Annealed neodymium, iron and boron magnets sit in a barrel before being ground into powder at Neo Material Technologies Inc.’s Magnequench Tianjin Co. factory in Tianjin, China, Friday, June 11, 2010.
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Chinese exports of rare earth magnets to the United States fell sharply in September, ending months of recovery as the two economic superpowers remain locked in trade disputes and Washington scrambles to secure alternative supply chains.
Data from China’s General Administration of Customs showed on Monday that exports to the United States fell 28.7% in September from August, to 420.5 tonnes. This figure was also almost 30% lower than the previous year.
It was the second consecutive monthly decline after a short-lived rebound that began in June, when Beijing agreed to speed up export approvals for rare earths during trade talks with U.S. officials in London.
Chinese rare earth magnet companies will reportedly face stricter scrutiny of their export license applications starting in September. The customs figures also date from before Beijing expanded its export licensing regime earlier this month.
China has a stranglehold on the production of rare earth permanent magnets, with about 90% of the market, and a similar dominance in the refining of the elements used to make them, according to the International Energy Agency.
Magnets are essential for technologies such as electric vehicles, renewable energy, electronics and defense systems. Previous restrictions from Beijing caused shortages and supply disruptions across all sectors earlier this year.
China’s export restrictions are not limited to the United States, with total shipments of rare earth magnets falling 6.1% in September from August, according to customs data.
These disruptions have prompted the United States and its partners to accelerate efforts to create alternative supply chains for rare earths and critical minerals.
On Monday, the United States and Australia signed a mining deal worth up to $8.5 billion. The agreement includes funding for several projects aimed at increasing the supply of rare earths and critical mineral materials used in defense manufacturing and energy security.
The deal comes as US company Noveon Magnetics signed a memorandum of understanding with Australian company Lynas Rare Earths earlier this month to form a strategic partnership to develop a scalable US supply chain for rare earth magnets.
However, the manufacturing of rare earth magnets is very complex and relies on upstream extraction and refining of rare earth elements.
Currently, only a handful of U.S. companies make magnets domestically, and many of them are in the early stages of production.
