According to industry participants, China has begun allowing some rare earth shipments under new export control rules, but the slow pace of approval threatens disruptions to global supply chains.
Beijing's export restrictions on seven rare earth elements and permanent magnets in early April were crucial to products from electric vehicles to wind turbines, humanoid robots and fighter jets.
Exporters, China-based industry groups and supply chain experts say Beijing’s commerce ministry has approved some licenses for export to Europe, but it’s too slow to meet demand.
"The window to avoid serious damage to production in Europe is closing quickly," Wolfgang Niedermark said.
U.S. manufacturers, including Tesla, Ford and Lockheed Martin, expressed concern about China's export control measures in recent investor briefings.
A European industrial director in China, who spoke on condition of anonymity, said the current delays were "untenable" for foreign manufacturers.
“What I witnessed locally is that there is really incompetence; they underestimate the impact of preparing at the work level and what you need to prepare for.”
China's expansion of control over rare earth exports is a response to a comprehensive tariff announced by U.S. President Donald Trump on April 2.
The controls require exporters to obtain licenses from Ministry of Commerce officials for the transportation of seven targeted rare earths and permanent magnets made by them, and highlight the geopolitical leverage imposed by China’s advantages over global mineral supply.
It is unclear whether China has begun to approve exports to the United States, as two economic superpowers agreed to a ceasefire in the tariff war this month.
Yantai Zhenghai Magnetic Materials, an exporter based in Shandong province in eastern China, said it has obtained an export license and has "restored" orders from some customers.
Also, two people familiar with the situation say at least one ship carries the German business of automaker Volkswagen.
Volkswagen said its supply of rare earth-containing parts is stable and its suppliers have obtained "limited (export) licenses among them."
China's Ministry of Commerce did not respond to a request for comment.
There is widespread concern in the industry that China's licensing bureaucracy will be placed in the number of applications.
European executives said European companies are “not sure how to prove that their goods will not be re-exported to the United States again, which would violate the licensing conditions.
Tesla boss Elon Musk told investors last month that China seeks assurance that the rare earth magnets needed for robotic weapons his company needs will not be used for military purposes. "This is an example of the challenges there. I'm confident we're going to overcome these problems," he said.
Rajesh Jejurikar, CEO of the automotive division of Indian conglomerate Mahindra & Mahindra, said the process of obtaining end-use certification - it is unclear yet the weapon is not yet clear.
The manager of Chengdu Galaxy Magnet, which sells permanent magnets, said stopping military-related goods is a focus of Chinese authorities. She said her company is helping clients submit statements of export approval to authorities, but does not allow the use of "military-related" applications.
"Exports of non-military applications are still allowed," she said.
Permanent magnets are used in fighters such as Lockheed's F-35, and new controls are expected to cause short-term problems and force long-term supply chain movement.
Lockheed's chief financial officer Evan Scott told investors this week that the company had enough rare earth materials for the year and he hopes U.S. authorities prioritize Lockheed "because of the importance of our plan."
Cameron Johnson, a manufacturing and supply chain expert and partner at Shanghai Tidalwave Solutions, said he believes some of the large companies with long-term ties to China are allowed to obtain rare earths from the country before approving their licensing applications. “There is still material to go out.”
"Of course there is no evidence that China "cuts off everyone straight away," said Cory Combs, deputy director of Beijing-based consulting firm Trivium China.
In view of the temporary 90-day U.S.-China tariff ceasefire, Coms said he hopes the Commerce Department will receive more recognition, but warned that uncertainty remains. "Everyone wants Mofcom to provide clarity. However, China's strategic leverage relies in part on the ability to pull export control leverages, so much so that the United States does not provide a satisfactory agreement."
Experts say the latest rare earth control measures will increase momentum for the West to work to reduce its dependence on China.