Chinese rare earth squeezing puts defense giants on cross

In the last few weeks of the automotive and robotics industry, Chinese rare export restrictions were particularly affected, but analysts warn that Western defense giants will also feel the heat.

Main US and Chinese officials resume trade talks in London for the second day in a row, trying to reduce tensions over rare low minerals and advanced technologies.

The White House has signaled The desire to facilitate the export control of the chips when Beijing accelerates rare earth exports by increasing investors’ expectations for a breakthrough. Both sides have accused each other of the recovery of a preliminary trade deal last month in Geneva.

In early April, the Chinese Ministry of Commerce imposed export restrictions on several rare land elements and magnets, which are widely used in the automotive and defense industry. The awards were part of the reaction to the growth of US President Donald Trump tariffs on the products exported by Beijing.

Kevin Haset, director of the National Economic Council, said on Monday, CNBC Squawk Box said he was expecting a deal about the rare land quickly.

“So, we hope … Immediately after a handshake, any export control of the US will be relieved and rare earth land will be released in volume, and then we can return to conversations for smaller things,” said Haset.

China is an indisputable critical mineral supply chain manager, producing About 60% of the world’s rare land supply and processing Almost 90%, which means importing these materials from other countries and processing them.

US officials have previously warned that this dominance creates a strategic challenge given turns on more sustainable energy sources.

William Bain, head of the British trading chamber trade policy, said it seems to have been achieved on the first day of the US and China’s trade negotiations, but is still “absolutely important” to make a further breakthrough in rare land.

“Over the weekend, we have seen some relaxation with licenses granted in sectors related to robotics and electric vehicles, but if you assume, such as critical mineral, such as Samaria, in magnets, it is absolutely important in the construction of F-35 fighter jets in the US,” Bain said Tuesday at CNBC.

“They can’t make them without it. And if you do not have access, it seriously affects both the construction of the US in the area, but maybe its national security, if it remains,” he added.

Some European defense giants were traded below on Tuesday afternoon. German tank gearbox manufacturer Color Reduced nearly 8%to result in losses in the Pan -European Stoxx 600 index. Sweden Saab fell by 5% and Germany Reinemal Trade with 2.4% lower.

CNBC has contacted the US Department of Defense and the European Commission, the head of the European Union executive to comment.

Rare earth elements play an integral role in modern defense technology, according to SFA-OXFORD ConsultationsPromoting advanced radar and hydrolocyte systems, laser indications and traction technology in the combat environment.

The automotive sector groups have complainant The cumbersome process trying to get the necessary approvals warning of increasing production threats, as stocks are depleted. However, China seems to have offered us and European car giants over the weekend.

The Chinese Ministry of Commerce on Saturday announced it is ready to set up an export license application for the so -called “green channel” to speed up the approval process for European Union companies. Beijing also granted a rare land license for suppliers of US auto giant Motors, Ford and Jeep-Maker Stellantis, Reuters reported on Friday, referring to unnamed sources.

Gracelin Baskaran, Director of the Critical Mineral Security Program of the Strategic and International Research Center (CSIS), based in Washington, said it was just a matter of time before the defense industry sounds like an alarm signal about rare earthly lacking that many of them have already done behind closed doors.

“Defense companies are on the front impact line, given that we need thousands of pounds in every submarine and the jet of the destroyers,” Basaran said in the CNBC.

The US, the European Union and Australia must co -ordinate the supply and demand party intervention to increase rare earth production, said CSIS Baskarans, adding that this need is mainly due to the dominant price dynamics.

“If praodimia-neodymium (prnd) oxide-critical entrance rare earth permanent magnet-pricing up to 2030, below $ 60 per kilogram, almost half of the forecast, non-festive supplies will become financially unmun.

“The demand side will require incentives to obtain minerals from the Allied countries – similar to the rules related to the inflation reduction law,” she added.

China last month Export restrictions temporarily stopped at 28 American companies after a trade ceasefire reaching Washington and Beijing in Switzerland.