Trump Pledge of Quick China Magnet Flows Has Yet to Materialize

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Industry figures have consistently told the Trump administration the ethane export restrictions are inflicting more pain on US interests than on China, according to the people.

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China’s Ministry of Commerce, which administers export licenses, hasn’t responded to Bloomberg’s questions on how many for rare earths have been granted since the London talks. At a regular briefing in Beijing on Thursday, spokesperson He Yadong said Beijing was “accelerating” its process and had given the go-ahead to a “certain number of compliant applications.”

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Access to rare earths is an issue “that is going to continue to metastasize until there is resolution,” said Adam Johnson, chief executive officer of Principal Mineral, which invests in US mineral supply chains for industrial defense. “This is just a spigot that can be turned on and off by China.”

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China only agreed to grant licenses — if at all — for six months, before companies need to reapply for approvals. Firms doing business in the US and China could see recurring interruptions, unless the Commerce Ministry significantly increases its pace of process applications.

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Adding an extra layer of jeopardy for US companies, Chinese suppliers to America’s military-industrial base are unlikely to get any magnet permits. After Trump imposed sky-high tariffs in April, Beijing put samarium — a metal essential for weapons such as guided missiles, smart bombs and fighter jets — on a dual-use list that specifically prohibits its shipment for military use. 

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Denying such permits could cause ties to further spiral if Trump believes those actions violate the agreement, the terms of which were never publicized in writing by either side. 

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That sticking point went unresolved during roughly 20 hours of negotiations last week in the UK capital, people familiar with the details said. Complicating the issue, companies often buy magnets from third-party suppliers, which serve both defense and auto firms, according to a person familiar with the matter. That creates a high burden to prove to Chinese authorities a shipment’s final destination is a motor not a missile, the person added.

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Beijing still hasn’t officially spelled out the deal’s requirements, nor has Xi publicly signaled his endorsement of it — a step Trump said was necessary.

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“The Geneva and London talks made solid progress towards negotiating an eventual comprehensive trade deal with China,” White House spokesman Kush Desai said. “The administration continues to monitor China’s compliance with the agreement reached at Geneva.”

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China’s Commerce Ministry is working to facilitate more approvals even as it asks for reams of information on how the materials will be used, according to people familiar with the process. In some cases, companies have been asked to supply data including detailed product designs, one of the people said.

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Morris Hammer, who leads the US rare-earth magnet business for South Korean steelmaker Posco Holdings Inc., said Chinese officials have expedited shipments for some major US and European automakers since Trump announced the agreement. 

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China’s Advanced Technology & Materials said Wednesday it had obtained permits for some magnet orders, without specifying for which destinations. The company’s customers include European aerospace giant Airbus SE, according to data compiled by Bloomberg.

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Around half of US suppliers to Toyota Motor Corp., for example, have had export licenses granted, the company said – but they’re still waiting for those materials to actually be delivered. It’s likely some of the delays are transport-related, one of the people said.