China's Rare Earth Export Curbs Threaten South Korean Industry

Beijing's export controls on seven heavy rare earths since April 4 have sharply reduced supplies of dysprosium and terbium - critical for high-strength neodymium EV motor magnets - and samarium, used in samarium‑cobalt military magnets.

Small suppliers are already feeling the squeeze. Daegu-based Star Group Industry imported only 2.5% of its required heavy rare earths (about 100 kg) over five months and may suspend operations. A North Gyeongsang defense contractor that makes samarium‑cobalt magnets is also considering halting production as inventories dwindle.

China still dominates the chain: roughly 70% of exports, 85% of refining capacity and 90% of alloy production, with 97% of output for the seven controlled elements. Customs slowdowns and tighter licensing have pushed lead times from about a week to more than two months.

Critics say Seoul’s response has been limited. KOMIR holds modest reserves and a 10 trillion won stabilization fund cannot directly buy foreign mines. By contrast, the U.S. and Japan have taken equity positions in producers to secure supply.

Experts urge coordinated action: state lenders partnering with private investors to finance overseas mines, plus increased funding for next‑generation magnet technologies to reduce heavy rare earth dependence and protect EV and defense supply chains.