China asks India for a guarantee that the heavy rare earths it supplies will not be re-exported to the US: Report

China has reportedly asked India to provide assurances ensuring that heavy rare earth magnets imported from China will not be re-exported to the US before the shipments begin. Beijing wants these magnets, which are key inputs in sectors such as electric vehicles and defence, to be used exclusively for domestic Indian needs.

According to a report in the Economic Times, Indian companies have provided end-user certificates stating that the magnets will not be used to manufacture weapons of mass destruction, but China is seeking more export control guarantees, similar to provisions under the Wassenaar Agreement. India is a signatory to this international export control system, but China is not. The report added that the request for these guarantees contributed to the continued delay in supplies, despite diplomatic communication between the two countries.

China controls 90 percent of global production of heavy rare earth magnets, and has stopped publishing country-specific export data. Negotiations remain stalled as China seeks guarantees against diversion, possibly linked to its trade talks with the United States.

The Indian suppliers have provided end-use certification documents as required by Chinese regulations. Beijing’s demands include guarantees that these magnets will not be diverted for uses such as manufacturing or processing weapons of mass destruction. A senior government official confirmed to the financial daily that the companies, which may have Ministry of Commerce certification, are offering these guarantees.

While China has resumed supplies of light rare earth magnets to India after the Shanghai Cooperation Summit in August, shipments of heavy rare earth magnets remain halted. Last year, India imported 870 tonnes of rare earth magnets worth Rs 306 crore.

The ongoing shortage has affected high-tech industries, with electric vehicle manufacturers facing significant constraints. The development of larger electric vehicles has been hampered, as alternatives to heavy rare earth magnets reduce efficiency.

China announced restrictions on the export of medium and heavy elements related to rare earths last April, under the pretext of “protecting national security.” Only buyers who have obtained a license from the Chinese Ministry of Commerce and provide an end-user certificate are eligible to import these items. Unlike supplies to Europe and Southeast Asia, export licenses have not yet been granted to Indian vendors.