BEIJING, Oct 9 — China tightened its rare earth export controls today, saying it plans to limit exports to overseas defence firms and semiconductor users and adding five rare earth elements to its list.
The world’s largest rare earth producer also added dozens of pieces of refining technology to its control list and announced rules that will require compliance from foreign rare earth producers who use Chinese materials.
The Commerce Ministry’s announcements follow United States lawmakers’ call on Tuesday for broader bans on the export of chipmaking equipment to China.
The expanded controls Beijing announced in April caused shortages around the world, before a series of deals with Europe and the US eased the supply crunch.
The new curbs come weeks ahead of a scheduled face-to-face meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea.
“This helps with increasing leverage for Beijing ahead of the anticipated Trump-Xi summit in (South) Korea later this month,” said Tim Zhang, founder of Singapore-based Edge Research.
China produces over 90 per cent of the world’s processed rare earths and rare earth magnets. The 17 rare earth elements are vital materials in products ranging from electric vehicles to aircraft engines and military radars.
Exports of 12 of them are now restricted after the Commerce Ministry added five — holmium, erbium, thulium, europium and ytterbium — along with related materials.
Foreign companies producing some of the rare earths and related magnets on the list will now also need a Chinese export licence if the final product contains or is made with Chinese equipment or material. This applies even if the transaction includes no Chinese companies.
The regulations mimic rules the US has implemented to restrict other countries’ exports of semiconductor-related products to China.
It is unclear how Beijing intends to enforce its new regime.
The ministry also added dozens of pieces of mining and refining equipment and materials to its control list.
China’s latest restrictions on the five additional elements and processing equipment will take effect on November 8, just before a 90-day trade truce with Washington expires.
The rules on foreign companies that make products using Chinese rare earths equipment or material are to take effect on December 1. Shares in China Northern Rare Earth Group, China Rare Earth Resources and Technology and Shenghe Resources surged by 10 per cent, 9.97 per cent and 9.4 per cent, respectively, today.
Chips and defence
The Commerce Ministry said overseas defence users will not be granted licences, while applications related to advanced semiconductors will be approved on a case-by-case basis.
The new rules apply to 14nm chips or more advanced chips, memory chips with 256 layers or more, and equipment used in production of such chips, as well as to related research and development. These advanced chips are used in products from smartphones to AI chipsets that require powerful computing performance.
The rules will also apply to research and development of artificial intelligence with potential military applications.
South Korea, home to major memory chipmakers Samsung Electronics and SK Hynix, is assessing the details of the new restrictions and will continue discussions with China to minimise their impact, its industry ministry said in a statement to Reuters.
Samsung declined to comment. SK Hynix and Taiwan’s TSMC did not immediately respond to questions.
Shares in TSMC rose 1.8 per cent today, as the company reported forecast-beating third-quarter revenue. South Korea’s financial markets were closed today for a public holiday.
Chinese rare earth shipments have been growing steadily over the past few months as Beijing grants more export licences, although some users still complain they are struggling to obtain them.
In a nod to concerns about access, the ministry said the scope of items in its latest restrictions was limited and “a variety of licensing facilitation measures will be adopted”.
