Sources say that China rare earth firms have halted some US shipments due to geopolitical concerns.

Three sources have confirmed that some Chinese suppliers of rare earths are refusing to ship to the U.S. out of fear for repercussions by Beijing. This highlights the fact that access to these materials is still an issue for Washington, weeks before President Xi Jinping's visit.

U.S. officials asked China repeatedly to'stick to the commitments made at Busan and Beijing in the last year to ensure that a'smooth?flow of export licences for rare earths. A source familiar with this work says that the U.S. has placed the persistent problem on its planning agenda in advance of Xi’s visit to the U.S. on September 24.

Sources with direct knowledge said that a few Chinese suppliers refused to supply rare earths to U.S. firms since early August, when China imposed restrictions on the Responsible Business Association (RBA), an American supply chain monitor.

Source: Companies were concerned about punishment by Beijing if they followed the RMI, a global audit programme of the mineral supply chain connected to the RBA.

Two other sources with knowledge of the industry said that in the past few months, other Chinese rare earths firms had stopped shipping to the U.S. in order to avoid geopolitical entanglements. According to one source, Chinese companies refused to send materials for fear that they could be resold by?users who are banned.

Sources declined to name themselves due to the sensitive nature of the subject.

It was not possible to count the number of Chinese suppliers that refused to ship shipments to U.S. customers.

Unnamed U.S. officials told a reporter that the administration is continuing to press China to comply with the Busan Agreement, and other bilateral concerns.

Tight Supply

Although exports of rare earths, magnets, and other critical materials, such as yttrium and indium phosphide, which are used for sensitive industries, including aerospace and chipmaking, have recovered since China's April 2025 restrictions, prices of certain rare earths, and critical materials, like yttrium and indium phosphide, that have military or sensitive applications, remain near record levels due to a shortage.

Medical devices and energy are also affected by delays in obtaining licenses.

Exports of yttrium to the United States have increased this year, but are still only?about half their levels in 2024 despite large shipments to other countries. Chinese customs data show that despite large shipments abroad, yttrium exports to the United States are only half of what they were in 2024. Two sources said that some U.S. firms have waited more than six month for mineral licenses.

Reva Goujon is a geopolitical analyst at Rhodium Group. She said that China has used rare earth export controls very effectively to restrain the Bureau of Industry and Security of the Commerce Department, the U.S. agency in charge of various restrictions targeted towards China.

Goujon said that "supply chain chokepoints" will be in focus. However, I expect Beijing to relax some of its critical raw material controls around the summit. This would deflate U.S. accusations that Beijing was not adhering to the Busan truce.

The U.S. Treasury Department, U.S. State Department, U.S. trade Representative and China's Ministry of Commerce did not respond to requests for comment.

China's Ministry of Foreign Affairs said that China is committed to maintaining critical global mineral supply chains.

Beijing has said that its decision in August to sanction RBA and U.S. auditors was a reaction to a series FCC restrictions targeting Chinese electronics testing laboratories, drones and consumer routers as well as submarine cables and advanced robotics equipment.

One of the sources briefed about the interaction said that when U.S. officials raised the rare-earths issue, Chinese officials responded by saying FCC's actions violated the Busan truce.

After two months of yttrium-free exports to the U.S., China shipped 27 tons in July, which was the second highest monthly shipment since January 2025.

Two sources reported that several U.S. companies have also received multiple licenses recently after waiting for a long time. Some firms expect an increase in approvals during the summit.

Two sources with knowledge of the issue said that licence approvals are even more restricted for Indian and Japanese customers. One of the?said that Chinese suppliers are refusing to ship material to Japanese companies in large numbers.

Ryosei Acazawa, Japan's trade minister, has said that Japanese companies face delays in obtaining permits and customs inspections of critical minerals such as rare earths. His ministry did NOT respond immediately to a Friday request for comment.

China did not export terbium from January to August this year, compared with 20 tons in the same period last year. Chinese customs data showed that yttrium shipments dropped 98% and gallium shipments fell 65% during the same time period. Rare earth magnets are made with small amounts of terbium and gallium.

The European Chamber of Commerce in China said in a press release that, "while processes have been streamlined our member companies are still facing implementation issues." What our members want to see is an agreement to implement a transparent, predictable application process which provides reliable access rare earth elements.

(source: Reuters)