Slow release of rare earths leads to a wave of production halts among European enterprises

Despite China's mainland achieving a record high in the export of processed rare earth products in August since 2012, European companies have been forced to suspend production due to a shortage of supply from China. The European Union Chamber of Commerce in China pointed out on the 18th that the European supply chain has been affected by the Sino-US trade war, and the approval speed of export licenses from China is inconsistent, raising doubts that US companies enjoy preferential treatment. Due to the shortage of rare earth materials, seven production disruptions occurred in European companies in August, and it is expected that there will be 46 more in September.

China holds an absolute dominant position in the rare earth market, with its mining output accounting for nearly 70% of the global total in 2024. Especially in the field of rare earth magnets used in key industries such as electric vehicles and wind turbines, China controls 90% of the global output. In April 2025, China implemented export controls on some rare earth products, causing a sharp reduction in supply and severely disrupting the global industrial chain.

After the Sino-US trade truce, China's export of processed rare earth products (including high-performance magnets used in everything from consumer goods to fighter jets) increased to 7,338 tons in August, which was seen as a positive factor following the phone call between the leaders of the two countries. However, European companies said they did not benefit from it.

Carlo D'Andrea, vice-chairman of the European Union Chamber of Commerce in China, said at a press conference in Shanghai: "We see progress, but it is extremely slow." This supply bottleneck is the "number one problem" faced by the chamber's members. European companies are concerned about the differential treatment in the approval of export licenses for rare earths. Some companies seem to be able to obtain licenses in just two days, while others have to wait for two months or longer.

D'Andrea pointed out, "I know that US companies can get licenses very quickly," which is a bottleneck that the Chinese Ministry of Commerce can easily solve.

According to foreign media reports, 22 European companies have sought help from the European Union Chamber of Commerce in China, hoping to assist in approving a total of 141 emergency export applications to China.

Meanwhile, Reuters reported that John Moolenaar, the chairman of the US House of Representatives' "China-US Strategic Competition Special Committee," called on the US government on the 18th to limit or suspend the landing rights of Chinese airlines in the US unless the Chinese government fully restores the supply of rare earths and magnets.

At the same time, the US should review its export control policies on the sale of commercial aircraft, parts, and maintenance services to China. Moolenaar said: "These measures will send a clear message to China that they cannot cut off key supplies to the US defense industry while their strategic sectors remain unaffected."

Currently, due to the continued low demand for air travel between China and the US, the actual number of flights operated by US airlines to China is only a small fraction of the approved flights.