- Write by:
-
Wednesday, June 16, 2021 - 14:30:01
-
590 Visit
-
Print
Mining News Pro - The US Department of Commerce is set to evaluate whether or not imports of rare earth permanent magnets from China pose a national security threat, but imposing tariffs on products sourced from its largest supplier might be counterintuitive, an analysis by Roskill has found.
On June 8, the White House released a report detailing the findings from a 100-day review of vulnerabilities within the supply chains of four critical products, including semiconductors, large capacity batteries; critical minerals and materials; and pharmaceuticals.
The report was released in response to President Biden’s February 24 executive order calling for an assessment of the vulnerabilities within essential supply chains.
The administration analysed and provided recommendations on the supply chains within the report and also seeks to create a Supply Chain Disruptions Task Force to address supply chain challenges across the government.
In addition, the report calls for the US to begin the process of building comprehensive strategies for revitalising key industrial bases.
As it stands, when rare earth magnets are exported from China, rare earths receive no value-added tax (VAT) refund, while permanent magnets qualify for the full 13% refund. This financial incentive encourages the domestic production and subsequent export of permanent magnets and also provides a cost advantage to Chinese producers.
The trade relationship is one of several contributing factors explaining China’s dominance in the rare earths industry.
China produced 85% of the world’s rare earths refined products in 2020, but with Chinese domestic output leveling off, imports of rare earths to China are forecast to grow to 80,000 tonnes per year by 2030, up from an estimated 60,000 tonnes in 2021, according to a recent report.
Level the playing field
According to Roskill, it appears counterproductive for the US to impose import tariffs on rare earth permanent magnets sourced from their largest supplier. China currently produces about 90% of the world’s neodymium-iron-boron or NdFeB permanent magnets, and alternative sources are limited.
This could lead to increased costs for US-based companies and further associated economic impacts.
Roskill also believes that in order to develop a truly resilient rare earths supply chain, North America must establish domestic capacity for precursory magnet metals and alloys, and the subsequent production of permanent magnets.
Imposing import tariffs on Chinese permanent magnets could encourage said domestic supply chain development or alternatively encourage China to either grant full VAT refunds upon exporting rare earths or cancel the VAT refund upon exporting permanent magnets.
“This would help level the playing field for other magnet producers because Chinese companies would either prefer to export the refined material prior to magnet generation, to receive the VAT refund, or accept the higher cost of exporting permanent magnets, therefore allowing rest-of-world producers to compete more closely on a cost basis,” says Roskill rare earth and titanium analyst Ross Embleton in a research note.
In short, the US Department of Commerce could impose import tariffs on permanent magnets from China in a bid to reduce the reliance on Chinese derived products, thus increasing supply chain security. This strategy could encourage China to review its current trade policies, or the development of North American capacity for permanent magnet production.
Short Link:
https://www.miningnews.ir/En/News/614667
![China May rare earth exports jump 36% y/y on restocking](/Incsys/Photo.aspx?image=/Uploads/News/20240615005753328.jpg&width=236&height=180)
China’s exports of rare earths in May climbed 35.9% from a year earlier, customs data showed on Friday, buoyed by a wave ...
![Gold price falls most in two years on jobs data, China buying pause](/Incsys/Photo.aspx?image=/Uploads/News/20240615003613938.jpeg&width=236&height=180)
Gold fell the most in more than two years as surprise strength in a key US jobs report dashed hopes that the Federal ...
![Australia orders Chinese investors to sell down stake in rare earths miner](/Incsys/Photo.aspx?image=/Uploads/News/20240610014934816.jpg&width=236&height=180)
Australian Treasurer Jim Chalmers has ordered several China-linked investors to dispose of shares in rare earths miner ...
![Copper traders get reprieve as historic New York squeeze eases](/Incsys/Photo.aspx?image=/Uploads/News/20240601221445853.jpeg&width=236&height=180)
A historic squeeze in New York copper futures is drawing to a close, with the loosening of a key price spread taking the ...
![Vulcan rejects Mexico’s ‘illegal expropriation’ of its investments](/Incsys/Photo.aspx?image=/Uploads/News/20240528184512620.jpg&width=236&height=180)
US construction company Vulcan Materials on Monday rejected what it considers the “illegal expropriation” of its ...
![Glencore, Rusal extend aluminum supply contract into 2025](/Incsys/Photo.aspx?image=/Uploads/News/20240524144609497.jpg&width=236&height=180)
Swiss-based trading house Glencore and aluminum producer Rusal have extended their long-term supply contract into next ...
![At least two companies seek Norway seabed mining permits](/Incsys/Photo.aspx?image=/Uploads/News/20240524144327722.jpeg&width=236&height=180)
Two companies said on Wednesday they are seeking offshore seabed acreage on the Norwegian continental shelf where they ...
![Copper’s record run at risk as US shipments calm speculator frenzy](/Incsys/Photo.aspx?image=/Uploads/News/20240521180640101.jpeg&width=236&height=180)
Copper’s lightning rally to record highs may not be sustainable in the coming weeks, with action concentrated on the ...
![Gold price hits $2,450 on rate cut optimism, geopolitical risks](/Incsys/Photo.aspx?image=/Uploads/News/20240521175341708.jpeg&width=236&height=180)
Gold touched a new record of $2,450 an ounce on Monday as increasing optimism over the Federal Reserve’s monetary policy ...
No comments have been posted yet ...