China Updates Rare Earth Regulations

Highlights

• China implements first comprehensive regulations on rare earth mining, refining, and export effective October 1, 2024.
• New rules impose stricter government controls, production limits, and traceability systems for rare earth elements.
• Regulations expected to tighten global supply chains and potentially increase costs for international technology and clean energy sectors.

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In a significant move affecting the global rare earths market, elite law firm Faegre Drinker Biddle & Reath LLP, with authors Wendy Yan and Jackson Chi, reviewed China’s newly implemented Regulations on Rare Earth Administration, which took effect on October 1, 2024. These are the country’s first comprehensive rules governing the mining, refining, utilization, and export of rare earth elements—essential components for technologies like clean energy systems and electronics.

The Regulations introduce several key measures, including tighter controls over mining and refining operations, quantitative limits on production, and a traceability system to monitor rare earth products’ flow. Only government-approved entities can mine or refine rare earths, and violations are met with strict penalties. Additionally, the rules emphasize adherence to existing export control laws, which already regulate rare earth exports under licensing systems.

China’s dominance in rare earth production makes these rules globally impactful. The changes are expected to tighten supply chains and raise costs, particularly for international companies reliant on rare earth materials. The authors recommend that non-Chinese companies carefully monitor the effects of the regulations and explore alternative sources or adjust supply chains to mitigate potential disruptions.

This legal assessment underscores the increasing strategic importance of rare earths in global markets and the implications of China’s regulatory tightening on industries worldwide.

See the  review (opens in a new tab).