China has warned Western enterprises not to hoard rare earth metals.

China has banned foreign companies from hoarding rare earth elements used in electric motors. The Chinese government controls exports to prevent overseas hoarding and maintain its influence in the industry.

The UNN, citing a report from the Financial Times of the UK, stated that China has warned Western companies not to hoard rare earth metals, otherwise they will face a greater risk of shortage. Currently, the Chinese government strictly controls the supply of rare earths, which are crucial for electric vehicles and other civilian and defense sectors.

China dominates the production of rare earths, processing approximately 90% of the global rare earth supply and producing 94% of permanent magnets. In the trade war with the United States, China used its control over an important industry as a weapon. According to sources, Beijing has been striving to prevent enterprises from hoarding large inventories, which will give them greater flexibility in dealing with shortages and price fluctuations. This indicates China's determination to maintain the maximum influence in this industry.

In April this year, China added seven categories of critical rare earth elements to its export control list in response to the "Release Day" tariffs imposed by US President Donald Trump. The publication stated that this move also included permanent magnets and other finished products, leading to shortages in many industries, including the automotive sector. Although Washington and Beijing agreed this week to extend the tariff truce period by another 90 days, China's control over rare earth elements remains an important part of the negotiations.

The Chinese government controls the mining and processing of rare earth elements through quotas. Last year, the quotas were only allocated to two state-owned enterprises. After officials and enterprises in the United States and Europe complained about the rare earth regulations causing shortages, China has allowed some resumption of the flow of rare earth elements. However, trade data and surveys show that export restrictions are still strictly enforced. A survey conducted by the US-China Business Council (USCBC) last month revealed that half of the member enterprises surveyed indicated that most of their rare earth applications were awaiting approval or had been rejected.

In June, China exported 3,188 tons of rare earth permanent magnets, which was more than twice the amount exported in May. However, it decreased by 38% compared to the same period last year. Since Beijing imposed trade restrictions, in the three months ending in June, the export volume of magnets was approximately half of that in the same period last year.

The report of USCBC states that large orders, especially "a significant increase exceeding the historical average of the applicants, will attract more rigorous reviews to prevent inventory shortages." The report adds: "Applications will also be reviewed gradually." "Any discrepancies may lead to delays or rejections of the applications." People involved in the application review process pointed out that due to the long waiting time, industry associations and business lobbying groups often raise the most urgent issues to the Chinese Ministry of Commerce. The Ministry usually speeds up the review process for the applications of companies ranked higher on the list.

One issue has led some Western companies to shift their manufacturing of finished products to China - a result that is in line with Beijing's efforts to strengthen control over the supply chain. Luis Pinkham, the CEO of the American automotive manufacturer Regal Rexnord Corp, said that the company has moved some production to China so that it can assemble rare earth magnets there and promote their export.