China has officially activated a tracking system for the rare earth magnet industry, further tightening control over this critical resource. Three sources revealed that the system requires producers to submit detailed information online, including transaction volumes and customer names, marking an escalation in China’s rare earth export oversight.
As the world’s largest supplier of rare earth magnets, China imposed export restrictions in early April on seven medium-to-heavy rare earth elements and related magnets, mandating exporters to obtain licenses. Approval delays have disrupted supply chains for automakers, semiconductor firms, and others, with some car manufacturers halting production lines due to insufficient rare earth reserves.
Although China proposed the tracking system as early as June 2023, it was only implemented last week. Analysts suggest this move signals that rare earth export controls may become long-term. Countries like the U.S. had hoped these restrictions would be lifted after a U.S.-China trade truce, but Tim Zhang, founder of Singapore-based Edge Research, noted, “China is likely to maintain these controls—they’re a strategic bargaining chip.”
China mines 70% of the world’s rare earths and processes 90% of global supply, including domestic output, imports from Myanmar, and nearly half of U.S.-mined rare earths. While Australia, Brazil, and others are expanding production, they remain unable to replace China’s supply in the short term. Experts estimate the U.S. lags 20 years behind China in heavy rare earth refining technology, requiring at least a decade to achieve full independence.
The new tracking system currently focuses on magnets but may eventually cover the entire rare earth supply chain to combat smuggling, illegal mining, and tax evasion.
