China ready to supply heavy rare earths to India, but with guarantee that involves US

China has asked India to provide guarantees that heavy rare earth magnets supplied by Chinese firms will not be re-exported to the United States and will be used solely to meet domestic needs before resuming shipments of the critical components, the Economic Times reported on Thursday, citing people familiar with the matter.

According to the report, Indian companies have submitted end-user certificates confirming that the magnets will not be used for the production of weapons of mass destruction.

However, Beijing has reportedly sought additional export control assurances similar to those under the ‘Wassenaar Arrangement’. This international export control regime governs the transfer of conventional arms and dual-use goods and technologies.

“China wants to ensure that the heavy rare earth magnets supplied to India do not reach the US,” ET quoted a person aware of the matter as saying.

The report suggests that New Delhi has not yet agreed to Beijing’s request.

China, which is negotiating a broader deal with the United States over supplies of heavy rare earth magnets, is reportedly hesitant to release shipments to India without diversion guarantees. According to multiple media reports, Beijing is trying to leverage its dominance in the rare earth supply chain in ongoing trade discussions with Washington.

China, which processes over 90% of global rare earth minerals (REMs), introduced export licence requirements in April for seven rare earth elements and magnets.

Heavy rare earth magnets are vital components in electric vehicle motors, renewable energy systems, and other high-tech industries.

India, which imports more than 70% of its REMs from China, has faced mounting disruptions. Shortages of rare earth magnets have slowed production of EVs.

During his visit to India in August, Chinese Foreign Minister Wang Yi assured External Affairs Minister S Jaishankar that Beijing will resume supplies rare earth minerals.

While China resumed exports of light rare earth magnets to India following the Shanghai Cooperation Organisation summit in early September, heavy rare earth magnet supplies remain constrained, ET reported.

“There have been requests for end-use certification,” ET quoted a senior Indian government official as saying. “Our understanding is that it is mostly companies that are providing the assurances, possibly with certification by the commerce ministry also.”