China making it harder to get rare earth magnet export licences

[BEIJING] Chinese rare earth magnet companies have been facing tighter scrutiny on export licence applications since September, sources say, even before Beijing’s move last week to expand controls over the critical minerals used in magnets.

The lengthier reviews magnet makers face raise questions about whether China, the top global supplier, is seeking to throttle back magnet shipments, contrary to its commitment to speed up exports in a trade truce with the US in May, to further tighten its grip on the products essential in military and commercial technology.

Starting in September obtaining an export licence became harder, according to two sources with knowledge of the matter. Applications are now being returned more often with requests for extra information, said one of the sources.

Approvals are taking longer, although generally still within the commerce ministry’s 45 business day deadline, said the other, but the scrutiny is now similar to April, at the height of the trade war, when lengthy waits for licences caused magnet shortages that led to shutdowns at automotive factories.

The sources declined to comment on exactly how much longer it is taking to obtain licences or elaborate on the questions that are being asked.

Both spoke on condition of anonymity given the sensitivity of the issue in China.

China’s commerce ministry did not respond to a Reuters fax request for comment on licence approvals.

Data released on Monday showed China’s rare earth exports dropped by 31% in September. It’s unclear how much of that decline was driven by magnets because the data does not distinguish between products.

“It’s not surprising to see lower exports in September as getting a new licence became increasingly difficult last month,” said one of the sources.

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Exports of rare earth magnets fell sharply in April and May but grew in June, July and August. Data for September will be released later this month.

China is the world’s top supplier of rare earths, a group of 17 elements vital in products ranging from electric vehicles and wind turbines to military radars, and tightly controls the export of many types through its licensing system.

Beijing expanded those controls last week, sparking anger in the US where President Donald Trump promised more tariffs and retaliatory export bans, although he later struck a more conciliatory tone.

There’s been a rush of inquiries since the announcement from foreign clients trying to get orders shipped before the new rules take effect on Nov 8, according to both sources.

Adam Dunnett, Secretary-General of the EU Chamber of Commerce in China, said the number one concern for members was still the bottleneck of rare earth product applications waiting for approval.

The chamber had seen both approvals and delays for its members over the past several weeks, he added.

“We can’t say that we’ve seen a decrease in the level of anxiety or concern,” he said. “Some companies have had their wait extended further without any response as to why that is the case.” REUTERS