New export restrictions on neodymium magnets – what should you know?

What are export licenses and why were they introduced?

• Purpose of the regulation: China, which produces about 90% of the global supply of neodymium magnets, introduced export licenses in response to trade tensions, mainly with the United States, which imposed tariffs on Chinese goods. The regulations aim to:
  Control strategic resources (rare earth elements are critical for technologies, including defense, automotive, and electronics).
  Protect national security by limiting the use of Chinese materials in military technologies of other countries.
  Strengthen China's position in the global supply chain.

• Legal basis: Regulation by China’s Ministry of Commerce (MOFCOM) and new rules on the export of rare earth elements, which came into effect in April 2025.

• Scope: The licenses cover NdFeB magnets as well as derivative products such as motor rotors, components for electric vehicles, or medical devices, if they contain specified rare earth elements.

Procedure for obtaining an export license

• Formal requirements:
  License application: Each exporter must submit an application to MOFCOM for each shipment. The license is specific to the recipient and product.
  Documentation: The application requires detailed information, including:
  End-Use Statement specifying how the magnets will be used (e.g., civilian, industrial, medical).
  Technical specification of the magnets (e.g., chemical composition, grade, e.g., N42, N52).
  Recipient details, including country and sector of use.

• Processing time: The procedure takes 20 to 45 business days, which causes delivery delays. In case of rejection, there is no appeal, but a new application with corrected documentation may be submitted.
  Approval criteria:
  Licenses are more easily granted for civilian uses (e.g., EV motors, speakers, medical devices).
  Exports for military or aerospace use (especially to the USA) are often denied for national security reasons.
  Priority is given to buyers from countries with good trade relations with China (e.g., Europe, Vietnam), although enforcement varies by port.

• Costs: Officially, there are no fees for the license, but the process requires additional personnel and documentation, increasing exporters’ operational costs. Some companies, such as MainRich Magnets, offer licensing assistance services, which may involve additional charges.
  Dependency on China: China controls 90% of neodymium magnet production, posing supply risks, as seen with the 2025 sanctions.

Who has already received export licenses?

• Based on available data, the following companies have received export licenses since May 2025:
  
  Baotou Tianhe Magnetics: License for deliveries to Volkswagen (following intervention in Beijing). Focused on magnets for the automotive industry.
  Zhongke Sanhuan: At least one license, mainly for customers in Europe.
  Baotou INST Magnetic: Confirmed license, recipient details undisclosed.
  Earth-Panda Advanced Magnetic Material: License for export to Southeast Asia.
  JL MAG Rare-Earth: Licenses for magnets, motor rotors, and components for customers in the USA, Europe, and Asia. One of the largest companies granted permits for a wide range of products.
  Innuovo Technology: Received a limited number of licenses, but recipient details remain unclear.
  Other beneficiaries: Some smaller firms received licenses for individual shipments, but data is limited as MOFCOM does not publish a complete list.

• Notes:
  Licenses are issued for specific shipments, which means that even companies with an export history must apply for new permits for every order.
  Recipients in Europe (e.g., Germany, Poland) and Vietnam have better chances of receiving licenses than companies from the USA, which face political restrictions.

Impact on prices and the market

• Price increase:
  Dysprosium oxide: The price in Shanghai rose to USD 204/kg in May 2025 due to export restrictions and reduced raw material availability.
  NdFeB magnets: Prices increased by 10–20% depending on the grade (e.g., N38 more expensive than N52) and specification (magnets with higher Dy/Tb content are pricier due to restrictions).
  Indirect costs: Delivery delays and additional customs procedures raise logistics expenses, which translates into higher component prices in the automotive, electronics, and energy sectors.

• Delivery bottlenecks: Export restrictions caused temporary supply halts at some ports, forcing companies to build up inventory or seek alternative suppliers.

• Regional impact: In Poland and the EU, where imports of magnets from China are common (customs code 8505199089), companies must account for higher costs and compliance with CE and RoHS standards, which further raises prices of end products, such as electric motors and medical devices.

Exceptions and workarounds

• Magnets without heavy elements: NdFeB magnets without Dy, Tb, or other heavy rare earth elements may not require a license, but are often subject to additional customs controls, causing delays.

• Alternative sources:
  
  Non-Chinese companies, such as MP Materials (USA) and Lynas (Australia), are increasing production, but their market share is below 10%.
  India launched the National Critical Minerals Mission to develop domestic production capacity.

• Specification adjustments: Some companies, like MainRich Magnets, offer magnets with lower content of restricted elements, making it easier to obtain a license or enabling export without one.

Practical steps for importers

• Advance planning: It is recommended to submit license applications 45 days in advance to avoid delays.

• Supplier diversification: Consider importing from other countries such as Japan (Hitachi Metals) or the USA, although they may be more expensive.

• Cooperation with intermediaries: Companies like MainRich Magnets and other Chinese entities offer support in obtaining licenses, which can speed up the process.

• Strategic stockpiling: Building inventories of magnets with standard specifications (e.g., N42 without Dy/Tb) helps avoid production interruptions.

• Regulation monitoring: Track changes in Chinese export regulations, as MOFCOM may introduce further restrictions or ease requirements depending on the geopolitical situation.

Outlook for the future

• Short-term: Export restrictions are likely to remain in place until the end of 2025, leading to further price increases and delivery delays.

• Long-term: Countries such as the USA, Japan, Australia, and India are investing in building their own production capacities, but full independence from China will take 5–10 years. Innovations such as neodymium-free magnets (e.g., research by Korean scientists) may reshape the market in the future.

• Geopolitics: Export licenses are a tool used by China to apply pressure on the West, potentially leading to further trade tensions.

Summary

Export licenses for neodymium magnets are a new challenge for the global supply chain. The licensing process is time-consuming (20–45 days), requires detailed documentation, and increases costs. Companies such as JL MAG Rare-Earth and Baotou Tianhe Magnetics have already received permits, but priority is given to recipients from Europe and Southeast Asia. Magnet prices have increased by 10–20%, and dysprosium oxide has reached USD 204/kg, impacting costs in automotive, electronics, and other sectors. Importers must plan ahead, build stock, and consider alternative sources to minimize disruptions.