Potentially drastic consequences: China sanctions export of further rare earths
China's leadership has announced drastic export controls for the remaining rare earths, and the consequences for the semiconductor industry could be drastic.
(Image: Shutterstock)
The People's Republic of China has imposed new export controls on the remaining five rare earths, which could give the country “complete control over the entire supply chain for advanced semiconductors.” This was reported by the Financial Times and categorized by Jimmy Goodrich, an expert at the University of California. According to Reuters, the elements affected are holmium, erbium, thulium, europium, and ytterbium. Just like the twelve rare earth metals already sanctioned, they are of fundamental importance for the manufacture of modern devices. Their export must be authorized by China. According to the Financial Times, China even stipulates an approval requirement for transactions in which no Chinese company is involved.
Escalation in the trade conflict
China completely banned the export of several rare earths in the spring. This was the People's Republic's response to the massive tariffs imposed on the country by US President Donald Trump. Contrary to initial reports, however, they applied to all countries, not just the USA. Although some agreements with Europe and the USA have subsequently eased the situation, Reuters explains, the move has nevertheless highlighted the dependence of the rest of the world on materials sourced in China. In July, the European Parliament called on the EU Commission to take swift action and condemned Beijing's decision “in the strongest terms.” The stricter measures now come ahead of an expected meeting between President Xi Jinping and Trump.
According to the Financial Times, China has now banned all transactions involving rare earths or products containing them if even the smallest proportion of them originates from China. The People's Republic is thus modeling itself on trade restrictions such as those imposed by the USA, which must also be regularly complied with outside the country. However, it is still unclear how China intends to review and enforce the sanctions. According to Goodrich, however, no semiconductor company operating in China would risk violating the regulations. They are to apply from 1 December, so it is possible that they will still be negotiated. China wants to ban military use completely.
Videos by heise
Rare earths are indispensable for the manufacture of many high-tech products and batteries, for example, and China has long dominated the global market. They only account for a small proportion of the People's Republic's exports, so the export restrictions are causing little economic damage in the country. At the same time, they are having a significant impact on various strategic industries around the world. Although some manufacturers have tried to build up stocks, they will not last forever. This is another reason why an overwhelming majority of MEPs called in July for the EU to pursue the extraction of critical raw materials on its territory and restore processing capacities.
(mho)
