The Chinese authorities have begun issuing the first permits for the supply of rare earths in accordance with the new export control rules. The slow pace of licensing is fraught with disruption to global supply chains.
The Financial Times writes that exporters, Chinese industry groups and experts said that after several weeks of delay, the Beijing Ministry of Commerce approved some export licenses to Europe, but the pace was too slow to meet demand.
The window that avoids significant losses for production in Europe is closing quickly," said Wolfgang Niedermark, member of the Executive Board of the Federation of German Industry.
American manufacturers, including Tesla, Ford and Lockheed Martin, have expressed concern about China's new export control measures. One of the heads of European industry in China said that the current delays were "unacceptable" for foreign manufacturers.
"I see real incompetence on the ground; they underestimated what the consequences would be and what would need to be prepared at the working level," the source said.
It is unclear whether China has begun approving exports to the United States after the two countries agreed to end the trade war.
Yantai Zhenghai Magnetic Material, an exporter from the eastern Chinese province of Shandong, said it had received export licenses and had "resumed" accepting orders from some customers.
In addition, two sources reported that at least one batch intended for the German enterprises of the Volkswagen automaker had been approved. The company stated that the supply of parts containing liquid earths is stable and that its suppliers have received "a limited number of such licenses."
There are concerns that the Chinese bureaucracy involved in issuing licenses will be overwhelmed as the number of applications increases. At the same time, European companies are "not sure how to prove" that their cargoes will not be re-exported to the United States, which would violate licensing conditions.
Rajesh Jejurikar, executive director of the automotive division of the Indian conglomerate Mahindra & Mahindra, said that the process of obtaining an end-use certificate designed to ensure that supplies will not be used for weapons production is "not yet clear."
Experts say the latest rare earth controls will boost Western efforts to reduce dependence on China.
