The Chinese government has given the strongest hint yet that it may restrict exports of rare earths to the US as part of the trade war between the countries.
China will continue to keep most of its rare earth resources for domestic use, while meeting "reasonable demand" from other countries, top planning body the National Development and Reform Commission (NDRC) said.
But "the Chinese people will never accept the US using the products made by China's exported rare earths to counter and suppress China's development," the NDRC said.
The NDRC statement was echoed by a commentary in the state-run People's Daily newspaper today, which referred to China's dominant role in global rare earths supplies and noted that US production of consumer electronics and military equipment is "highly dependent" on Chinese rare earths.
"Will rare earths become a counter weapon for China to hit back against US pressure…? The answer is no mystery," the commentary said.
"We advise the US side not to underestimate the Chinese side's ability to safeguard its development rights and interests. Don't say we didn't warn you!"
The People's Daily commentary was not attributed directly to the government, but is highly unlikely to have been published without official backing.
China exported 53,000t of rare earths last year, around 45pc of its total production of about 120,000t. China accounts for more than 90pc of global supplies of rare earths, while 70-80pc of all US imports of rare earth oxides and metals come from China.
The Chinese government has yet to make clear whether it will restrict rare earth exports to the US. The commerce ministry said last week that China has not implemented any extra trade management measures on rare earths in addition to the regular export licence system.
The China-US trade dispute has escalated in the last few weeks. The US raised its tariffs on $200bn/yr of Chinese imports to 25pc from 10pc on 10 May, with bismuth and several electronic metals affected. But rare earths and critical minerals are among the few products that the US has excluded from potential tariffs on almost all remaining imports from China, reflecting China's dominant role in the global market.
Beijing retaliated against the latest US measures on 13 May by imposing 5-25pc tariffs on imports of hundreds of metals, ores and ferro-alloys from the US, effective 1 June.
The list covers imports of rare earth ores and concentrates, oxides of several elements such as yttrium, praseodymium, terbium and mixed rare earth carbonates from the US. The biggest impact will be on companies that have invested in rare earth mines in the US, as the tariffs will make it less viable to process the material in China.
Any move by Beijing to restrict rare earths exports would be likely to benefit China's domestic magnetic material manufacturers. The US lacks medium and heavy rare earths such as terbium and dysprosium, which are critical to manufacturing high-end magnetic materials, although it is self-sufficient in light rare earths. China exported 4,100t of rare earth magnetic materials to the US last year.
Rare earths prices have risen in the past week in anticipation of stronger demand from the magnetic material sector because of potentially supportive government policies, after Chinese president Xi Jinping's visit to domestic producer JL Mag Rare-Earth on 20 May sparked speculation that rare earths could be dragged into the trade war.
A fall in ore supply from Myanmar (Burma) following a ban on imports that took effect on 15 May is also lifting prices, particularly for medium and heavy rare earths.
