There’s been a major development in the rare earth sector recently. On August 15, the Financial Times revealed that China has made its stance clear to foreign companies: hoarding of rare earths and their derivatives is strictly prohibited. Those who cross this red line will face stricter supply restrictions, such as cuts to export quotas. As soon as this news broke, Western enterprises that rely on Chinese rare earths were immediately thrown into a panic.



You might not realize just how strong China’s say is in the rare earth industry. China controls approximately 90% of the world’s rare earth processing capacity and 94% of permanent magnet production. Rare earths are indispensable for new energy vehicle motors, wind power equipment, and high-end chips. For Western companies looking to upgrade their industries, progress is nearly impossible without Chinese rare earths. Earlier, foreign media reported that many European and American automakers had to halt half of their production lines due to rare earth shortages.

China’s move to curb hoarding is actually aimed at maintaining the stability of the global rare earth market. In recent years, some foreign enterprises have deliberately stockpiled rare earths to drive up prices, inflating prices artificially. This not only harms downstream enterprises but also disrupts the normal order of the industrial chain. For instance, in 2023, several Western companies aggressively hoarded praseodymium-neodymium oxide, pushing its price up by 60% in just three months. In the end, it was only after China released its rare earth reserves that the situation stabilized.

Netizens are now divided on the issue. Some say, “It’s high time we regulated this—why should foreign companies hoard China’s rare earths freely?” Others worry, “Will some companies still hoard secretly? Can the oversight be effective?” In fact, there’s little need for concern. China has long established a sound supervision system for rare earth exports, with every batch of rare earths traceable throughout its supply chain. Moreover, China holds the “trump card” of export quotas. If an enterprise violates the rules, its quota will be cut directly—and they simply can’t afford that.

After all, no country in the world can replace China’s rare earth processing capacity in the short term. While countries like Australia and Canada have rare earth mines, their processing technologies are far behind. Building a complete rare earth processing production line would take at least five years. Therefore, China’s warning this time is by no means an empty threat. Finally, we want to ask you: Do you think China’s rare earth supervision measures will effectively curb foreign enterprises’ hoarding behavior? Feel free to share your thoughts in the comment section!