European Firms Struggle to Access Chinese Rare Earths Despite Deal
European companies continue to encounter significant obstacles in securing access to essential rare earths from China, according to a report released by the European Union Chamber of Commerce in China. Despite a deal reached in July 2023 aimed at expediting exports, the situation remains challenging for many businesses, particularly small and medium-sized enterprises (SMEs).
China has established itself as the dominant force in the global rare earth industry, controlling the extraction and refinement of these strategic minerals. This position grants the country considerable leverage, especially amidst ongoing trade tensions with the United States. Since April 2023, Beijing has required licenses for certain exports, creating ripple effects across various manufacturing sectors worldwide.
Continued Supply Chain Disruptions
Following a summit in July hosted by Beijing, Ursula von der Leyen, President of the European Commission, announced an agreement to enhance the mechanisms for exporting rare earth minerals to the European Union. However, the Chamber of Commerce’s annual position paper indicates that many companies still face considerable supply chain disruptions.
The report highlighted that “no long-term, sustainable solution has been put forward,” and emphasized that the Chamber remains in “regular contact” with Chinese authorities to address these issues. Chamber president Jens Eskelund informed journalists that numerous members are currently incurring significant losses due to ongoing bottlenecks. “We have raised with our members more than 140 applications, and it’s a fraction of these so far that have been resolved,” he stated. “So this has not gone away.”
In its latest report, which represents over 1,600 member companies, the Chamber proposed 1,141 recommendations to Chinese policymakers to alleviate the barriers faced by European firms operating in China.
Economic Challenges Compounding Issues
This year, the European Union Chamber of Commerce identified a struggling Chinese economy as a primary hurdle. Following the end of the COVID-19 pandemic, the nation has experienced sluggish consumption and a manufacturing surplus, alongside ongoing difficulties within its extensive property sector. Recent data revealed that factory output and consumption growth in August 2023 reached their weakest levels in about a year.
Eskelund noted, “I actually see a greater convergence in terms of the challenges Chinese companies have and the challenges foreign companies have.” He described the state of the domestic economy and the supply-demand balance as the “big enemy” facing both local and foreign enterprises. “I think we see completely eye-to-eye with the vast majority of Chinese companies,” he added.
The ongoing difficulties in accessing rare earths from China not only impact European firms but also reflect broader challenges within the global supply chain. As these firms navigate the complexities of international trade and economic uncertainty, the need for clear strategies and solutions remains critical.
