Heavy rare earth monopoly: China seeks India guarantee that magnets won’t be re

China will export rare earth magnets to India only if it assures that they will be used for domestic needs and will not find their way to the US. Indian companies have already provided end-user certificates confirming the magnets will not be used in weapons of mass destruction production.China has sought assurances from India that heavy rare earth magnets they supply will be utilised exclusively for domestic requirements and not be exported to the United States.

China-US rare earth dynamics & the India angle

Sources quoted in an ET report said that Beijing has asked export control assurances similar to the Wassenaar Arrangement framework. Whilst India is a member of this 42-nation agreement promoting responsible transfer of dual-use technologies and goods for international security purposes, China remains outside the arrangement.“China wants to ensure that the heavy rare earth magnets supplied to India do not reach the US,” the ET report said. The source told the financial daily that the Indian government has not yet accepted this requirement.

“China appears to be seeking an arrangement with the US regarding heavy rare earth magnets and is reluctant to supply without assurance against redirection,” another source was quoted as saying.Beijing’s control extends to 90% of worldwide heavy rare earth magnet production, and it has ceased publishing export data for specific countries. It is attempting to use its commanding position in the rare earth supply chain as a negotiating tool in its trade discussions with Washington.“End-use certification requirements have been implemented,” a senior government official informed ET. “We understand that primarily companies are providing these assurances, likely accompanied by commerce ministry verification.”In India, manufacturers of electric vehicles are the primary users of these high-powered magnets, which are vital elements in various advanced sectors including renewable energy, electronics production, aerospace and defence industries.Following the August 31-September 1 Shanghai Cooperation Summit, China has recommenced delivering light rare earth magnets to India. However, the ongoing deficit in heavy rare earth magnet supplies continues to impact the development of motors for bigger electric three-wheelers, automobiles, lorries, and buses across India.These substances are essential in approximately twelve crucial components that are incorporated into electric vehicle motors, as well as systems for detecting vehicle speed and automatic transmission shifting.“There has not been any movement so far as regards to supplies of heavy rare earth magnets despite high-level talks between India and China,” a senior auto industry executive said. “Two-wheeler makers have resorted to solutions utilising heavy rare earth-free magnets, but for larger electric vehicles, supplies are still a constraint. Using ferrite magnets or light rare earth magnets ends up impacting efficiency of the vehicles.“On April 4, China implemented export restrictions on medium and heavy rare earth-related products, citing “national security” concerns, following US President Donald Trump’s tariff impositions on Beijing. The April directive required exporters to obtain a licence from China’s commerce department after receiving an EUC from the purchaser.Under the EUC requirements, purchasers must provide assurance that these materials will not be utilised in the storage, manufacture, production, or processing of weapons of mass destruction or their delivery mechanisms.Despite China’s recent resumption of rare earth magnet exports to European and Southeast Asian companies, suppliers to India are still awaiting export licence approvals. During FY25, India’s imports of rare earth magnets totalled 870 tonnes, valued at ₹306 crore.