"China restricts the export of rare earth technology, the United States and the West are hindered in supply competition"

On December 21, the Ministry of Commerce and the Ministry of Science and Technology issued an announcement on the publication of the "Catalogue of Technologies Prohibited and Restricted by China for Export". In the part of the prohibition of export, "rare earth refining, processing and utilization technology" is included, specifically involving rare earth extraction and separation technology; production technology of rare earth metals and alloy materials; Samarium cobalt, NdFeB, cerium magnet preparation technology and rare earth calcium borate oxide preparation technology.

The adjustment of the directory immediately attracted the attention of many American media. According to Bloomberg, China, the world's main supplier of rare earths, has included rare earth metals and rare earth magnet manufacturing technology in the list of prohibited or restricted exports, which may make it more difficult for the United States and other Western countries to strengthen the supply of strategic raw materials, so that the West will be hindered in this "supply competition", although the new rules themselves do not affect the export of rare earth products, but may still have an impact on the development of rare earth industries in other regions.

Bloomberg reported that critical metals are increasingly in the spotlight as Western countries increasingly view the supply of critical metals as a matter of national security, especially at a time when the global energy transition raises concerns about potential future supply shortages.

Currently, the United States is leading the way to reduce China's control over the flow of minerals, from rare earths to lithium and cobalt. The Biden administration's climate-related bills are designed to get more supply from within the United States or from allies. While the Biden administration and the European Union have pledged new funding for potential suppliers in legislation, China's latest move highlights the technical challenges that Western producers may face when trying to develop rare earth refining processes that China has mastered for decades, the report said.

Especially since until now, there have been few rare earth refineries outside of China, which means that Chinese companies and researchers have established a huge technical and practical advantage in how to extract and process rare earths, while elsewhere, this expertise has lagged behind.

Bloomberg mentioned that in the "Catalogue of Technologies Prohibited and Restricted by China for Export" released this time, in addition to the prohibited export part, there is also a restricted export part, which includes the "mining, beneficiation and smelting technology of rare earths".

China's move comes at a time when its "geopolitical rivals" are also eager to reduce their reliance on rare earths produced in China, the report said. Rare earth, as a non-renewable scarce strategic resource, is a collective name for 17 metal elements, known as "industrial monosodium glutamate", because of the wide application in the field of energy, military high-tech has attracted much attention, in the past 30 years, China has always had a leading force in rare earth mining and refining.

The Financial Times, citing data from the International Energy Agency (IEA), noted that China accounts for about 60% of global rare earth mining production, while processing and refining accounts for nearly 90%. China also dominates the global supply of rare earth magnets, which are the main products used in manufactured products, such as those made from neodymium, a rare earth element, which is used in 90 percent of electric vehicles and is widely regarded as the most efficient way to power electricity, according to U.S. government data.

The importance of rare earths has long been self-evident. A research report by the US Congress has revealed that the United States relies heavily on rare earths for high-tech weapons, for example, an F-35 fighter needs 417 kilograms of rare earth materials, and a nuclear submarine uses more than 4 tons of rare earths.

Because of this, in recent years, some Western countries, led by the United States, have been looking for and building new rare earth supply chains to reduce their dependence on China for key strategic materials and try to avoid the dilemma of "being stuck". However, bypassing China, a large country with rare earth resource reserves and a major producer, export, and consumer, cobbling together a new supply chain will inevitably bring more costs in all links. The Wall Street Journal reported on December 15 that Western companies have faced numerous "unusual obstacles" on this difficult path.

The report pointed out that for decades, China has dominated every aspect of the rare earth magnet manufacturing process and is the only country that has the ability to mass-produce rare earth magnets from start to finish. Two-thirds of the world's rare earth production comes from China. At the same time, China also accounts for 85% of the world's rare earth ore processing capacity, and more than 90% of the world's magnet manufacturing capacity.

Rare earths are already valuable in their own right, and even more so are the technology to produce rare earth magnets, which are essential for smartphones and electric vehicles, as well as jet fighters and wind turbines. The problem is that the U.S. and Australia are able to mine rare earths, but not to process them on a large scale; Malaysia can process ores, but not magnets; Japan is able to produce magnets, but there are no rare earth minerals.

Reuters used the word "struggling" to describe the West's current efforts in rare earth refining, citing data from the British battery raw materials consultancy Benchmark Mining Intelligence (BMI), saying that China has refined 99.9% of the world's "heavy rare earths" while the West is still processing "light rare earths", including neodymium rare earths and neodymium-praseodymium mixed rare earths (NdPr).

"Most likely, the impact of this ban will make it more difficult to bring heavy rare earth separation capacity online outside of China." For example, Daan De Jonge of BMI said that neodymium may be easily isolated in Europe or the United States, but only in China it can be extracted.

On December 22, Foreign Ministry Spokesperson Wang Wenbin held a regular press conference. A Bloomberg reporter asked that China will halt the export of a range of rare earth technologies, and although China has previously imposed some restrictions, it has now expanded the list of technologies that cannot be transferred overseas, including the processing of rare earths and magnets. What is China's response to this?

Wang Wenbin said that the Chinese authorities have already responded to this. The revision of the catalogue of technologies prohibited and restricted from export is a concrete measure and routine adjustment for China to adapt to the changes in the technology development situation and improve the management of technology trade. After the revision, the table of contents was reduced from 164 to 134 items.

"China has always adhered to promoting reform and development through opening-up, and we will create positive conditions for promoting international economic and trade cooperation on the basis of safeguarding national economic security and development interests." Wang Wenbin said.