grounds, as with previous export restrictions on dual-use goods, which can be used in both civilian and military applications. These include critical raw materials such as gallium, germanium, and certain rare earth elements, as well as some of their compounds, processing equipment, and end products such as permanent magnets. With Monday’s announcement, the existing rules, under which export licenses were previously required for the companies in question, have effectively been tightened into a full export ban. According to Reuters, the measure is largely symbolic. Given their ties to the U.S. government and the U.S. defense industry, the companies would in any case have had very limited operations in China. However, the impact of the export ban on the development of independent rare earth value chains remains uncertain, given China’s dominant position in this sector.
The two countries have been engaged in a trade conflict for years, characterized by periods of escalation and intermittent de-escalation.
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