China wants guarantees from India on rare-earth supplies to US – media

New Delhi has reportedly not yet agreed to Beijing’s request for guarantees

China has sought guarantees from India that its supplies of heavy rare-earth metals would not be diverted to the US, the Economic Times (ET) reported on Wednesday.

Beijing is working on a deal with Washington on heavy rare-earth magnets and is unwilling to provide supplies to its neighbor without an assurance that they will not be diverted to the US, the report quoted an unnamed source as saying.

Heavy rare-earths are critical components for a range of products, including electric vehicles, smartphones, hard disks, and an array of military applications.

China dominates the rare earth value chain, mining 60%, processing 80%, and producing 90% of these high-performance magnets. The US is prioritizing a multi-billion-dollar effort to reduce this dependence after China introduced curbs on exports.

Beijing introduced curbs on heavy rare-earth metal exports to the US after the administration of President Donald Trump placed taxes on Chinese imports. On August 12, the US extended a tariff truce with China by 90 days, capping the levies on imports at 30%.

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The US tariffs and China’s curbs on rare-earth exports have escalated trade tensions globally and hit industries worldwide. On Thursday, China further tightened restrictions on exports of rare-earth minerals, ahead of expected talks later this month between President Xi Jinping and Trump.

New Delhi has not yet agreed to the request, according to the ET report. The paper also said that Indian firms have submitted end-user certificates that the magnets will not be used for manufacturing weapons of mass destruction.

In India, electric vehicle makers are the largest consumers of heavy rare-earths, followed by renewable energy, defense and aerospace, and electronics manufacturing industries.

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Though China has restarted supplies of light rare-earths to India after the recent Shanghai Cooperation Organization (SCO) Summit in Tianjin, its pause on heavy rare earth supplies continues, mainly affecting the automobile industry.

New Delhi and Beijing have been working on restoring ties, which were strained by a border clash in 2020 that claimed several lives on both sides.