As global automakers brace for fallout from China’s tightening grip on rare earths exports, Hyundai Motor (KRX:005380,OTC Pink:HYMTF) appears to have quietly positioned itself ahead of the curve.
According to Reuters, a source familiar with the matter said on a recent investor call that the auto giant has stockpiled enough rare earth materials to maintain uninterrupted electric and hybrid vehicle production for about a year. The strategic stockpile should buy Hyundai critical time as supply chains buckle under mounting geopolitical tension.
China’s April decision to restrict exports of seven rare earths — a move requiring producers to obtain government licenses — has sent shockwaves through the auto, aerospace and semiconductor industries, particularly in the west.
But Hyundai, the world’s third largest automaker alongside affiliate Kia (KRX:000270), reportedly boosted its reserves during a brief window of relaxed Chinese controls, as per the source quoted by Reuters.
The Hyundai investor relations official reportedly told call participants that the company has “far more wiggle room” than rivals, citing successful procurement diversification and proactive inventory buildup.
Hyundai declined to confirm on inventory specifics in a public statement, but told Reuters, “We continuously evaluate market conditions to ensure operational stability and maintain a diversified global supply chain.”
Hyundai’s preparedness stands in contrast to the scramble now engulfing US and European manufacturers. Several major European suppliers have already reported production disruptions linked to delayed rare earths deliveries.
“We’re gradually coming into a very, very critical moment whereby those stocks are now being exhausted,” said Jonathan O’Riordan, international trade director at the European Automobile Manufacturers’ Association, in a Monday (June 9) interview with CNBC. “We are potentially going to see production stoppages.”
The rare earths crunch has become a central issue in US-China trade negotiations, which resumed on Monday in London and were set to continue Tuesday (June 10) morning, with Washington pushing for firmer guarantees.
Delegations led by Chinese Vice Premier He Lifeng and US officials — including Secretary of Commerce Howard Lutnick, Secretary of the Treasury Scott Bessent and Trade Representative Jamieson Greer — convened at Lancaster House in a bid to stabilize relations that have deteriorated beyond tariffs into critical minerals and tech controls.
The talks follow a May 12 truce that paused most of the 100-percent-plus tariffs both countries had imposed. However, since then, the US has accused China of “slow-walking” commitments, particularly regarding rare earths shipments.
US President Donald Trump, who last week spoke directly with Chinese President Xi Jinping, appeared optimistic on Monday, telling reporters at the White House, “We’re doing well with China. China’s not easy.”
He added, “We’re going to see,” when asked about lifting rare earths restrictions.
Kevin Hassett, Trump’s economic advisor, said the US is seeking a “handshake” agreement on resumed rare earths shipments, signaling that the mineral supply chain has now taken center stage in the global trade war.
For its part, China over the weekend appeared to open a narrow diplomatic path, announcing a “green channel” to fast track rare earths export licenses to select European Union firms. The country’s Ministry of Commerce also confirmed that it has quietly granted licenses to Chinese suppliers servicing major US automakers.
It remains unclear whether Hyundai’s buffer includes inventory held by its suppliers, or how the company may choose to ration usage in the event of further disruptions. Nonetheless, the South Korean firm’s ability to maintain stable production offers temporary reassurance for a jittery global auto market.
As trade talks continue in London, the question isn’t whether China will remain central to rare earths — it’s whether any other nations can afford to remain dependent.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.