China's Rare Earth Magnet Export Ban: The Ultimate Retaliation Against Biden's Chip Crackdown

As tensions between China and the United States continue to rise, China has opted to retaliate in a crucial domain. While the ongoing battle in the semiconductor manufacturing sector has put China at a disadvantage, the nation maintains a firm grip on one critical resource: rare earth metals.

President Joe Biden recently acknowledged China's dominant position in this market, stating, "China controls most of the global market in these minerals." In light of the escalating friction between the two countries, this statement underscores the challenges faced by the US and other nations in securing these essential resources.

The heightened dependence on rare earth metals, coupled with China's market dominance, poses significant concerns for industries that rely on these materials. As global powers navigate the complexities of the geopolitical landscape, securing a stable supply of rare earth metals will remain a top priority.

The Tension Between These Two Nations

China is reportedly considering prohibiting the export of specific rare-earth magnet technology, a move that would put the US at a competitive disadvantage in high-tech and defence. The potential move comes as Japan joins the United States and the Netherlands in restricting chip-making equipment exports to China and as the United States and China continue to embrace the tension between both nations.

According to the Nikkei, China is considering "prohibiting exports of certain rare-earth magnet technology, a move that would counter the US's advantage in the high-tech arena." To accomplish this, officials will file amendments to a technology export restriction list last updated in 2020. The draught list, first announced in December by the commerce and technology ministries, contains 43 amendments or additions in total. Officials have completed collecting public comments from experts, and the changes are expected to take effect this year.

The revisions would "either ban or restrict exports of technology to process and refine rare-earth elements." There are also provisions proposed to prohibit or limit exports of alloy technology used to make high-performance magnets derived from rare earth." High-performance magnets are used in a variety of applications, including electric vehicle motors and various high-tech military devices.

The Antidote to Acquiring Rare Earth Metals

There is currently only one rare earth mine in the USA, just one. The only mine is located in Mountain Pass, but the problem really arises when we look at how much influence China truly has. It processes 92% of the earth’s rare metals, and imposing sanctions on the horizon puts Biden’s administration and the country on the defence. Luckily, there are new sources that have been found in North America.

Defense Metals Corp. (DEFN) DEFN DFMTF (FSE:35D) is progressing diligently on its wholly-owned Wicheeda Rare Earth Element project, situated in east-central British Columbia. The project benefits from a robust infrastructure and an extensive, expanding resource. In this article, we examine the crucial highlights of DEFN's investment thesis and the promising potential it holds.

Finally, China's possible ban on rare-earth exports could have far-reaching consequences for the global high-tech industry. While China has long been the dominant producer of rare earths, other countries are increasingly developing their own rare-earth supply chains in order to reduce their reliance on China. High-tech investors should pay close attention.

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. This content contains sponsored advertising content and is for informational purposes only and not intended to be investing advice.