European Auto-Parts Plants Seek Protection Against Rare Earths Shortage
Some European auto-parts plants have attached production and Mercedes-Benz consider paths to protect against the lack of rare earths, as concerns about the damage caused by Chinese restrictions on critical mineral exports. China’s decision in April to suspend the exports of a large number of rare earths and related magnets is of central importance for car manufacturers, manufacturers of aerospace, semiconductor companies and military entrepreneurs around the world.
China’s Dominance in the Critical Mineral Industry
The step underlines China’s dominance of the critical mineral industry, the key to the transition of green energy and is viewed by China in his trade war with the US as a lever. China produces around 90% of the rare earths in the world. The EU trade commissioner said on Wednesday that he and his Chinese counterpart had agreed to clarify the situation of rare earth as quickly as possible.
Reducing Dependence on China
"We have to reduce our dependencies on all countries, especially in a number of countries such as China, of which we are more than 100% dependent," said a Commissioner for Industrial Strategy. "Export (curbs) increases our will to diversify," he said when Brussels identified 13 new projects outside the block to increase metals and minerals.
Car Manufacturers’ Response
On Wednesday, Mercedes-Benz production manager said that he spoke to the top suppliers of the automobile manufacturer about the construction of "Puffer" such as rare earth stock stocks in order to protect against potential threats for care. Mercedes was currently not affected by the defect. BMW said that part of its supplier network was affected by the defect, but that his own plants ran as usual.
Impact on Production
According to the Auto Supplier Association, several production lines were closed after the stocks no longer have any supplies, which recently warn of the growing threat to manufacture due to the controls. So far, only a quarter has been granted by the hundreds of applications on export licenses that have been provided by car suppliers since the beginning of April.
Searching for Alternatives
Many are committed to their governments to find a quick solution and are looking for alternatives. Some companies only have enough supplies to take a few weeks or months, said the CEO of the Electrical and Digital Industry Association in a statement. "Companies are currently feeling abandoned by politicians and are sometimes looking for solutions for their difficult situation in China," he said.
Trust in China
Car manufacturers from General Motors to BMW and large suppliers such as ZF and Borgwarner have researched or developed engines with little to zero rare -terms to reduce their dependence on China, but only a few have managed to scale production to reduce the costs. The German car manufacturer Volkswagen said it was currently not a bottlenecks.
Trade Relationship with China
China’s slow pace of alleviating his critical mineral export controls has become a focus of criticism of Beijing, which he violated that the ceasefire was reached last month to regain tariffs and trading restrictions. The export components are expected to be high on the agenda when the two countries’ leaders meet this week to try to iron out their differences.
