A recent research report indicates that following China's comprehensive management of the rare earth industry, global rare earth supply growth expectations may be revised downward, with related policies benefiting the high-quality development of the domestic rare earth industry. After implementation of export controls, the Ministry of Commerce stated it will accelerate the review of rare earth-related export license applications in accordance with laws and regulations. By August this year, China's rare earth permanent magnet exports had recovered to a year-on-year growth of +15.4%. Supply normalization and sustained demand growth have driven this year's rare earth sector performance. Additionally, rare earth permanent magnet materials are closely related to industries such as humanoid robots, and the sector may benefit from anticipated demand growth in emerging industries in the future.
Main Points:
Event: The Ministry of Commerce and General Administration of Customs issued multiple documents announcing that starting November 8, 2025, export controls will be implemented on certain heavy rare earth-related items, certain rare earth equipment and raw auxiliary materials-related items, and rare earth-related technologies.
China's Comprehensive Upgrade of Rare Earth Industry Controls
In April this year, the Ministry of Commerce and General Administration of Customs issued an announcement implementing export controls on seven heavy rare earth-related items including samarium. The current round of export controls represents a comprehensive upgrade based on this foundation.
1) Expanding the scope of controlled items. Document No. 56 added export controls on five additional heavy rare earth-related items including holmium, further expanding the elemental scope of rare earth controls.
2) Extending control reach overseas. Document No. 61 requires that when overseas operators export to other countries, if the exported items contain, integrate, or mix rare earth control items originating from China, they must obtain dual-use item export license certificates issued by China's Ministry of Commerce.
3) Implementing export controls on rare earth equipment and technology. Documents No. 56 and No. 62 respectively implement export controls on rare earth-related technologies and certain rare earth equipment and raw auxiliary materials-related items, achieving more comprehensive control over the upstream and downstream of the rare earth industry chain.
Increased Difficulty in Overseas Rare Earth Supply Chain Reconstruction Enhances Strategic Position
Since this year, the United States has attempted to reconstruct rare earth supply chains in multiple ways, including: the U.S. Department of Defense investing $400 million in MP Materials, the nation's only rare earth mining and refining company, becoming the largest shareholder and guaranteeing a price of $110/kg for neodymium-praseodymium products; supporting Ramaco Resources' development of the first new rare earth mining project in Wyoming in 70 years.
China's strengthened comprehensive control over the rare earth industry chain has increased the difficulty of overseas rare earth supply chain reconstruction, further enhancing the strategic position of Chinese rare earth products.
Supply Normalization Combined with Sustained Demand Growth Drives Rare Earth Sector Performance
Policies issued this year, including the "Interim Measures for Total Volume Control Management of Rare Earth Mining and Rare Earth Smelting and Separation," incorporate imported ores into total volume control management and strengthen full-process traceability management of rare earth products. The special campaign against strategic mineral smuggling exports requires strengthened source control over rare earths.
The demand side for rare earths benefits from sustained growth in new energy vehicle production and wind power installation capacity. After implementation of export controls, the Ministry of Commerce stated it will accelerate the review of rare earth-related export license applications in accordance with laws and regulations. By August this year, China's rare earth permanent magnet exports had recovered to a year-on-year growth of +15.4%. Supply normalization and sustained demand growth have driven this year's rare earth sector performance.
For investment targets, attention should be paid to rare earth production companies Northern Rare Earth (600111.SH), CHINA RAREEARTH (000831.SZ, 00769), Guangsheng Colored Metals (600259.SH), and permanent magnet material company JLMAG (300748.SZ, 06680).
Risk Warning: U.S. tariff policies exceeding expectations.