Chinese Magnet Makers Bypass Beijing Export Controls

Chinese rare-earth magnet manufacturers are employing technical and structural strategies to circumvent export controls implemented by the Government of China this spring. Companies including X-Mag and Zhaobao Magnet are developing new magnet grades that utilize ultra-fine grinding to increase heat tolerance, removing the need for restricted heavy rare earths like dysprosium or terbium and avoiding lengthy licensing processes.

Suppliers are further bypassing restrictions by shipping completed motors and components with magnets already embedded, as these finished goods are not subject to the same export rules. Beijing attempted to close these loopholes in October by adding holmium to the restricted list, but a subsequent deal between the United States and China delayed the enforcement of those specific limits by one year.

Western buyers are currently purchasing these substitute materials despite slightly lower performance at high temperatures. This shift has prompted some international firms to accelerate the establishment of supply chains outside of China to mitigate geopolitical dependency.