China unveils new rare earth regulations to protect domestic supply

China has unveiled a list of rare earth regulations that are aimed at protecting supplies for national security purposes, reports Reuters. These regulations encompass rules governing the mining, smelting, and trading of critical materials used in the production of items ranging from magnets in electric vehicles (EVs) to consumer electronics.

The regulations, issued by the State Council, announced that rare earth resources belong to the state, and the government will oversee the development of the rare earths industry. In recent years, China has become the world’s dominant producer of the 17 minerals, accounting for nearly 90% of global refined output.

China’s global industrial significance is such that the EU has set ambitious 2030 targets for domestic production of crucial minerals, particularly rare earths. This is in line with the green transition as rare earths are used in permanent magnets powering motors in electric vehicles and wind energy. The law came into force in May to support this initiative. The demand for rare earths in the EU is projected to increase sixfold by 2030 and sevenfold by 2050.

The new Chinese regulations, which will take effect on October 1st, state that the State Council will establish a rare earth product traceability information system. Under this system, enterprises involved in rare earth mining, smelting and separation, as well as the export of rare earth products, will need to establish a product flow record system and accurately record the flow of products when entering them into the traceability system.

Last year, China imposed restrictions on the export of germanium and gallium, which are used in chip-making, in order to protect national security and interests. Additionally, China banned the export of technology used to produce rare earth magnets and placed restrictions on technology used for the extraction and separation of rare earths. These rules raised concerns that limitations on rare earth supplies could escalate tensions with the West, especially the United States.

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