A glimmer of hope as Beijing processes rare-earth magnet requests

Chinese authorities have informed New Delhi that they are processing applications from Indian importers seeking shipments of rare earth magnets, amid new export licensing rules imposed by Beijing.

 

The export restrictions, which took effect on April 4, apply to rare earth magnets, which are critical components in industries ranging from automobiles and electronics to health care and defence. China introduced the curbs in response to heightened tariffs imposed by the US on Chinese goods.

 

The Indian automobile sector raised concerns last month over disruptions caused by the delay in obtaining import approvals from China’s Ministry of Commerce. Industry executives warned the supply bottlenecks were affecting production schedules, including for electric vehicles.

 

According to government officials, the delay stems from a surge in export license applications, putting pressure on China’s processing system. “China has made the process of obtaining a licence long-drawn and complicated,” a senior official said. “Right now, they are not adequately equipped to handle the sudden overload of applications, but we have been informed that they have started processing the applications. So we believe it’s a matter of time now.” 

 

The official added that Chinese authorities are under pressure from domestic stakeholders, who are wary of foreign competitors catching up in rare earth technologies. “The companies wouldn’t want other countries to develop the technology and compete with them,” the official said.

 

China accounts for about 70 per cent of global rare earth mining and nearly 90 per cent of rare earth magnet production, making it a dominant player and giving it significant leverage in global supply chains. The recent export controls have therefore affected importers around the world.

 

Under the new licensing regime, Chinese exporters are required to show that shipments will not be used for dual-use or defence-related applications. The approval process, however, remains complex.

 

Commerce Secretary Sunil Barthwal, addressing reporters last month, stressed that the curbs are not India-specific and that the government is working to mitigate the impact. “We are facilitating them to have discussions with their counterparts in China, and at the diplomatic level the external affairs ministry and the department of commerce also have spoken to the ambassador over there,” Barthwal had said.