“For now, most companies are prioritizing their need for rare earth magnets over longer-term security concerns. Companies are willing to do whatever China wants to get the supplies.”
Ministry of Commerce is demanding sensitive business information including production details and confidential lists of customers as part of its export approval process for rare earths, critical minerals and magnets, raising concerns about potential misuse of data and exposure of trade secrets.
“It’s a matter of China getting information . . . officially rather than trying to steal it.”
Under the current rare earths licensing regime, China requires foreign companies to submit comprehensive data about their operations, workforce, end-use applications and production information. Companies can also be asked to provide images of products, facilities and details of past business relationships.
An Italian speaker manufacturer has submitted pictures and a video of its production line as well as information about its market, the names of its customers and some customer orders with names blurred out.
“We had to, otherwise they put aside all your papers and wait for what they requested.”
Ministry of Commerce has frequently requested information covering end users’ “production and operations, process flow”.
A UK manufacturer of engineered magnets was rejected several times in April “for lack of end-user evidence”. It’s now providing photographs of the magnets in production, details of the ultimate application and the customers of the end users, among other details, which has helped it obtain several export approvals.
The applications are typically submitted to local commerce bureaus by Chinese suppliers on behalf of their customers, underscoring concerns about possible theft of trade secrets and business partners.
The level of detail makes it difficult for companies in sensitive industries to comply with or even apply for the export licences.
China dominates the processing of rare earths and manufacturing of the magnets in which they are used. These magnets are widely used in electronics, electric vehicle motors, wind turbines and defense applications such as fighter jets, giving Beijing a significant point of leverage with its trading partners.
ft.com/content/0fce71