Report: China asks South Korean companies to halt exports to US defense firms
This week, China urged South Korean companies to halt exports of products containing Chinese rare earth elements to US defense firms, according to the Korea Economic Daily. This follows China's export restrictions on several rare earth elements, including dysprosium, terbium and NdFeB magnets containing those elements, announced on April 4, 2025, amid escalating US-China trade tensions and new US tariffs.
“As of yet, no facts have been confirmed”
This week, China urged South Korean companies to halt exports of products containing Chinese rare earth elements to US defense firms, according to the Korea Economic Daily.
This follows China’s export restrictions on several rare earth elements, including dysprosium, terbium and NdFeB magnets containing those elements, announced on April 4, 2025, amid escalating US-China trade tensions and new US tariffs.
The Chinese government reportedly sent letters to South Korean manufacturers in battery, electric vehicle, aerospace and other industries, warning of sanctions for non-compliance.
South Korea’s Ministry of Trade, Industry and Energy said Wednesday, “as of yet, no facts have been confirmed” and that it “is in the process of checking whether the news article is based on facts by communicating with the Chinese government and relevant industries”.
South Korean officials are in Washington this week to discuss tariffs with their US counterparts, Reuters reported.
Earlier this month, Korea’s industry ministry said the country “maintains over six months’ worth of public reserves for metals like dysprosium”, the Korea Herald published.
South Korea’s first NdFeB factory
South Korea’s first NdFeB magnet factory opened its doors in October 2023 and counts Hyundai, LG Innotek, Valeo, Posco, Vinfast, Seagate and Western Digital among its clients and partners.
Owned by Sunglim Advanced Industrial, a subsidiary of Star Group, the factory has capacity to produce 1,000 tonnes of NdFeB magnets per annum, including dysprosium- and terbium-diffused magnets, as well as cerium-containing magnets.
In 2021, LG Innotek announced development of a super-strong “eco-friendly” NdFeB magnet with Sunglim that contains 60% less heavy rare earths than competitors’ products.
In late-2024, LG Innotek announced that it developed a heavy rare earth element (HREE) free variant of its “eco-friendly” magnet with the Korea Institute of Materials Science that can operate at temperatures up to 180℃ – a potential alternative to restricted magnets from China.
Similarly, industry leader Neo Performance Materials produces a line of ultra-fine grained “MQU” NdFeB powders – an order-of-magnitude finer grained than those found in conventional sintered NdFeB magnets – that can be used to produce “MQ3” HREE-free NdFeB magnets suitable for EV motors, robot actuators and other high performance applications – another potential alternative to restricted magnets from China.
Largest importer of dysprosium oxide in 2025 YTD
While the South Korean government fact checks the allegations, we observe that they have materialized at an interesting time.
Not only is South Korea host to magnet production capacity that could partially supply the US defense industry amidst China’s export restrictions, the nation has also become a major importer of China’s dysprosium (and terbium) in recent years, reinforcing the assertion that it holds considerable reserves of the material that could be used against China’s interests.
In fact, through the first three months of 2025, customs data indicates that South Korea imported more dysprosium oxide from China than any other nation, including Japan, and over the same three-month period imported more dysprosium oxide than it did in all of calendar 2024.
It begs the question – has South Korea’s import surge raised red flags in China? Or is it merely a continuation of its volatile import history, that has seen volumes swing from year to year. As we noted in February, China is implementing a rare earth traceability system that will allow it to oversee and manage exports with surgical precision. Are we now seeing this oversight in action?
Isolated incident?
Relative to Japan – the leading producer of NdFeB magnets outside China, and the leading importer of dysprosium oxide from China – South Korea is a relatively small player leading us to question if incumbents in Japan, or even Japanese companies operating in China, have received similar alleged letters or threats of sanctions.
Same for the Philippines, the third largest importer of dysprosium oxide, which, like South Korea, imported more of the material through the first three months of 2025 than all of 2024 combined, but also has a somewhat volatile import history.
With the trade war evolving by the week, time will tell how the situation evolves.
If the latest allegations prove true, it signals a sincere fervor in China’s intent to cut off access to US defense and leaves little doubt that any export license applications for US defense-related entities will ultimately be rejected, possibly following an intentionally drawn-out review period.
代替サプライヤーと面談する
2025年9月、トロントで開催される「Rare Earth Mines, Magnets & Motors 2025」にて、新興のレアアース採掘企業や磁石メーカーと交流し、市場の主要プレイヤーや業界の専門家と共にこのテーマについてさらに深く掘り下げていきます。
この2日間のイベントでは、鉱山からOEMに至るグローバルなサプライチェーンの各分野から、ビジネスおよび技術のリーダーたちが一堂に会し、5つ星の会場で質の高い議論とネットワーキングを行います。
今年のカンファレンスの主なテーマには、ロボティクス、自動化、先進的航空モビリティ、そして上流工程で統合されつつある「鉱山から磁石まで」のサプライチェーンが含まれます。
特別ゲスト：スティーブ・ウォズニアック（Apple共同創業者）
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