logo
Auto companies 'in full panic' over rare-earths bottleneck

Auto companies 'in full panic' over rare-earths bottleneck

BERLIN/LONDON/DETROIT: Frank Eckard, CEO of a German magnet maker, has been fielding a flood of calls in recent weeks.
Exasperated automakers and parts suppliers have been desperate to find alternative sources of magnets, which are in short supply due to Chinese export curbs.
Some told Eckard their factories could be idled by mid-July without backup magnet supplies. "The whole car industry is in full panic," said Eckard, CEO of Magnosphere, based in Troisdorf, Germany. "They are willing to pay any price."
Car executives have once again been driven into their war rooms, concerned that China's tight export controls on rare-earth magnets – crucially needed to make cars – could cripple production. US President Donald Trump said Friday that Chinese President Xi Jinping agreed to let rare earths minerals and magnets flow to the United States. A US trade team is scheduled to meet Chinese counterparts for talks in London on Monday.
The industry worries that the rare-earths situation could cascade into the third massive supply chain shock in five years. A semiconductor shortage wiped away millions of cars from automakers' production plans, from roughly 2021 to 2023. Before that, the coronavirus pandemic in 2020 shut factories for weeks.
Those crises prompted the industry to fortify supply chain strategies. Executives have prioritised backup supplies for key components and reexamined the use of just-in-time inventories, which save money but can leave them without stockpiles when a crisis unfurls.
Judging from Eckard's inbound calls, though, "nobody has learned from the past," he said.
This time, as the rare-earths bottleneck tightens, the industry has few good options, given the extent to which China dominates the market. The fate of automakers' assembly lines has been left to a small team of Chinese bureaucrats as it reviews hundreds of applications for export permits.
Several European auto-supplier plants have already shut down, with more outages coming, said the region's auto supplier association, CLEPA.
"Sooner or later, this will confront everyone," said CLEPA Secretary-General Benjamin Krieger.
Cars today use rare-earths-based motors in dozens of components – side mirrors, stereo speakers, oil pumps, windshield wipers, and sensors for fuel leakage and braking sensors.
China controls up to 70 per cent of global rare-earths mining, 85 per cent of refining capacity and about 90 per cent of rare-earths metal alloy and magnet production, consultancy AlixPartners said. The average electric vehicle uses about .5 kg (just over 1 pound) of rare earths elements, and a fossil-fuel car uses just half that, according to the International Energy Agency.
China has clamped down before, including in a 2010 dispute with Japan, during which it curbed rare-earths exports. Japan had to find alternative suppliers, and by 2018, China accounted for only 58 per cent of its rare earth imports. "China has had a rare-earth card to play whenever they wanted to," said Mark Smith, CEO of mining company NioCorp, which is developing a rare-earth project in Nebraska scheduled to start production within three years. Across the industry, automakers have been trying to wean off China for rare-earth magnets, or even develop magnets that do not need those elements. But most efforts are years away from the scale needed.
"It's really about identifying ... and finding alternative solutions" outside China, Joseph Palmieri, head of supply chain management at supplier Aptiv, said at a conference in Detroit last week.
Automakers including General Motors and BMW and major suppliers such as ZF and BorgWarner are working on motors with low-to-zero rare-earth content, but few have managed to scale production enough to cut costs.
The EU has launched initiatives including the Critical Raw Materials Act to boost European rare-earth sources. But it has not moved fast enough, said Noah Barkin, a senior advisor at Rhodium Group, a China-focused US think tank.
Even players that have developed marketable products struggle to compete with Chinese producers on price. David Bender, co-head of German metal specialist Heraeus' magnet recycling business, said it is only operating at 1 per cent capacity and will have to close next year if sales do not increase.
Minneapolis-based Niron has developed rare-earth free magnets and has raised more than US$250 million from investors including GM, Stellantis and auto supplier Magna.
"We've seen a step change in interest from investors and customers" since China's export controls took effect, CEO Jonathan Rowntree said. It is planning a US$1 billion plant scheduled to start production in 2029.
England-based Warwick Acoustics has developed rare-earth-free speakers expected to appear in a luxury car later this year. CEO Mike Grant said the company has been in talks with another dozen automakers, although the speakers are not expected to be available in mainstream models for about five years.
As auto companies scout longer-term solutions, they are left scrambling to avert imminent factory shutdowns. Automakers must figure out which of their suppliers – and smaller ones a few links up the supply chain – need export permits. Mercedes-Benz, for example, is talking to suppliers about building rare-earth stockpiles.
Analysts said the constraints could force automakers to make cars without certain parts and park them until they become available, as GM and others did during the semiconductor crisis.
Automakers' reliance on China does not end with rare earth elements. A 2024 European Commission report said China controls more than 50 per cent of global supply of 19 key raw materials, including manganese, graphite and aluminum.
Andy Leyland, co-founder of supply chain specialist SC Insights, said any of those elements could be used as leverage by China. "This just is a warning shot," he said.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Trump says China will supply rare earths in ‘done' trade deal
Trump says China will supply rare earths in ‘done' trade deal

The Star

time2 hours ago

  • The Star

Trump says China will supply rare earths in ‘done' trade deal

President Donald Trump says the US is 'getting a total of 55% tariffs, China is getting 10%' in a social media post. - Photo: Reuters WASHINGTON: US President Donald Trump said a trade framework with China has been completed, with Beijing supplying rare earths and magnets 'UP FRONT' and the US allowing Chinese students into its colleges and universities. The United States and China will maintain tariffs at their current, lower levels following negotiations between the two nations this week in London, Trump said on Wednesday (June 11). He said the deal is subject to final approval by him and Chinese President Xi Jinping. 'OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME,' Trump posted on social media. 'WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT!' A White House official said the agreement allows the US to charge a 55 per cent tariff on imported Chinese goods. This includes a 10 per cent baseline 'reciprocal' tariff, a 20 per cent tariff for fentanyl trafficking and a 25 per cent tariff reflecting pre-existing tariffs. China would charge a 10 per cent tariff on US imports, the official said. In a later post, Trump said Xi and he 'are going to work closely together to open up China to American Trade. This would be a great WIN for both countries!!!' His post suggested China may have to restart rare earth shipments before the US agrees to lower export controls on key technology. And his comments left doubt about whether Beijing could negotiate tariff rates even lower. 'FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA. LIKEWISE, WE WILL PROVIDE TO CHINA WHAT WAS AGREED TO, INCLUDING CHINESE STUDENTS USING OUR COLLEGES AND UNIVERSITIES (WHICH HAS ALWAYS BEEN GOOD WITH ME!),' Trump said. US and Chinese officials said on June 10 they agreed on a framework to get their trade truce back on track and remove China's export restrictions on rare earths while offering little sign of a durable resolution to longstanding trade tensions. At the end of two days of intense negotiations in London, US Commerce Secretary Howard Lutnick told reporters the framework deal puts 'meat on the bones' of an agreement reached in May in Geneva to ease bilateral retaliatory tariffs that reached crushing triple-digit levels The Geneva deal faltered over China's curbs on critical minerals exports, prompting the Trump administration to respond with export controls of its own preventing shipments of semiconductor design software, aircraft and other goods to China. Trump's shifting tariff policies have roiled global markets, sparked congestion and confusion in major ports and cost companies tens of billions of dollars in lost sales and higher costs. - Reuters, Bloomberg

Deal ‘is done', says Trump, as China and US trade truce gets back on track after London talks
Deal ‘is done', says Trump, as China and US trade truce gets back on track after London talks

The Star

time2 hours ago

  • The Star

Deal ‘is done', says Trump, as China and US trade truce gets back on track after London talks

BEIJING: China and the United States agreed to revive a fragile trade truce after two days of talks in London, further defusing tensions between the two geopolitical rivals. US President Donald Trump said on Wednesday (June 11) that the deal with China 'is done' and that the relationship was 'excellent'. Hours earlier, Chinese Vice-Premier He Lifeng, who led the negotiating delegation in London, called on the US to 'stay true to your words', and 'demonstrate good faith in keeping promises'. The agreement, which concluded close to midnight on June 10 in London, followed a roller coaster of rising and easing tensions over non-tariff measures, after both sides agreed in May in Geneva to a 90-day truce that sharply lowered tariffs on each other's goods. The main sticking points since May were Beijing's restrictions on rare earth exports to the US and Washington's curbs on the export of chip design technology to China. In a Truth Social post, Trump said full magnets, along with any necessary rare earth minerals, will be supplied upfront by China. In return, the US will provide to China 'what was agreed to', including allowing Chinese students to attend colleges and universities in the US, which he noted 'has always been good with me!'. Separately, US Commerce Secretary Howard Lutnick told reporters that the 'framework' reached in London puts 'meat on the bones' of the Geneva agreement, adding that it will still need approval from both leaders. He said Chinese restrictions on rare earth minerals and magnets and some of the recent US export restrictions would be removed 'in a balanced way' but did not provide details. China's Vice-Commerce Minister Li Chenggang told reporters after the talks that both countries had agreed on a framework to implement the consensus that Chinese President Xi Jinping and Trump had reached after a June 5 phone call, as well as May's trade truce. He described the talks as in-depth, professional, rational and frank. 'The progress achieved at the London talks is beneficial to enhancing trust between the two countries, advancing the healthy and stable development of China-US economic ties, as well as provide positive energy to the global economic development,' Li said. Analysts saw the latest talks as positive. Professor Wu Xinbo, director of the Centre for American Studies at Shanghai's Fudan University, said he expects the US to roll back the non-tariff measures threatened or imposed on China after the Geneva talks, such as revoking visas of Chinese students studying in the US. 'As for the Chinese side, it may accelerate the process of rare earth exports to help resolve the urgent needs of the Americans,' he said. The May agreement was derailed on June 1 when the US accused China of 'slow-rolling' licences for exports of rare earths, which are critical in the production of cars, chips and other products. China dominates the world's rare earth supply chain, accounting for nearly 70 per cent of the global mining output and processing about 90 per cent of the total supply – a trump card Beijing has cultivated for decades. However, economist Bert Hofman noted that China's delay in rare earth export licences was partly due to 'bureaucratic inertia'. 'The process was cumbersome and brought issues for industries around the world, not just for the US. So it was not specifically targeted at US companies,' he said. Washington, meanwhile, activated its own levers on China. On May 29, it announced the revocation of visas for Chinese students and issued export control guidelines for AI chips, as well as effectively halting sales of chip design software to China. Chinese tech firms that design chips rely on such foreign software, known as electronic design automation. China's Ministry of Commerce on June 2 criticised these measures as discriminatory and accused the US of violating the consensus of the Geneva talks. Just as all the signs pointed to the breakdown of the truce, the June 5 call between Xi and Trump was widely seen as having reset fraught relations. This was followed on June 7 by China's Ministry of Commerce's announcement that it had approved a number of applications for rare earth exports, and will continue to strengthen the approval process for such applications. Even as the London talks were ongoing, Beijing strategically underscored its resilience. In a front-page interview on the official People's Daily on June 10, Huawei founder Ren Zhengfei discussed China's technology and research capabilities, particularly in chips. The Chinese telecommunications equipment giant has emerged as a national champion for areas such as AI chips called the Ascend processors, which Washington has recently warned other countries against using. Asked how he feels about Huawei being under a blockade, Ren said: 'Don't think about the difficulties – just do it, one step at a time.' - The Straits Times/ANN

Syrian airline Fly Sham launches 1st commercial flights from Damascus to UAE
Syrian airline Fly Sham launches 1st commercial flights from Damascus to UAE

The Star

time2 hours ago

  • The Star

Syrian airline Fly Sham launches 1st commercial flights from Damascus to UAE

DAMASCUS, June 11 (Xinhua) -- Syria's newly established airline Fly Sham launched its inaugural commercial flight Wednesday from Damascus International Airport to Abu Dhabi, marking the first phase of what officials describe as a major expansion in air travel connectivity, according to the state news agency SANA. Fly Sham, a Syrian-registered carrier backed by Emirati investment, currently operates four aircraft, with plans to grow its fleet to 15 by the end of the year, according to the airline's commercial director, Hamdi Khalaf. "This is the first Emirati investment to move from planning to actual implementation in Syria," SANA quoted Khalaf as saying. "We're a supportive partner to the national airline and aim to provide a reliable alternative." In addition to Abu Dhabi, the airline also launched a flight to Sharjah on its first day of operations. Khalaf said plans are underway to expand routes to Saudi Arabian and European cities in the near future. The launch of the commercial flights comes amid growing demand for air travel to and from Syria, officials say.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store