Magnet crisis: Auto giants rush to China for rare earth rescue

Time of India

a day ago

The
Indian automotive industry
is preparing to send a high-level delegation to China next week to address escalating concerns over delays in rare earth magnet imports, people familiar with the development said.
They noted that China's new export restrictions on rare earth materials, effective April 4, have created procedural bottlenecks, resulting in delayed shipments to Indian manufacturers.
Several consignments of India-bound
rare earth magnets
- critical for electric motors and various automotive components - are reportedly stuck at Chinese ports, raising fears of production disruptions as early as the first week of June.
A joint delegation from the
Society of Indian Automobile Manufacturers
(Siam) and the
Automotive Component Manufacturers Association
(ACMA) will meet with senior Chinese government officials to expedite necessary clearances and restore the flow of shipments, people cited above said.
India's commerce and external affairs ministries are currently coordinating with their counterparts in Beijing through the Indian embassy to facilitate the meetings.
"The situation is serious, but we are receiving strong support from the government. We are hopeful of an early resolution," said Vinnie Mehta, director general of ACMA.
China accounts for an estimated 70-80per cent of global rare earth processing and over 90per cent of rare earth magnet production, making automakers heavily dependent on imports from the country.
Automakers and component suppliers warn that further delay in getting the magnets could severely impact vehicle production, especially in the electric mobility segment.
"The rare earth situation is a very difficult one," Rakesh Sharma, executive director at
Bajaj Auto
, said during the company's recent earnings call.
He flagged the "onerous" approval process that currently involves multiple certifications from Indian ministries, the Chinese embassy, and Chinese provincial authorities.
While the supply crunch poses a serious challenge, some players have begun diversifying their sourcing strategy.
JBM Group, a leading electric bus manufacturer, has started procuring rare earth magnets from other Asian countries. "Post-pandemic, we undertook a comprehensive risk assessment that led us to explore alternative supply bases beyond China," said Nishant Arya, vice-chairman of JBM Group.
With inventory levels depleting rapidly, Siam and ACMA have been in active dialogue with the commerce ministry. As reported by Reuters on May 29, Siam informed government officials that component makers' inventories could run out by the end of May and urged intervention at the highest level, including from the Prime Minister's Office.
Representatives from major OEMs and suppliers, particularly those involved in motor manufacturing, are expected to be part of the industry delegation headed for China.