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Business Standard
10-06-2025
- Business
- Business Standard
China's chokehold on this obscure mineral threatens the west's militaries
China's strict controls on the export of heat-resistant magnets made with rare earth minerals have exposed a major vulnerability in the U.S. military supply chain. Without these magnets, the United States and its allies in Europe will struggle to refill recently depleted inventories of military hardware. For more than a decade, the United States has failed to develop an alternative to China's supply of a specific kind of rare earth crucial for the manufacture of magnets for missiles, fighter jets, smart bombs and a lot of other military gear. Rare earth minerals are a central issue in the trade talks between the United States and China now underway in London. China produces the entire world's supply of samarium, a particularly obscure rare earth metal used almost entirely in military applications. Samarium magnets can withstand temperatures hot enough to melt lead without losing their magnetic force. They are essential for withstanding the heat of fast-moving electric motors in cramped spaces like the nose cones of missiles. On April 4, China halted exports of seven kinds of rare earth metals, as well as magnets made from them. China controls most of the world's supply of these metals and magnets. China's Ministry of Commerce declared that these materials had both civilian and military uses, and any further exports would be allowed only with specially issued licenses. The move, according to the ministry, would 'safeguard national security' and 'fulfill international obligations such as nonproliferation.' The ministry has begun issuing some licenses for magnets that include two of the restricted rare earths, dysprosium and terbium, to automakers in Europe and the United States. Magnets with these two rare earths, which are used in brake and steering systems, can withstand the heat of a nearby gasoline engine but cannot reliably tolerate the greater heat encountered in military applications. But there has been no sign that China has approved exports of samarium, which has few civilian applications. Chinese and American officials began on Monday two days of trade talks in London. Restoring the flow of rare earths is a priority for U.S. officials, but few expect China to rescind its new export license system entirely. 'I don't think that's going away,' said Michael Hart, the president of the American Chamber of Commerce in China, who is coordinating the U.S. private sector's efforts in Beijing to obtain more rare earth materials. The main American user of samarium is Lockheed Martin, an aerospace and military contractor that puts about 50 pounds of samarium magnets in each F-35 fighter jet. Lockheed Martin responded to questions with a short statement: 'We continuously assess the global rare earth supply chain to ensure access to critical materials that support our customers' missions. Specific questions about the rare earth supply chain will be best addressed by the U.S. government.' Officials in the Biden administration were so concerned about the U.S. military's lack of a domestic samarium supply that they issued large contracts for the construction of two samarium production facilities. Neither was built because of commercial concerns, leaving the United States entirely dependent on China. The interruption in samarium supplies over the past two months comes as the United States and its allies in Europe are rushing to rebuild inventories of advanced weaponry. These stocks have been severely depleted by shipments to Ukraine after the Russian invasion and, for the United States, to Israel during the Gaza conflict. The Trump administration is also trying to supply more weapons to Taiwan, an island democracy over which Beijing claims sovereignty. In addition to halting exports of rare earths for military use, China recently imposed sanctions on some American military contractors because of their roles supplying Taiwan. Those sanctions now bar Chinese companies and individuals from having any financial connection to the U.S. military contractors. That did not have much of an effect on the samarium industry until recently, because China exported samarium to chemical companies that mixed the metal with cobalt before selling it to magnet manufacturers, which then sell to the military contractors. But Beijing's new export controls on rare earths specify that licenses can be issued based only on the final user of the mineral at the end of the supply chain. For samarium licenses, that sometimes means military contractors. Of the seven kinds of rare earth metals restricted by China, the demand for six of them is largely civilian, said Stanley Trout, a metallurgist at the Metropolitan State University of Denver who has specialized in samarium magnets since the 1970s. Samarium is different. It is 'almost exclusively used for military purposes,' he said. U.S. Defense Department regulations require that the casting or smelting of military magnets be done in the United States or a friendly nation. But the rules allow the ingredients of military magnets to be imported from anywhere, so low-cost samarium has come from China for many years, Mr. Trout said. Concerns about dependence on China for samarium are not new. Starting in the 1970s, militaries in the West depended on a single chemical factory in La Rochelle, France, that refined samarium from ore mined in Australia. But that factory closed in 1994, partly because of pollution concerns. The factory also could not compete with inexpensive production in Baotou, a city in China's Inner Mongolia region with a history of weak environmental enforcement, even by China's standards. In 2009, U.S. lawmakers became worried about American dependence on samarium supplies from refineries in Baotou, a flat, dry industrial city at the southern edge of the Gobi Desert. Congress ordered the Defense Department to come up with a plan by the next year to address the issue. That was before China halted shipments to Japan of all 17 kinds of rare earths for two months in late 2010 as part of a territorial dispute. A $1 billion American effort began soon after to repair, expand and reopen the sole U.S. rare earths mine, in Mountain Pass, Calif., which had suspended operations in 1998 after a pipeline leak. Rare earth metals are found all over the world, but seldom in concentrations high enough for efficient mining. They are tightly bound together, and breaking those chemical bonds can require a sequence of 100 or more chemical processes using extremely powerful acids. The Mountain Pass mine had not previously tried to pry samarium loose from its ore, and did not start doing so as part of its expansion. The mine reopened in 2014, producing other rare earths, but closed a year later and went bankrupt because it could not compete with Chinese production. Jay Truesdale, a former American diplomat who played a senior role at the State Department on critical minerals policy in 2014 and 2015, said the Obama administration had focused on using World Trade Organization rules to compel China to sell its rare earths. 'There was less of an alarmist perspective at that time, because the W.T.O. was seen as the right and proper arbiter of these issues,' said Mr. Truesdale, who is now chief executive of TD International, a Washington consulting firm. During his first term, President Trump considerably reduced U.S. participation in the W.T.O., and relations with China worsened. When the Biden administration took office, senior officials became more concerned about samarium. A new company, MP Materials, had acquired the Mountain Pass mine and resumed operations there in 2018. But it initially shipped ore to China for processing. The Defense Department awarded $35 million to MP in early 2022 to start production of samarium and several other rare earths that China has now restricted. MP then spent $100 million, using a lot of its own money, to buy the necessary equipment to process them, said James Litinsky, the company's chief executive. The Biden administration soon after awarded $351 million to Australia's Lynas Rare Earths to build a facility in Texas that would also produce samarium. Mr. Litinsky said the market for samarium was so small that it would be uneconomical to have two producers in the United States. So MP never installed its samarium processing equipment, which is still in storage. But Lynas never built its Texas factory, after a permit it had for rare earth mining in Malaysia that was in limbo was eventually renewed. Lynas did not respond to emails and phone calls for comment. MP is willing to install its samarium processing equipment now only if promised better financial terms by customers, Mr. Litinsky noted. 'We felt very burnt by the whole thing,' he said.
Finextra
10-06-2025
- Business
- Finextra
Payroll data startup Teal raises £1.4 million
Payroll data platform Teal has raised £1.4 million in pre-Seed funding led by Passion Capital. 0 Founded in London, Teal provides real-time payroll data to lenders to help with credit decisioning. Michael Hart, CEO and Co-founder of Teal, says: 'Traditional credit scoring is broken, relying too heavily on outdated processes that fail to deliver for lenders or borrowers. By being able to securely and accurately share income data, users can unlock access to credit that works for them.' Teal is partnering with payroll and HCM providers to deliver reliable, real-time income data to lenders, helping to streamline underwriting and perform ongoing income and employment checks. The firm says its modular API architecture ensures faster integration and adaptability, making it easier for lenders to customise Teal to their existing workflows. Teal plans to expand its data infrastructure beyond payroll to incorporate additional income and financial sources, enabling a more complete and consistent view of each borrower. The company is developing tools to support the full credit lifecycle - from origination to repayment - and employing AI-driven automation to drive smarter decision-making. Will Orde, partner at Passion Capital, says: 'Teal's payroll infrastructure is laying the foundation for a new wave of fintech products, powered by source-level payroll data. It is exactly what the credit ecosystem needs right now, and we are excited to back another great company from the UK's thriving fintech scene."
Bloomberg
02-06-2025
- Business
- Bloomberg
AmCham President Says China Isn't Blocking Rare Earths Exports
China has been slowly loosening the grip on its exports of rare earths over the past week, according to a lobby group for American businesses, after top US officials complained it hadn't been removing barriers as promised. 'We are seeing some approvals come through — certainly slower than industry would like,' said Michael Hart, president of the American Chamber of Commerce in China. 'Some of the delay is related to China working through their new system to approve exports, not that they are not allowing exports.'
Epoch Times
02-05-2025
- Business
- Epoch Times
After Freezing Out Boeing, Beijing Appeals to US Companies
China's commerce ministry said on April 29 that the regime is willing to support normal business cooperation with American companies, days after Chinese airlines canceled Boeing aircraft orders amid a tariff standoff with the United States. The Chinese commerce ministry also blamed the halt in plane deliveries on U.S. tariff hikes. It urged Washington to 'listen to businesses' and restore 'a stable, predictable environment for trade and investment,' claiming tariffs had undermined the stability of global industry and supply chains and disrupted the air-transport market. U.S. officials have not responded to the latest statement publicly. The plea came just days after the Chinese regime ordered Chinese airlines to suspend purchases of Boeing aircraft and returned three newly built 737 MAX jets to the United States. The planes—two for Xiamen Airlines and one for Air China—have already been flown back, and Boeing CEO Kelly Ortberg confirmed last week that Chinese airlines have stopped accepting deliveries. Related Stories 2/28/2025 1/19/2025 While retaliating against U.S. duties, Beijing is quietly compiling a list of U.S.-made goods to be exempted from its own 125 percent retaliatory tariffs and has asked companies to identify critical imports they need duty-free, according to American Chamber of Commerce in China President Michael Hart. Hart said that tariff waivers already cover some pharmaceuticals. Meanwhile, the chief executive of French aircraft engine maker Safran said that Beijing had granted tariff exemptions on 'a certain number of aerospace equipment parts,' including engines and landing gear. In a separate, low-key step to blunt the trade-war fallout, Chinese regulators published a revised 'negative list' on April 24 that trims the number of sectors closed or restricted to foreign investors to 106 from 117. The new list effectively opens 11 additional industries to overseas capital at a time when U.S. tariffs are adding strain to an economy already hobbled by weak consumption and a deep property-sector debt crisis. Since President Donald Trump began his second term in January, the United States has raised duties on Chinese goods by 145 percent, pushing effective rates on some items to 245 percent. In response, Beijing imposed a blanket 125 percent tariff on U.S. imports. Boeing Shrugs Off the Standoff—for Now Boeing Although the first-quarter figures do not yet reflect China's freeze, the Trump administration in March The major government contract likely contributed to the company's optimistic outlook. During the first-quarter earnings call on April 23, Boeing's CEO said jets once earmarked for China can be redirected 'to people who want them,' noting that the order backlog now tops $500 billion. 'We are not going to continue to build airplanes for customers who will not take them,' he U.S.-based economist Davy J. Wong told The Epoch Times that Beijing's decision to block Boeing deliveries amounts to 'strategic self-harm.' He said China's home-grown C919 airliner still relies on U.S. and European avionics, engines, and hydraulics, making a full decoupling impossible. Politically driven cancellations could stall C919 production and maintenance, 'deepening doubts about the reliability of China's aviation market,' Wong said, adding that lessors, financiers, insurers, and suppliers might now reassess China's stability as a long-term partner. 'Most of China's fleet is still Boeing,' Wong said, noting that cutting off access to maintenance, parts, and upgrades would drive up costs and strain the entire civil aviation system. He said a litmus test would be Xiamen Airlines, a near-exclusive Boeing operator. If its orders are fully canceled, the dispute will have moved beyond tariffs into 'a full confrontation over industrial leadership and geostrategic positioning,' an escalation Beijing may not actually want, he said. Shen Ming-shih, a research fellow at Taiwan's Institute for National Defense and Security Research, told The Epoch Times that the Chinese cancellation of aircraft delivery will sting less than Beijing hopes. 'Global demand for the 737 MAX remains strong, production slots are sold out for years, while China accounts for only about 10 percent of Boeing's commercial backlog,' he said, meaning Boeing can likely place the returned jets with new buyers quickly. Cheng Mulan, Luo Ya, and Reuters contributed to this report.
Yahoo
28-04-2025
- Business
- Yahoo
China Quietly Giving Tariff Exemptions: AmCham China's Michael Hart
China is giving tariff exemptions to some companies in the IT, healthcare, and aviation sectors, American Chamber of Commerce in China President Michael Hart tells Bloomberg. Chinese officials have also asked companies to identify critical imports that would be difficult to source from other countries. Hart speaks as Chinese policymakers try to reassure the public that they will take measures to aid growth as record US tariffs dent the economy's outlook. Sign in to access your portfolio
