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According to a report from Liberty Times, citing the Financial Times and the Korea Herald, China’s recent export controls on rare earth materials could lead to automotive production shutdowns, as inventories of essential magnets could be depleted within months if Beijing fully halts exports.
The restrictions announced by China on April 4 cover seven rare earth elements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—as well as related products such as permanent magnets. Although not a full ban, the new rules require companies to obtain special licenses, which could significantly delay shipments, as noted by The Korea Herald.
The report points out that China’s new restrictions focus on “heavy” and “medium” rare earth elements crucial for producing high-performance magnets that can withstand high temperatures, which are essential for military applications like jets, missiles, and drones, as well as engines and transmissions in electric and hybrid vehicles.
As indicated by The Korea Herald, citing data from the Center for Strategic and International Studies (CSIS), in the case of heavy rare earth processing, China controls as much as 99% of the global total.
China’s Export Curbs Expose Korea’s Rare Earth Vulnerability
Following China’s announcement, Korea’s industry ministry stated that the country holds about six months’ worth of public reserves for critical metals such as dysprosium—used in EV motors—and yttrium, used in display phosphors, lasers, and alloys, according to The Korea Herald.
However, this stockpile falls short of strategic needs, as experts cited by The Korea Herald suggest that at least a one-year reserve is necessary.
Meanwhile, the report notes that about 50% of Korea’s rare earth imports come from China.
Analysts cited in the Korea Herald report warn that the new restrictions could significantly impact the automotive supply chain, as most automakers and their suppliers reportedly hold only two to three months’ worth of magnet inventories.
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(Photo credit: Hyundai)
