China has imposed export controls against two US rare earth producers that are part of Washington’s effort to reduce its dependence on Beijing by establishing an alternative supply chain for the critical minerals.
MP Materials Corp and USA Rare Earth Inc have been added to China’s export control list to “safeguard national security and interests,” the Chinese Ministry of Commerce said in a statement Monday.
The decision ends a months-long lull in China’s use of such restrictions against US companies following last October’s summit between US President Donald Trump and Chinese President Xi Jinping (習近平). In a separate statement, the Commerce Ministry said the move was in response to the Pentagon’s decision this month to add some of China’s biggest companies to a roster of firms it accuses of supporting the Chinese military.
Photo: Reuters
Effective immediately, China’s designation prohibits these US companies from access to items that can be used for both commercial and military purposes.
The order bans organizations and individuals around the world from transferring or providing them with dual-use items originating in China, effectively extending the scope of export controls beyond Chinese borders.
The ministry announced eight other US companies, including drone makers and robotics and aerospace firms, were added to the export control list.
MP Materials operates the only major rare earths mine in America. It is the linchpin of the Trump administration’s push to build a domestic supply chain for rare earths and magnets, which are crucial to advanced manufacturing and defense. Last year, the company got a US$400 million equity investment from the US Department of Defense.
USA Rare Earth is an emerging producer of rare earths, having earlier this month confirmed US$1.6 billion in funding from the US Department of Commerce. It has agreed to buy Brazil’s Serra Verde Group for access to its mines.
Both companies have been building up their capacity over the past year, as the US races to boost production of rare earths and magnets on US soil following a trade standoff with China.
Beijing used its control of rare earth supplies to retaliate against Trump’s tariffs by restricting exports, highlighting supply vulnerabilities and disrupting production from the US to Europe.
The impact would likely be limited this time. The companies said they have largely cut off supplies of equipment and materials from China.
China accounts for about 60 percent of global mined production of rare earths used in permanent magnets that are critical to making everything from mobile phones and electric vehicles to fighter aircraft and missiles, according to the International Energy Agency. Its dominance is even more clear cut in midstream and downstream segments, accounting for above 90 percent of the refining process and almost 95 percent of permanent magnet production, the agency said.
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