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BEIJING (Reuters) -China tightened its rare earth export controls on Thursday, saying it planned to limit exports to overseas defence firms and semiconductor users and adding five rare earth elements to its list.
The world's largest rare earth producer also added dozens of pieces of refining technology to its control list and announced rules that will require compliance from foreign rare earth producers who use Chinese materials.
The Ministry of Commerce's announcements follow U.S. lawmakers' call on Tuesday for broader bans on the export of chipmaking equipment to China.
They expand controls Beijing announced in April that caused shortages around the world, before a series of deals with Europe and the U.S. eased the supply crunch.
The new curbs come weeks ahead of a scheduled face-to-face meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea.
"This helps with increasing leverage for Beijing ahead of the anticipated Trump-Xi summit in (South) Korea later this month," said Tim Zhang, founder of Singapore-based Edge Research.
China produces over 90% of the world's processed rare earths and rare earth magnets. The 17 rare earth elements are vital materials in products ranging from electric vehicles to aircraft engines and military radars.
Exports of 12 of them are now restricted after the Ministry of Commerce added five - holmium, erbium, thulium, europium and ytterbium - along with related materials.
Foreign companies producing some of the rare earths and related magnets on the list will now also need a Chinese export licence if the final product contains or is made with Chinese equipment or material. This applies even if the transaction includes no Chinese companies.
The regulations mimic rules the United States has implemented to restrict other countries' exports of semiconductor-related products to China.
It is unclear how Beijing intends to enforce its new regime.
The ministry also added dozens of pieces of mining and refining equipment and materials to its control list.
China's latest restrictions on the five additional elements and processing equipment will take effect on November 8, just before a 90-day trade truce with Washington expires.
The rules on foreign companies that make products using Chinese rare earths equipment or material are to take effect on December 1. Shares in China Northern Rare Earth Group, China Rare Earth Resources and Technology and Shenghe Resources surged by 10%, 9.97% and 9.4%, respectively, on Thursday.
CHIPS AND DEFENCE
