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China’s Magnet Export Limits Threaten to Halt India’s Vehicle Production

India has scheduled a June 3 meeting to finalize incentives for domestic magnet manufacturing to counter China’s export controls

A  labourer works at a site of a rare earth metals mine at Nancheng county, Jiangxi province March 14, 2012. REUTERS/Stringer CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA/File Photo
A mining machine is seen at the Bayan Obo mine containing rare earth minerals, in Inner Mongolia, China July 16, 2011. Picture taken July 16, 2011. REUTERS/Stringer ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT./File Photo
Miners are seen at the Bayan Obo mine containing rare earth minerals, in Inner Mongolia, China July 16, 2011. Picture taken July 16, 2011.REUTERS/Stringer ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT./File Photo
China's and U.S.' flags are seen printed on paper in this illustration taken January 27, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Overview

  • China’s exports of permanent magnets plunged 51% year-on-year in April after Beijing imposed strict licence requirements.
  • Indian automakers have yet to secure Chinese export licences and warn that production could grind to a halt by early June as inventories run out.
  • New Delhi plans a high-level June 3 meeting to approve financial incentives and partnerships for homegrown rare earth magnet production.
  • Over 90% of global rare earth magnet processing is controlled by China, creating a critical vulnerability for electric and conventional vehicle makers.
  • U.S. and European automakers have urged Beijing to ease curbs, and China has signalled willingness to discuss export controls to stabilize supply chains.