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

EU proposes lowering Russia oil price cap in new sanctions
EU proposes lowering Russia oil price cap in new sanctions

The Sun

timean hour ago

  • The Sun

EU proposes lowering Russia oil price cap in new sanctions

BRUSSELS: The European Union on Tuesday proposed slashing a price cap on Russia's global oil exports, as part of a new package of sanctions over the Ukraine war. The move comes ahead of a G7 summit in Canada next week where allies will push US President Donald Trump to be more aggressive in punishing the Kremlin. 'We are ramping up pressure on Russia, because strength is the only language that Russia will understand,' European Commission president Ursula von der Leyen said. 'Our message is very clear, this war must end. We need a real ceasefire, and Russia has to come to the negotiating table with a serious proposal.' The European Commission, the EU's executive, suggested cutting the current oil price cap from $60 to $45 as Moscow drags its feet on a ceasefire in Ukraine. The cap is a G7 initiative aimed at limiting the amount of money Russia makes by exporting oil to countries across the world. The oil price cap, set at $60 by the G7 in 2022, is designed to limit the price Moscow can sell oil around the world by banning shipping firms and insurance companies dealing with Russia to export above that amount. To have most impact the EU and other G7 partners need to get the United States to follow suit and agree to the cut in the level. But Trump so far has frustrated Western allies by refusing to impose sanctions on Russia despite President Vladimir Putin's failure to agree a Ukraine ceasefire. 'My assumption is that we do that together as G7,' von der Leyen said. 'We have started that as G7, it was successful as a measure from the G7, and I want to continue this measure as G7.' European leaders last month threatened Moscow with 'massive' sanctions if it did not agree a truce, but there has been no major progress in US-led peace efforts. 'Russia lies about its desire for peace. Putin is taking the world for a ride. Together with the United States, we can really force Putin to negotiate seriously,' EU foreign policy chief Kaja Kallas said. As part of its 18th round of sanctions since Russia's 2022 invasion, the EU also proposed measures to stop the defunct Nord Stream gas pipelines from being brought back online. Officials said they would also look to target some 70 more vessels in the 'shadow fleet' of ageing tankers used by Russia to circumvent oil export curbs. The EU in addition is looking to sever ties with a further 22 Russian banks and add more companies, including in China, to a blacklist of those helping Moscow's military. One EU diplomat described the latest proposals as 'one of the most substantive and significant packages we've discussed recently'. 'It will hurt Russia's ability to finance its war machine. Now let's see how the discussions evolve.' The sanctions will need to be agreed by all 27 EU countries, and could face opposition from Moscow-friendly countries Hungary and Slovakia.

Tencent Music to buy Chinese audio platform Ximalaya for $2.4b
Tencent Music to buy Chinese audio platform Ximalaya for $2.4b

The Sun

time2 hours ago

  • The Sun

Tencent Music to buy Chinese audio platform Ximalaya for $2.4b

CHINESE music platform Tencent Music Entertainment Group said on Tuesday it would buy long-form audio platform Ximalaya for about $2.4 billion in cash and stock, expanding its library of content to attract more paying users. U.S.-listed shares of Tencent rose 7% in premarket trading. The company will offer $1.26 billion in cash and Class A shares representing up to 5.20% of its total outstanding stock. It will also issue shares to Ximalaya's founder investors not exceeding 0.37% of its total share count. The stock component of the deal totals about $1.15 billion based on Tencent Music's last closing price on April 24, a day before Bloomberg News reported about the deal.

Beijing woos US influencers with free trip to show ‘real China'
Beijing woos US influencers with free trip to show ‘real China'

The Star

time2 hours ago

  • The Star

Beijing woos US influencers with free trip to show ‘real China'

China seeks to enlist young social media influencers from the United States to collaborate with its local content creators. - Photo: AFP BEIJING: China is inviting American influencers to join a 10-day, all-expense paid trip through the country in July, as part of Beijing's efforts to boost people-to-people exchanges and showcase the 'real China'. The initiative, titled 'China-Global Youth Influencer Exchange Programme', seeks to enlist young social media influencers with at least 300,000 followers to collaborate with Chinese content creators, according to recruitment posts by Chinese state-affiliated media outlets, including the China Youth Daily. While relations between China and the US have deteriorated in recent months over issues including geopolitics, technology and trade, the programme marks an effort to boost cultural exchanges. In 2024, President Xi Jinping had called for more exchanges between Chinese and American universities, after previously announcing a plan to welcome 50,000 American students to China. Another post in College Daily, a publication particularly targeting Chinese students in North America, specified that applicants for the exchange programme based in the US should be active on platforms such as Instagram, YouTube, TikTok and X, and should 'love Chinese culture' and 'have no history of bad behaviours'. It called on Chinese students overseas to encourage influencers in their circle to apply, and said the successful candidates will get China's official invite as well as special assistance from the state to process their visas. The trip intends to take the participants across five Chinese cities – Suzhou, Shanghai, Shenzhen, Handan and Beijing, and will cover China's e-commerce hubs, the headquarter of companies such as Xiaohongshu Technology Co and BYD Co. The influencers will also partake in cultural activities such as Taichi and be able to live-stream their trip to the Great Wall, according to the posts. Working with Chinese social media influencers on ideas, and getting their content promoted by China's state media will be part of the deal. Social media content from Western influencers travelling through China post-Covid-19 have won praise from the state media for their authentic portrayal of everyday life in the country. In April, American streamer IShowSpeed's visit to China sparked widespread curiosity among fans about advancements in Chinese technology. The authorities have tapped social media influencers to check negative information and promote positive contents. In 2023, think-tank Australian Strategic Policy Institute analysed over 120 foreign influencers, mostly active on Chinese social media, received the state's help to grow their influence in return for content that praises and spreads Beijing's narrative. - Bloomberg

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