China issues rare earth licences to suppliers of top 3 US automakers, sources say

BEIJING/WASHINGTON – China has granted temporary export licences to rare earth suppliers of the top three US automakers, two sources familiar with the matter said, as supply chain disruptions begin to surface from Beijing’s export curbs on those materials.

At least some of the licences are valid for six months, the two sources said, declining to be named because the information is not public. It was not immediately clear what quantity or items are covered by the approval or whether the move signals China is preparing to ease the rare earth licensing process, which industry groups say is cumbersome and has created a supply bottleneck.

China’s decision in April to

restrict exports of a wide range of rare earths

and related magnets has tripped up the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.

China’s dominance of the critical mineral industry, key to the green energy transition, is increasingly viewed as a

key point of leverage for Beijing

in its trade war with US President Donald Trump. China produces around 90 per cent of the world’s rare earths, and auto industry representatives have warned of increasing threats to production owing to their dependency on it for those parts.

Suppliers of three big US automakers, General Motors (GM), Ford and Jeep-maker Stellantis received clearance for some rare earth export licences on June 2, one of the two sources said.

GM and Ford each declined to comment. Stellantis said it is working with suppliers “to ensure an efficient licensing process” and that so far the company has been able to “address immediate production concerns without major disruptions”.

China’s Ministry of Commerce did not immediately respond to a faxed request for comment.

China’s critical-mineral export controls have become a focus of Mr Trump’s criticism of Beijing, which he says has violated the truce reached in May to roll back tariffs and trade restrictions.

On June 5, Mr Trump and Chinese President Xi Jinping had a lengthy phone call to iron out trade differences. Mr Trump said in a social media post that “there should no longer be any questions respecting the complexity of Rare Earth products”. Both sides said teams will meet again soon.

US vehicle companies are already feeling the impact of the restrictions. Ford shut down production of its Explorer sport utility vehicle at its Chicago plant for a week in May because of a rare earth shortage, the company said.

The approval for the vehicle suppliers follows a green light granted to a US electronics company’s suppliers last week and another one issued earlier this week to suppliers of a US non-auto company, the first source said, declining to name the companies.

“We have to give the Chinese the benefit of the doubt that they’re working through this. It’s up to them to show that they are not weaponising it,” said the source. Reuters reported on June 4 that China has introduced a tracking system for its rare earth magnet sector in a move to improve its control over the sector and crack down on smuggling. REUTERS