##China’s move to ease its new export controls on rare earths has begun, but industry participants warn the approvals are coming too slowly to keep global supply chains running.

Beijing placed fresh restrictions on seven key rare-earth elements and on the permanent magnets made from them. The minerals are crucial for electric cars, wind turbines, humanoid robots, and advanced fighter jets. Under the rules, Chinese exporters must secure a licence from the Ministry of Commerce before each shipment can leave the country.

Exporters and trade bodies now say those licences are being approved at a slow pace. Some shipments to Europe have been cleared, but the pace is far behind demand.

“The window to avoid significant damage to production in Europe is rapidly closing,” said Wolfgang Niedermark, a member of the executive board of the Federation of German Industries, or BDI.

Big US manufacturers are also sounding the alarm. In recent briefings, executives at Tesla, Ford, and Lockheed Martin told investors that China’s new export controls could slow or even halt supply chains. 

One European executive based in China, who asked not to be named, called the present delays “untenable” for foreign firms. “What I’m witnessing on the ground is that there is really incompetence; they underestimated what the impact would be and what you would need to prepare at the working level,” the executive said.

Beijing widened its export controls just after US President Donald Trump announced steep new tariffs on Chinese goods on 2 April. Many analysts saw the rare-earth move as a direct response, highlighting China’s leverage as the world’s dominant supplier of minerals.

China’s rare-earth controls may be a strategic response to US tariffs

So far, it is not clear whether any shipments bound for the United States have received licences since Washington and Beijing declared a 90-day ceasefire in their tariff war earlier this month. 

Yantai Zhenghai Magnetic Material, based in Shandong Province, confirmed it had secured export permits and had “resumed” taking orders from certain buyers.

Two people familiar with the situation said at least one consignment destined for Volkswagen’s operations in Germany had also been cleared. Volkswagen stated that its supply of parts containing rare earths remained stable and that its suppliers had received “a limited number of these [export] licences.”

Inside the industry, companies fear the ministry will be overwhelmed as licence applications pour in. One executive said European importers “are not sure how to prove” that their shipments will not be re-exported to the United States, a step that would break the permit rules.

Slow license approvals would affect Western companies

Tesla chief Elon Musk told investors last month that Chinese officials had asked for assurances that the rare-earth magnets used in the company’s robot arms would not go into military hardware. “That is an example of a challenge there. I’m confident we’ll overcome these issues,” he said.

Permanent magnets made from rare earths are found in combat aircraft such as Lockheed’s F-35. Short-term shortages could disrupt production lines, and experts predict that the new controls will speed up long-term efforts in the West to build alternative supply chains.

Evan Scott, chief financial officer at Lockheed, told investors this week that the company had enough rare-earth material for the rest of the year. He added that he expected US authorities to give priority to Lockheed’s needs “given the importance of our programmes.”

Cameron Johnson, partner at the Shanghai-based consulting firm Tidalwave Solutions, said he believes some big companies with long histories in China have managed to move rare-earth cargoes even before their licences were formally approved. “There is still material going out,” he said.

Cory Combs, associate director at Trivium China, a Beijing consultancy, noted that there is “certainly no evidence” that China has “bluntly cut everyone off.” With the 90-day tariff truce now in place, he expects the commerce ministry to grant more permits, but he warned that uncertainty remains high. 

“Everyone wants Mofcom to provide clarity,” Mr Combs said. “But China’s strategic leverage relies partly on the ability to pull the export control lever to the extent that the US does not provide a satisfying deal.”

Your crypto news deserves attention - KEY Difference Wire puts you on 250+ top site's #Write2Earn