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China: Export ban of critical minerals to the US

Date of publication: December 16th, 2024
Following the release of Decree No. 792 on the Regulations of the Export Control on Dual-Items on September 30, 2024, the Ministry of Commerce of the People’s Republic of China (MOFCOM) and the Safety and Control Bureau of China promulgated Announcement 46 on December 03, 2024 to strengthen export control of these items to the United States (US) and to include an export ban on specific critical minerals. The new controls became effective on the same day.
This action is the most recent round of trade conflict escalations, in which both sides have imposed tariffs and counter-tariffs, as well as various other import/export controls. This promulgation is also seen as a retaliation for Washington’s tighter regulations limiting China’s access to cutting-edge semiconductor technologies, which the US considers a national security risk because of their possible military applications. The Biden administration has imposed a series of increasingly broad restrictions on the export to China of “dual-use” products, those with civilian and military applications. These restrictions have included transshipment bans.
This latest Announcement by MOFCOM is particularly concerning to many companies due to a provision extending the ban to companies in other countries that transfer minerals to US companies after acquiring them from China. This broad ban on transhipment or “re-export” has not been seen in past export regulations in China and indicates the readiness of China to escalate their response to increasing controls on US exports. The mineral embargo is also the latest effort to replace imports with domestic production in China.
The Announcement states:
  1. To safeguard national security and interests, and fulfil international obligations such as non-proliferation; it’s decided to strengthen export controls on relevant dual-use items to the US.
  2. Prohibit the export of dual-use items to U.S. military users or for military purposes.
  3. The export of dual-use items such as “gallium, germanium, antimony and superhard materials” to the US will not be permitted. For the export of dual-use items such as graphite to the United States, stricter end-user and end-use reviews will be implemented.
    Names
    ECNs
    Gallium
    3C001
    Germanium
    3C002
    Antimony
    3C003
    Superhard Materials
    2A901, 2B005, 2C901
    Graphite
    1C108
important
This chart indicates potentially applicable ECNs. There is no direct correlation between the material or product names and the relevant ECNs. The ECNs are provided for reference only.
Any organization or individual violating these provisions by transferring or providing dual-use items originat-ing in China to U.S. entities will face legal consequences. Companies would be wise to conduct a review of their supply chains and identify specific sources of these critical minerals to ensure they are not running the risk of non-compliance with these new regulations when selling to the US.
The new export restrictions on these items may affect directly some industries that rely on the production of those materials from China such as semiconductors, space, and defense technology manufacturing. It will likely result in material price increases, increasing product risks, impacting trade lanes and leading to possible supply chain disruptions. As the global demand for critical minerals continues to grow, actions such as this one by China further emphasize the possible impact to national security that trade issues can have on the supply chain.
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