China’s rare earths are becoming available again, but the flow is not as unrestricted as hoped. The initial threat of mass shutdowns in the automotive supply chain has begun to subside as rare earth magnets from China start to be distributed. Nevertheless, automakers and suppliers are still apprehensive about production plans, facing ongoing uncertainties and the risk of shortages.
European suppliers have received sufficient licenses to prevent the widespread disruptions that were anticipated earlier. Nils Poel, the head of market affairs at the supplier association CLEPA, noted that the licensing rate has improved, increasing from 25% to 60%. However, applications for end users in the United States or products transiting through nations like India face longer processing times and are not prioritized.
Poel indicated that production is likely to continue through July, with manageable impacts overall, although some production lines may be affected sporadically. Volkswagen confirmed its supply of rare earth components remains stable, while Stellantis reported addressing its immediate production concerns. China’s restrictions on seven rare earths and associated magnets, which were implemented in response to U.S. tariffs, have led to a 75% decrease in exports.
This decline has forced some automakers in Asia, Europe, and the U.S. to halt production lines. Recently, the White House announced a deal with China to expedite rare earth approvals without disclosing specifics. The agreement is believed to address the inefficient export licensing system.
U.S. Treasury Secretary Scott Bessent expressed confidence that, due to this arrangement, the flow of magnets would resume. With the rapid licensing approvals, the intense anxiety within the automotive sector has subsided. However, some European firms are receiving only the minimum required licenses to avoid halting production entirely.
In contrast, U.S. companies like Dexter Magnetic Technologies are still experiencing significant delays in obtaining necessary licenses for their operations, facing hurdles that prolong the approval process.