Tesla Inc.’s unexpected announcement that the electric vehicle maker will stop using the material in its future models.
Colin Campbell, a Tesla official, stated that its “next drive unit” will employ a permanent magnet that does not use rare-earths due to the health and environmental risks associated with mining the material. JL Mag Rare-Earth Co. and Jiangsu Huahong Technology Stock Co. slid by about 10% on mainland China due to the remarks made at Tesla’s investor meeting.
World’s mining and purification of rare earths is ruled by China, an important mineral which is used for everything from smartphones to electric vehicles and military hardware.
As the pandemic constricted the supply chains and geopolitical tensions between China and some Western countries grew making the material being used as a bargaining chip, this overdependence became a growing pain point.
In 2019 and 2020, the sector experienced brief rallies on the supposition that Beijing may restrict exports of the critical metal due to trade tensions with the U.S. President Joe Biden has stated that development of sources of the strategic minerals is a top priority.
Rising Nonferrous Metals Share Co. fell as much as 9.6%, defying an overall consistent motion in the CSI 300 benchmark for onshore shares. China Rare Earth Holdings Ltd. fell nearly 3% in Hong Kong, more than doubling the drop in the Hang Seng Index.
