More electrified vehicles are sold in China than in any other market. Drivers in the Asian nation purchase millions and millions of battery-bolstered cars and crossovers every year. This impressive scale has given Chinese manufacturers important advantages over rival automakers, including in the area of critical rare-earth minerals, which are used in powerful electric motors.
Critical To Modern Life
According to a report from Reuters, China has a “near-monopoly on rare-earth magnets.” These mission-critical components are used in a wide range of products, from electric vehicles to power-generating windmills to military aircraft. Thanks to simmering trade tensions with the U.S., back in April, rare-earth magnets were placed on an export control list, forcing companies to apply for licenses to take these magnets out of China.
“While dozens of licenses have been issued since late April,” the Reuters article says, “executives, lobbyists and diplomats say they are only a small fraction of the applications that have flooded in from automakers, semiconductor companies and aerospace firms around the world since the tougher export controls were introduced.” The modern world runs on computer chips, fossil fuels, and it would appear rare-earth magnets, too.
Delays in issuing these export licenses are leading to tensions between the U.S. and China, with the former country accusing the latter of reneging on its promises. Reportedly, there were only 30 people in China’s export control bureau when restrictions were put in place, leading to an obvious bottleneck. The number of employees has since doubled to around 60, at least according to a couple different sources.
Curiously, there are apparently only three senior officials that can approve export permits, something that is causing even more delays and frustration. Adam Dunnett, secretary general of the European Chamber of Commerce in China said that workers in the bureau are putting in long hours, “But the reality is,” he added, “this is having a huge impact on a wide variety of sectors. It’s something that could have been better planned and rolled out.”
TopSpeed’s Take
Many countries are dependent on imports of foreign oil to function, a situation that makes them vulnerable to myriad global issues. Suppliers can cut exports, enemy forces can sink transport ships, and prices can fluctuate, often significantly, in a short period of time. This makes things difficult for many nations. It’s interesting that the world is in essentially the same situation now, but with rare-earth elements instead of oil, with everyone relying almost exclusively on China, a market the country has largely cornered. People are working on developing new mines to extract these materials, and facilities to refine them, but these are not likely to come online anytime soon.
For now, there is a cumbersome and time-consuming process in place to get rare-earth metals out of China, but if the country’s government wanted to, it could basically shut down much of the modern world by halting exports. Doing so could be viewed as an act of war and is probably not going to happen… probably. But still, bureaucratic restrictions are causing many headaches. As Reuters reported, automotive suppliers in Europe have filed hundreds of requests to get these materials, but only about a quarter of them have been granted. Where this goes in the future remains to be seen, but China appears to be in a powerful position.
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