Rare Earths Flow-But the Valve’s Still in Beijing’s Hands

Highlights

• China has partially eased rare earth magnet export restrictions, issuing 60% of delayed export licenses.
• Magnet exports have plummeted 75% since April.
• Most licenses are going to non-strategic civilian users.
• The export strategy represents 'coercive stability' - maintaining minimal supply flow without reducing global dependence.

The Straits Times reports (opens in a new tab) that China has begun easing its grip on rare earth magnet exports, but make no mistake—this isn’t a return to normalcy. It’s a slow bleed, not a free flow. After months of disruption, the auto industry is breathing a little easier. But for investors tracking rare earth equities, the real story lies in what’s not said—and who still holds the tap.

According to the report, China has issued about 60% of delayed export licenses—up from 25% earlier this month—averting the worst-case scenario of shutdowns at European automakers. Volkswagen and Stellantis confirm their rare earth supply is stable, for now. But that’s a fragile calm. Delays persist for shipments routed through third countries or destined for U.S. companies, hinting at an export regime still marked by discretion and leverage.

The article references the June 26 U.S.-China agreement, with Treasury Secretary Scott Bessent promising expedited shipments to previously approved U.S. firms. But there’s no documentation of systemic reform—just verbal assurances and ambiguous signals from Beijing. That’s not a de-escalation; it’s an uneasy pause.

Behind the curtain, magnet exports from China have plummeted 75% since April. U.S. defense-aligned firms like Dexter Magnetic Technologies (opens in a new tab) have received only 5 of 180 license requests. The licenses that are moving? Primarily intended for non-strategic civilian end-users. This is textbook “coercive stability”—enough flow to keep the supply chain from seizing, but not enough to reduce dependence.

From an investor’s perspective, this piece presents relief but overlooks the risk. There’s no discussion of substitution strategies, no mention of stockpiling behavior in Japan or the EU, and no real interrogation of the West’s midstream bottlenecks—particularly magnet-to-metal conversion. It omits upstream and recycling projects that might benefit from China’s squeeze, such as Energy Fuels, Lynas, Neo Performance Materials, and MP Materials.

Retail investors should view this “stabilization” as a geopolitical mirage. Nothing in China’s export behavior suggests a durable policy shift—only that it can weaponize rare earths with precision and plausible deniability.

RARE EARTH EXCHANGES™ BIAS METER™

Rare earths are flowing—but the river still runs through Beijing. Don’t mistake trickle for trust.