China Implements Rare Earth Regulations to Strengthen Domestic Supply, Reports Reuters

BEIJING (Reuters) – China has introduced a set of rare earth regulations designed to safeguard supplies under the guise of national security. These rules will govern the mining, smelting, and trade of these critical materials, which are essential for various products, including electric vehicle (EV) magnets and consumer electronics.

The regulations, announced by the State Council on Saturday, assert that rare earth resources are state-owned and stipulate that the government will supervise the industry related to rare earths. China has emerged as the preeminent producer of these 17 minerals, currently accounting for nearly 90% of global refined output.

The global relevance of these minerals is underscored by recent European Union legislation that established ambitious domestic production targets for critical minerals, particularly rare earths, in support of the green transition. This is particularly significant given their role in permanent magnets that power EV motors and wind energy systems. Demand within the EU is projected to increase dramatically, with forecasts indicating a sixfold rise by 2030 and a sevenfold rise by 2050.

The new Chinese regulations, set to take effect on October 1, will require the establishment of a rare earth product traceability system overseen by the State Council. Companies involved in rare earth mining, smelting, separation, and exporting will be required to maintain detailed records of product flows and submit these records to the traceability system accurately.

In addition to these new regulations, China previously implemented restrictions on the export of germanium and gallium—materials widely used in the semiconductor industry—justifying these measures as necessary for national security reasons. Furthermore, the government has prohibited the export of technology needed to manufacture rare earth magnets and the extraction and separation of rare earth elements.

These developments have heightened concerns that supply restrictions on rare earths could escalate tensions with Western nations, especially the United States, which has accused China of leveraging economic pressure to sway other countries. China has refuted these allegations.

China’s regulations also arrive amid potential provisional tariffs that the EU plans to impose on Chinese EVs, intended to protect the bloc from an influx of vehicles allegedly produced with unfair state subsidies. Both the EU and China have expressed intentions to engage in discussions regarding these proposed tariffs.