China Hits US Rare Earths Companies with Export Curbs
China hasimposed targeted export controlson two heavily state-backed US rare earths companies and barred 46 Americandefense contractorsfrom government procurement. The Chinese Ministry of Commerce announced on. . .
China hasimposed targeted export controlson two heavily state-backed US rare earths companies and barred 46 Americandefense contractorsfrom government procurement. The Chinese Ministry of Commerce announced on Monday (June 22) that it has added 10 US industrial suppliers to its export control list to “safeguard national security and interests. ”The move is seen as a retaliation toWashington’s blacklistingof major Chinese technology firms. China's clampdown targets the anchor of America's critical minerals supply chain,MP Materials (NYSE:MP), and emerging rare earths producerUSA Rare Earth (NASDAQ:USAR). Also designatedwere drone manufacturers Teal Drones and Jaia Robotics, the aerospace subsidiary ofBAE Systems (LSE:BA,OTCPL:BAESY), electronics manufacturer Aveox and military equipment provider Oshkosh Defense. Concurrently, the Chinese Ministry of Finance excluded 46 US companies from participating in domestic government procurement projects, though foreign-funded, locally registered entities associated with the firms are exempt. The coordinated measures from China end a diplomatic lull that came after lastOctober’s summitbetween US President DonaldTrumpand Chinese President Xi Jinping. China's commerce ministry has explicitly framed the fresh sanctions as a response to the Pentagon’s recent update to its "1260H" list. Earlier this month, theUS Department of Defense addedChinese corporate giantsAlibaba Group Holding (NYSE:BABA),Baidu (NASDAQ:BIDU)and automakerBYD (OTCPL:BYDDF)to a roster of entities it accuses of aiding Beijing’s military. The US designation bars the Pentagon from awarding direct contracts to those companies starting on June 30, with indirect procurement restrictions following in 2027. MP Materials, which operates the only major US rare earths mine, recently received aUS$400 million equity investmentfrom the Department of Defense. Meanwhile, USA Rare Earthsecured US$1. 6 billionin funding from the Department of Commerce and recently agreed to purchase Brazil’s Serra Verde Group to gain access to Latin American mines. Both companies said they have already largely phased out Chinese equipment and materials. Shares of MP Materials gained as much as 3. 7 percent in New York trading after the announcement, while USA Rare Earth rose 5. 8 percent. China currently accounts for 60 percent of global mined rare earths, 90 percent of refining capacity and 95 percent of permanent magnet production, according to the International Energy Agency. The Chinese sanctions follow closely on the heels of aGroup of Seven pledgeto cap rare earths and permanent magnet imports from any single country to below 60 percent by 2030. Beijing has similarly started to leverage its own industrial dominance. Three weeks ago, researchers at the Chinese Academy of Sciences published acomprehensive frameworkidentifying 63 specific technology sectors where China holds a global advantage, outlining them as candidates for future export controls to counter Washington's expanding technology embargoes. Don’t forget to follow us@INN_Resourcefor real-time news updates!Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.