Highlights
- China introduces selective export licensing for medium and heavy rare earth materials through MOFCOM Announcement 18.
- Potential supply disruptions and price increases up to 500% expected in critical sectors like defense and electronics.
- Businesses advised to reassess supply chains, explore alternative sourcing, and enhance compliance strategies.
Top law firm Holland & Knight highlights (opens in a new tab) that China’s new export controls, issued under Announcement 18 by Minisry of Commerce (MOFCOM) and the General Administration of Customs, impose licensing requirements on exports of several medium and heavy rare earth materials—including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, along with their oxides, alloys, compounds, and mixtures. These restrictions, effective immediately, are framed by China as measures to protect national security and uphold international nonproliferation obligations.
From a legal and strategic standpoint, the firm underscores that this is not a ban but a restriction, meaning that while exports may still be possible, approvals will be selective and limited. This ambiguity introduces regulatory uncertainty, likely disrupting global supply chains in sectors reliant on rare earths, such as defense, electronics, clean energy, and advanced manufacturing.
Holland & Knight warns of potential supply shortages, price spikes (possibly up to 500%), and renewed urgency around diversification, stockpiling, and onshoring strategies.
The firm advises affected parties to:
- Communicate immediately with suppliers to assess risks
- Evaluate alternative sourcing or inventory strategies
- Stay informed on updates from Chinese regulators
- Review and strengthen internal compliance systems to align with dual-use export control frameworks
Holland & Knight views this development as part of a broader geopolitical trend and stresses the relevance of recent U.S. executive actions targeting critical mineral supply chain security. While not offering legal advice in the alert, the firm positions itself as a resource for clients needing tailored compliance or strategy guidance in response to the new controls.
The firm interestingly opts to omit that the U.S. under President Trump triggered the global tariff scheme and that this latest Chinese move clearly appears to be at least partially connected.
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