This ban includes technologies for producing rare earth magnets and refining rare earth metals. This move is seen as a response to the efforts of the United States and Japan to reduce their dependence on China's rare earth supply.
Due to these developments, the Monthly Rare Earth Metal Index (MMI) fell by 4.87% at the end of 2023, reflecting a shift in global rare earth supply dynamics.
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Overall, 2023 is unstable for rare earth MMI, as the industry experienced a significant decline at the beginning of the year. This is mainly due to the decline in Chinese production, supply chain disruptions, and many countries seeking sources of rare earth metals outside of China. In the second and third quarters, price trends remained sideways, but global supply dynamics continued to show further tension. Meanwhile, Australia, the United States, and several other countries continue to push for rare earth competition, seeking independence from Chinese supply.
Although the price fluctuations in the fourth quarter were not as significant as in the first quarter of 2023, in terms of global rare earth supply changes, the fourth quarter was the most active. For example, as a major source of rare earths for China and other countries, Myanmar has suspended rare earth mining. Vietnam, which has rare earth reserves second only to China, has arrested the heads of two major mining companies for illegal activities.
Finally, China issued a rare earth technology export ban before Christmas. In fact, some analysts believe that this may trigger a trade war between China and other countries competing for the dominance of rare earths. These fourth quarter events ultimately put bearish pressure on the index, with the Rare Earth Monthly Metals Index (MMI) falling 4.87% at the close of 2023
China's new export ban on rare earth technology
On December 21st, China officially implemented an export ban on the technology required for producing rare earth magnets. This ban affects the manufacturing of rare earth magnets and the extraction of rare earth metals, as well as technologies related to the extraction, separation, and manufacturing of rare earth substances. Many people believe that this move is a response to the efforts of the United States and Japan to reduce their dependence on Chinese suppliers.
China still controls most of the world rare earth processing market. Therefore, most experts predict that this export restriction will have a significant impact on the US market. The United States and its allies may find it difficult to maintain a reliable supply of rare earth materials. This development occurred against the backdrop of the escalating trade conflict between the United States and China, where both countries have restricted the mutual transfer of important technological equipment and materials.
The competition for the dominant position of rare earth metals is still fierce
In addition to the rare earth embargo, the United States and China have also implemented export restrictions or bans on cutting-edge artificial intelligence chips and semiconductor manufacturing machinery. These measures highlight the increasingly fierce competition and tense diplomatic relations between the two countries in the global technology field. Both countries are paying attention to relevant national security issues at all costs while still focusing on maintaining their technological advantages.
The recent ban on rare earth exports clearly indicates that China intends to maintain its advantageous position in rare earth metals and protect its strategic interests. As countries outside of China actively seek alternative sources and technological solutions for rare earth minerals, the impact of this embargo will affect high-tech fields such as electronics, electric vehicles, and renewable energy.