China banned the export of technology to make rare earth magnets on Thursday, adding it to a ban already in place on technology that facilitates the extraction and separation of critical materials. The move, in an apparent response to moves by the United States and Japan to wean themselves from reliance on Chinese suppliers, further cement Beijing’s grip on the market for rare earth, a group of 17 metals crucial to manufacturing the magnets that make everything from electric vehicles to wind turbines.
It would take years to build rare earth processing technology from scratch, so Western companies like MP Materials and Neo Performance Materials Inc. have been buying rare earths from China to process in the US. But the ban, which also covers technology for mining and ore-dressing, could stifle that effort. “China has the only processing plant in the world and is therefore in a position to keep out competition,” said Constantine Karayannopoulos, CEO of Neo. “They can make a good price for the raw material and then keep out competitors.”
The ban, which China sought public opinion on in December, does not affect exports of the rare earths themselves. However, it targets technologies to refine “heavy rare earth” elements such as terbium and dysprosium. It is also expected to hinder attempts to develop production facilities for rare-earth magnets, the most valuable processed rare earths.
China controls over two-thirds of global refining capacity as the world’s top miner and processor. Its grip first gained broad international attention in 2010, when Beijing tightened restrictions on rare-earths exports. The US, the EU, and Japan eventually forced Beijing to ease those limits through the WTO, but concerns have lingered.
Despite their name, rare earths are not rare: They are found all over the planet, concentrated (because of their weight) in sediments formed by erosion. Their use makes them unusual: They are incorporated into all sorts of modern and new applications, so their value has risen. As a result, the costs of extracting them and making them into magnets have gone up.
China, the world’s dominant processor of rare-earth minerals, banned the export of technology to extract and separate the strategic metals on Thursday in a move that aimed to protect national security. The ban, which the commerce ministry had sought public opinion on last year, adds to restrictions in place in 2008 and earlier this year.
Unlike rare-earth magnets, other processed rare earths are not considered vital to China’s economy, and other producers can produce them. However, the ban will limit those options, and experts say it may encourage companies in Vietnam and Mongolia to seek supplies from China for processing and to export their technology back to China. They also say it will likely encourage the US and Japan to increase their sourcing of raw rare earths from third countries, such as Australia and Canada.
