China Issues New Rare Earth Export Licenses: Source

China has issued the first batch of new rare earth export licenses that should accelerate shipments to certain customers, a source said on Tuesday, fulfilling a key outcome of the summit between Presidents Donald Trump and Xi Jinping.

The approvals come after months of disruption triggered by China’s introduction of rare earth export controls in April at the height of the trade war.

By forcing companies to apply for licenses for each export, Beijing created shortages that brought parts of the auto supply chain to a halt and handed it enormous leverage in trade talks with Washington.

The new "general licenses" are designed to ease that pressure by allowing more exports under year-long permits for individual customers, Reuters reported exclusively in November, and were a key outcome of the Trump-Xi meeting in late October.

Chinese magnet maker JL Mag Rare Earth has received general licenses for nearly all of its clients, while Ningbo Yunsheng and Beijing Zhong Ke San Huan High-Tech have secured licenses for some of their clients, the source said, declining to be identified due to the sensitivity of the matter.

The three firms and China's Ministry of Commerce did not immediately respond to questions.

All three companies sell to the automotive industry among others, according to their websites. JL Mag has a subsidiary in Europe and Ningbo Yunsheng says it has clients in Europe and the Americas.

The new licenses will supplement but not replace the existing licensing regime, Reuters reported in November. For now, only large Chinese rare earth companies are eligible for general licenses, but the criteria could widen if the rollout proves successful, the source said.

The new licenses go some way to closing the gap between Beijing and Washington's respective accounts of what was agreed at the leaders' summit in South Korea.

While the White House likened general licenses to the effective end of China's rare earth export controls, Beijing has said little about the new licenses in public and given no sign it intends to dismantle its regime.

It remains to be seen how widely licenses will be issued and whether they will be off limits for some customers, for example defense or sensitive sectors such as aerospace or semiconductors.

Meanwhile European firms on Monday complained again about long delays and a lack of transparency in the existing export control system.