Mineral explorers hoping to meet growing demand for rare earths are fighting for around $1 billion in funding in Brazil to make a project a reality in a country with the largest reserves after China.
Bloomberg | Bloomberg | Getty Images
BEIJING – Beijing does not provide foreign companies with much-needed access to rare earths, according to China’s European Chamber of Commerce.
As a result, at least one member lost “millions of euros,” the ECCC told reporters on Monday.
Nearly 25 years ago, business organizations refused to share the names of affected companies, but others said they still haven’t clarified the consistent process for accessing minerals.
Rare earth is a category of minerals that are important in the belts of products, from cars to semiconductors. China controlled more than 69% of rare earth mine production in 2024, and nearly half of global reserves, according to the US Geological Survey.
Beijing is leveraging this control in trade consultations with the US and other partners. Since the end of last year, China has tightened restrictions on rare earth exports and has even called for evidence that it will not be used for military purposes. China began issuing disposable export licenses after a mid-May trade ceasefire with the US
A spokesman for German automaker Volkswagen said, “The supply of parts containing rare earths is stable and has not experienced a shortage. Suppliers are continuing to work with subcontractors to obtain the necessary export licenses.”
However, the ECCC said that after receiving approval in June and July, members reported an increasing number of challenges in obtaining export licenses. The business group also emphasized that the licensing does not guarantee steady access to rare earths, and increases uncertainty for the company.
According to the bloc, almost half of the EU’s rare earth imports came from China last year, followed by Russia and Malaysia.
Increased restrictions on access to rare earths are the latest challenge for international companies caught up in the midst of trade tensions involving China.
Since Covid-19, when pandemic restrictions disrupt supply chains, foreign businesses have been declining in China. The domestic economy slowed and was dragged by the real estate recession and overcapacity in the industrial sector.
Last week, the Shanghai Chamber of Commerce said it had shown that its members surveyed between May and June showed that businesses have reached a new low for the next five years. The survey found that almost half of respondents (highest on record) diverted Chinese investments to other regions, primarily Southeast Asia.
European and US companies have warned that rare earth shortages will be hit in the third quarter, in addition to the production disruption earlier this year.
Weekly analysis and insights from Asia’s biggest economy in your inbox
Subscribe now
The ECCC said it will meet with European Union policymakers in Brussels next week to update the business situation. They also released their annual position paper on Wednesday. This included several recommendations to China as they prepared plans for the next five years.
The Chamber of Commerce is urging Beijing to consider ways to fix the root cause of overproduction and to give the private sector a major role in key industries such as healthcare, where state entities tend to have greater shaking in China.
ECCC President Jens Eskelund told reporters this week at a recent meeting with Chamber and China’s Commerce Ministry that the conversation is focused on access to rare earths.
China’s top leaders are scheduled to meet in October to discuss development goals for 2026-2030. Beijing has similar plans every five years. The 14th version, released in 2021, will end at the end of this year, with the 15th starting next year.
As China is the EU’s second largest commodity partner to win trade in 2024 at 732 billion euros, European companies will watch the meeting closely.
“Made in China 2025,” “Look back at such plans that include all these things that we struggle with. [with] Now, the majority are actually the result of policy choices, Eskelund said.
– CNBC’s Sam Meredith contributed to this report.
