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Date: 07-jun-2025 | By: Nuztrend Team
By Planet Labs inc. - https://www.planet.com/gallery/evaporate-mine/, CC BY-SA 4.0, Link
In a significant development affecting global supply chains, China has started allowing limited exports of rare earth elements under a newly tightened licensing regime. While the move offers some relief to key industries, shortages continue to disrupt electric vehicle (EV) production, electronics manufacturing, and defense sectors worldwide.
China, which controls roughly 90% of the world’s rare earth processing capacity, introduced stricter export rules in April 2025. Under this policy, companies must apply for government-approved licenses to export these critical materials, which are vital in the production of EV motors, wind turbines, smartphones, and military hardware.
According to a Bloomberg report, only a select few companies — notably U.S. automakers — have received export approvals so far. However, many businesses in India, Europe, and Southeast Asia remain cut off from this essential supply stream.
Automakers and electronics firms across the globe are facing production setbacks due to the restricted supply of rare earths. Companies like Ford and BMW have already reported minor disruptions, while Bajaj Auto in India warned of potential EV line halts if the situation persists into Q3 of 2025.
This export restriction is widely seen as part of China’s broader strategy to assert geopolitical leverage, particularly as trade negotiations with the United States and European Union gain momentum. Despite a recent call between President Xi Jinping and former President Trump, experts believe China will continue using rare earth access as a bargaining chip.
As reported by The Washington Post, rare earth supply is now a major point of tension in ongoing global trade discussions.
Countries like Australia, the U.S., and Canada have accelerated their efforts to develop alternative rare earth sources. Australia is investing in new mining and refining facilities, but experts caution that it may take years to match China’s capabilities in refining and magnet production.
Still, the urgency has pushed several governments to offer subsidies, fast-track permits, and encourage private investment into rare earth projects.
While the limited resumption of Chinese exports provides momentary relief for some companies, the supply chain remains fragile. Industry analysts warn that if broader export approvals are not granted by Q3, global EV and electronics markets may face escalating delays and cost increases.
The situation continues to evolve, with businesses watching closely for any shift in China's licensing policies or trade negotiations that could further impact the flow of these vital resources.
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