China's Ministry of Commerce (MOFCOM) and General Administration of Customs on April 4, 2025, issued Announcement 18, which imposes export controls on specific medium and heavy rare earth materials. China cites a desire to safeguard its national security and fulfill international nonproliferation obligations as reasons for the announcement.
Effectively immediately, exporters are required to obtain licenses for the following controlled items, as well as their oxides, alloys, compounds and mixtures:
- Samarium. These include metallic samarium and samarium-containing alloys (e.g., samarium-cobalt alloys), samarium oxide and its mixtures, and compounds and mixtures containing samarium.
- Gadolinium. These include metallic gadolinium and gadolinium-containing alloys (e.g., gadolinium-magnesium alloys), gadolinium oxide and its mixtures, and compounds and mixtures containing gadolinium.
- Terbium. These include metallic terbium and terbium-containing alloys (e.g., terbium-cobalt alloys), terbium oxide and its mixtures, and compounds and mixtures containing terbium.
- Dysprosium. These include metallic dysprosium and dysprosium-containing alloys (e.g., dysprosium-iron alloys), dysprosium oxide and its mixtures, and compounds and mixtures containing dysprosium.
- Lutetium. These include metallic lutetium and lutetium-containing alloys, lutetium oxide and its mixtures, and compounds and mixtures containing lutetium.
- Scandium. These include metallic scandium and scandium-containing alloys (e.g., scandium-aluminum alloys), scandium oxide and its mixtures, and compounds and mixtures containing scandium.
- Yttrium. These include metallic yttrium and yttrium-containing alloys (e.g., yttrium-aluminum alloys), yttrium oxide and its mixtures, and compounds and mixtures containing yttrium.
Exporters must apply for the necessary export licenses through MOFCOM in accordance with China's Export Control Law and related regulations. They are also required to ensure proper classification and declaration during customs procedures, specifying the dual-use item control codes when applicable. Failure to comply may result in withholding of shipments.
Potential Effects
This move is likely to have both immediate and strategic impacts on global supply chains, particularly for industries dependent on rare earth materials for high-performance magnets, electronics, defense systems, clean energy technologies and advanced manufacturing. Along with potential supply disruptions, the announcement could lead to increased regulatory uncertainty, upward pressure on prices, acceleration of diversification and onshoring efforts, and compliance and due diligence imperatives.
This is not an export ban, but rather an export restriction. As with previous export restrictions, affected parties will need to wait and see how many applications (and how much material) is approved for export. It is anticipated that exports could decrease dramatically. Additionally, prices for these materials could double on short order, with some analysts anticipating a 500 percent increase in the near future.
This announcement highlights the importance of a recent executive order issued by the administration related to critical minerals.
Observations for Those in the Market
Those affected by this announcement are encouraged to:
- begin conversations with suppliers to understand how this policy may impact lead times and pricing
- consider stockpiling or identifying alternate sources where feasible
- monitor further guidance from Chinese authorities and watch for retaliatory or responsive policy measures from other governments
- if applicable, revisiting internal compliance protocols to ensure awareness of changes in dual-use export controls and licensing processes
Holland & Knight will monitor further guidance from Chinese authorities.
