Global Rare Earth Magnet Trade Compliance Center

1.1 Core Criteria for Controlled Items

Pursuant to the Export Control Law of the People's Republic of China, the Regulations on the Export Control of Dual-Use Items, and the latest effective MoFCOM/GACC Dual-Use Items Export Control Catalogue, the following rare earth permanent magnetic items must obtain a Dual-Use Items and Technologies Export License prior to customs clearance:

• Samarium Cobalt Permanent Magnetic Materials (SmCo)— Full-category control is enforced. Regardless of whether the material belongs to the SmCo5 or Sm2Co17 series, and regardless of its physical form—be it magnetic powder, raw blocks/blanks, finished magnets, or assembled magnetic sub-assemblies—it is subject to "Item-Specific Control." There are no performance parameters or elemental concentration exemption thresholds.
• NdFeB Permanent Magnetic Materials Containing Heavy Rare Earths (NdFeB) — NdFeB magnets are not under a blanket ban. Controls selectively target items infused with heavy rare earth elements, specifically Dysprosium (Dy) and/or Terbium (Tb), that meet the following threshold: The Red-Line Criterion: Sintered NdFeB magnets where the Dysprosium (Dy) and/or Terbium (Tb) content individually or combined is greater than or equal to 0.1% by weight. Note: Compliance determination is strictly based on the professional composition test results of the magnet core itself.
• Controlled Product Morphologies — Upstream industrial forms processed from the aforementioned controlled magnetic materials—including magnetic rings, discs, segments/arcs, blocks, cylinders, cores, and independent magnetic assemblies that can be isolated and directly reused—are rigidly included within the scope of control.

1.2 Exemptions and Out-of-Scope Items

• Pure Light Rare Earth Standard NdFeB Magnets — Pure light rare earth NdFeB magnets that do not contain controlled heavy rare earths such as Dy or Tb (e.g., standard commercial N35, N45, N52 grades with low coercivity and low-to-medium operating temperatures) are not listed in the Dual-Use Items Export Control Catalogue. They do not require a dual-use export license.
• Trace Impurity-Grade NdFeB Magnets — If the individual or combined weight percentage of Dy and Tb in the magnet is strictly less than 0.1% (which in industrial practice is typically categorized as natural impurity levels carried over from upstream separation), the item is not regulated as a controlled dual-use item.
• Deeply Integrated End Products — When controlled magnets are deeply integrated into end-use equipment or high-level assemblies—where they cannot be independently disassembled using simple tools without structural damage, cannot be reused post-disassembly, and are no longer sold as separate standalone components—the integrated product is generally exempt.
  • Typical Exempt Scenarios: Fully assembled motor rotors/stators, hermetically sealed sensor modules, finished consumer loudspeakers, and complete consumer electronics. Ultimate product classification is subject to the definitive determination of the Harmonized System (HS Code) by GACC and MoFCOM.

1.3 Export License Application Guide & Review Cycle

For magnets falling within the controlled scope, exporters must complete the entire non-paper application flow online via the Unified Platform of MoFCOM's Business Systems.

1. Digital Identity Authentication：Pre-requisite Configuration. The export operator must first acquire a secure Electronic USB-Key (Ukey) issued by MoFCOM's business platform to enable identity authentication and digital signatures for the online system.
2. Assemble '7-Element' Application Dossier：Document Compilation. Strictly compile and digitize the following mandatory application documents in accordance with regulatory criteria:
   • Dual-Use Items and Technologies Export License Application Form: Filled out precisely within the portal.
   • End-User and End-Use Statement (FUA): The original document issued directly by the overseas end-user.
   • Sales Contract: Signed and stamped originals from both executing parties.
   • Proforma Invoice (PI): Strictly aligned with contract terms, quantities, and valuations.
   • Product Technical Specifications: Detailed parameters covering magnetic properties, dimensions, coatings, etc.
   • Magnet Composition Test Report: A certified report breaking down the exact mass percentages of rare earth elements (Nd, Dy, Tb, Sm, Co, etc.).
   • End-User Profile: Including business registration, corporate background profiles, and official websites.
3. System Submission & Local First-Instance Audit：Provincial Bureau Review. Submit the dossier online. The application will route to the Provincial Department of Commerce for first-instance review. If the commercial contract measures cargo in non-weight units (e.g., pieces/units), it must be converted into kilograms (kg) in the system, supplemented by a conversion breakdown document.
4. Final MoFCOM Approval & Issuance：Single-Shipment vs. Multi-Batch. Following the provincial bureau's endorsement, the dossier escalates to MoFCOM for inter-departmental compliance verification and end-use legitimacy assessment. Once approved, an electronic license is issued. The standard processing cycle spans 45 to 60 days.

1.4 End-User and End-Use Statement (FUA) Specifications

The FUA is the most critical and heavily scrutinized substantive document in the entire export vetting process. Any discrepancies will lead to immediate rejections or application denials.

Key Compliance Red Line:The FUA must be signed and stamped by the actual entity utilizing the magnets (not an intermediate broker, freight forwarder, or trading distributor), and must explicitly execute binding covenants stating that the items "will not be used for military purposes and will not be transferred to unapproved third parties."

1.5 Industry Compliance Recommendations for Rare Earth Exports

• Establish an Internal Compliance Program (ICP):Enterprises handling controlled magnets are highly encouraged to build an internal ICP framework (covering transaction records retention, restricted-party screening, and end-use alerts). Enterprises with verified ICP operations can apply for General Licenses from MoFCOM, eliminating the need for tedious "per-batch" filing.
• Rigorous Control over Composition Reports: High-coercivity magnets containing Dy/Tb or premium SmCo magnets are highly sensitive. Exporters should always maintain up-to-date Composition Test Reports from accredited third-party labs to ensure technical parameters (Br, Hcj, etc.) correspond perfectly with customs declarations.
• Implement "Consistency of Documentation" & Splitting Rules: Verify that the exporter and shipper listed on the Dual-Use License align 100% perfectly with the declaration forms submitted to GACC. Since a standard license operates on a "Single-Shipment" rule (typically valid for 6 months), if a single contract requires split shipments, the exporter must select the option to split-issue up to 12 separate licenses during the initial filing.
• Proactive Know-Your-Customer (KYC) Audits: Before finalizing any sales contract or Proforma Invoice (PI), perform a comprehensive background screening on the end-user against global sanctions and restricted-party databases to prevent contractual defaults or severe legal liabilities stemming from blacklisted entities.

2.1 Statutory Foundation & Regulatory Framework

• Statutory Basis: 10 U.S.C. § 4872 (Procurement restrictions on specific strategic and sensitive materials).
• Implementing Regulation: Defense Federal Acquisition Regulation Supplement DFARS 252.225-7052 (Restriction on Acquisition of Certain Magnets, Tantalum, and Tungsten).
• Covered (Restricted) Countries: China, Russia, North Korea, Iran.

2.2 Supply Chain Timelines and Structural Compliance Shifts

Per the latest active amendments to the DFARS framework, compliance mandates for Neodymium (NdFeB) and Samarium Cobalt (SmCo) permanent magnets operate on a critical phased timeline:

• Phase 1 (Enforced through December 31, 2026) — Alloy Melting Restrictions — Defense supply chains are strictly prohibited from procuring or incorporating magnets where the alloy melting (Melting) or final production occurred inside a covered country. For SmCo, this applies to the samarium-cobalt alloy melting stage; for NdFeB, this restricts the melting of neodymium, iron, and boron into strip-casting alloy flakes.
• Phase 2 (Mandatory Enforcement Effective January 1, 2027) — Full Supply Chain Look-Through Ban — Regulatory oversight shifts completely upstream. Any end item or assembly delivered under a defense contract containing NdFeB or SmCo magnets must prove that the entire supply chain—spanning initial rare earth ore mining, separation, refining, alloy blending, sintering, and final machining—was executed entirely outside of covered countries (including China).

2.3 COTS (Commercial Off-The-Shelf) Exemptions & Electronic Exceptions

• The COTS 50% Weight Rule: For items that qualify as Commercial Off-The-Shelf (COTS) and are not custom-machined for military applications:
  • Prior to December 31, 2026, COTS products are generally exempt if the weight of the restricted metal/magnet component comprises less than 50% of the item's total weight.
  • Effective January 1, 2027, this safe harbor contracts sharply: If the total weight of covered-country magnets or specialty metals within the end item is greater than or equal to 50%, the COTS product automatically loses its exempt status.
• Electronic Device Exceptions: Standard commercial-grade electronic devices (Electronic Devices) are typically exempt from the look-through audit unless the procurement contract explicitly specifies specialized military-grade encryption or custom defense ruggedization clauses.

3.1 Core Legislation and European Localization Benchmarks

• EU Critical Raw Materials Act (CRMA):Formally designates Neodymium (Nd), Dysprosium (Dy), Terbium (Tb), Samarium (Sm), and Cobalt (Co) as highly strategic and critical raw materials. It establishes rigid 2030 Localization Benchmarks: of the EU's annual consumption of strategic raw materials, at least 10% must originate from extraction within the EU, 40% from processing/refining within the EU, and at least 25% must come from domestic recycling, while capping dependency on any single third country at 65%.

3.2 Latest Amendments Under the RESourceEU Initiative

The European Commission has enacted targeted directives governing permanent magnets integrated into Electrical and Electronic Equipment (EEE), adding strict statutory burdens:

• Article 28 — Expanded Magnet Labeling and Content Disclosure — In addition to wind turbines and electric vehicles, consumer-grade electrical and electronic equipment (such as microwaves, vacuum cleaners, and dishwashers) containing permanent magnets must feature a secure digital label. This label must publicly disclose the presence of the magnets, their precise grades, and full chemical compositions (specifically highlighting heavy rare earth weight percentages).
• Article 29 — Mandatory Recycled Content Declarations and 2031 Rigid Quotas — Manufacturers placing products on the EU market must compile verifiable technical documentation authenticating the exact mass percentage of recycled materials in their rare earth magnets. The regulation mandates that beginning in 2031, permanent magnets in designated industries will face legally binding, minimum recycled content quotas.
• Restrictions on Magnet Waste Export— The EU enforces strict export restrictions on permanent magnet production scrap and end-of-life magnet waste, preventing the outflow of secondary rare earth resources and forcing the supply chain to align with a closed-loop "European Domestic Recycling" model.

3.3 Digital Product Passport (DPP) Execution Criteria

Under the ESPR framework, magnet supply chain data must be consolidated into a Digital Product Passport (DPP). B2B transactions must expose the following parameters digitally:

1. Scope 3 Carbon Footprint Verification: Lifecycle greenhouse gas emission calculations tracking from mining, refining, and alloy blending through to fine post-processing.
2. Disassembly and Recyclability Index: Providing European recyclers with step-by-step schematics mapping physical locations and instructions for the non-destructive extraction of magnets from end equipment.