(Reuters) – Chinese rare-earth magnet suppliers to U.S. automaker Ford Motor (F.N), opens new tab were included in the first batch of new export licenses issued by Beijing to boost shipments and reduce shortages of the vital components, the carmaker said on Wednesday.
The so-called general licenses were agreed after Presidents Xi Jinping and Donald Trump met in South Korea and will reportedly allow larger shipments with fewer hurdles under year-long permits for individual customers.
China’s introduction of rare-earth export controls in April forced companies to apply for licenses for every shipment, creating shortages that brought parts of the auto supply chain to a halt and handed Beijing enormous leverage in trade talks with Washington.
Reuters reported last week that three Chinese magnet suppliers had licenses issued, but Ford appears to be the first foreign customer to acknowledge that suppliers have received approvals under the streamlined system.
China has said little publicly about the new licenses, how they will work or who will receive them, raising fears among non-U.S. diplomats and producers that the licenses will be for U.S. customers primarily.
Those concerns were heightened this week when Germany’s Foreign Minister Johann Wadephul said that the country’s automakers were not included in this first round. Many of those manufacturers, such as Volkswagen (VOWG.DE), opens new tab, have had ties with China for many years.
Wadephul said that “quite a lot of work” was still needed to persuade Beijing to grant the new licenses to German companies.
BMW (BMWG.DE), said it is monitoring the issue of general licenses along with its suppliers. VW said its rare-earths supply is stable and it is not experiencing any shortages. “Our suppliers are continuously working with their subcontractors to obtain the necessary export licenses,” the automaker said.
While the system agreed between Xi and Trump should accelerate exports for some customers, it remains to be seen how widely Beijing will issue licenses and whether customers in more sensitive sectors such as aerospace or semiconductors will qualify. China’s rare-earth exports jumped in November.
“While we are pleased that some of our suppliers have secured these approvals, we urge the U.S. and Chinese governments to continue their collaboration to fully resolve supply chain issues,” Ford said in its statement to Reuters.
