Annealed neodymium iron boron magnets are placed in a barrel before being ground into powder at Neo Material Technologies’ Magnequench Tianjin factory in Tianjin, China, Friday, June 11, 2010.
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China’s rare earth magnet exports to the United States fell sharply in September, ending a months-long recovery as the two economic superpowers remain embroiled in a trade dispute and the United States seeks to secure alternative supply chains.
Exports to the United States in September fell 28.7% from August to 420.5 tons, according to data released by the China General Administration of Customs on Monday. This figure was also down nearly 30% year over year.
It was the second straight month of declines after a brief rebound that began in June, when the Chinese government agreed to expedite rare earth export permits in trade talks with U.S. officials in London.
Chinese rare earth magnet companies are reportedly facing increased scrutiny on their export permit applications starting in September. This tariff figure also comes before the Chinese government expanded its export licensing system earlier this month.
According to the International Energy Agency, China accounts for an estimated 90% of the market in rare earth permanent magnet production and has a similar advantage in refining the elements used to make magnets.
Magnets are essential to technologies such as electric vehicles, renewable energy, electronics, and defense systems. Previous restrictions from the Chinese government caused shortages and supply disruptions across all industries earlier this year.
According to customs data, China’s export restrictions are not limited to the United States, with total shipments of rare earth magnets dropping 6.1% in September compared to August.
The disruption has prompted the United States and its partners to accelerate efforts to build alternative rare earth and critical mineral supply chains.
On Monday, the United States and Australia signed a mineral agreement worth up to $8.5 billion. The agreement includes funding for several projects to increase supplies of rare earths and critical mineral materials used in defense manufacturing and energy security.
The deal comes after US-based Noveon Magnetics earlier this month signed a memorandum of understanding with Australia’s Lynas Rare Earths Ltd. to form a strategic partnership aimed at developing a scalable US supply chain for rare earth magnets.
However, the production of rare earth magnets is highly complex and relies on upstream rare earth mining and refining operations.
Currently, only a few U.S. companies manufacture magnets domestically, and many are in the early stages of production.
