EV makers seek govt help as China restricts supply of rare earth magnets

Rare earth magnets are widely used in electric vehicles and other automobiles.

Automobile and component manufacturers have sought the intervention of the government as China has restricted the supply of rare earth magnets, an indispensable part of electric vehicles, CNBC-TV18 reported on April 25.

China’s move to restrict the supply of the magnets, essential for traction motors and various components used in EVs and automobiles, since April 4 is likely to disrupt supply chains and slow down production, the report cited industry sources as saying.

Moneycontrol couldn’t verify the report independently.

Early this month, China, which produces around 90 percent of the world’s rare earth minerals, restricted the export of these elements in response the US’ tariffs.

The curbs on mined minerals, permanent magnets and other finished products were aimed at exports to all countries not just the United States, reports said.

According to new Chinese regulations, magnets will only be supplied to companies that submit an end-user certificate in a prescribed format.

Importers must get the certificate authorised by the ministry of external affairs and the Chinese embassy. They also have to confirm that the magnets won't be used in weapons or transferred to third parties, the CNBC report said.

Amid tariff war with the US, China has warned countries against striking a broader economic deal with the United States at its expense.

Beijing will firmly oppose any party striking a deal at China's expense and "will take countermeasures in a resolute and reciprocal manner," its commerce ministry was quied as saying in a recent Reuters report.

As a trade war plays out between the US and China, there are reports of several companies looking to move a part of their production to India from China.

The US has hit Chinese products with a tariff of 145 percent compared to India’s 36 percent, which have since been paused for 90-days, making a move to Indian shores a more economical.

Apart from electric vehicles, rare earth magnets find wide industrial use including in electric motors, generators, hard disk drives and medical imaging devices like MRI machines.

Early this month, China, which produces around 90 percent of the world’s rare earth minerals, had restricted the export of these elements in response the US’ tariffs. The export curbs not only included mined minerals but permanent magnets and other finished products.

The move affects exports to all countries not just the US, as China tightened grip on the minerals, which are used to make weapons, electronics and a range of consumer goods.