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China relaxes exports: rare earths save US auto industry!
China has approved the export of rare earth elements to US automakers as shortages in the auto industry grow.
China relaxes exports: rare earths save US auto industry!
In a surprising twist, China has temporarily allowed the export of rare earths to major US automakers. As the The standard reported, the licenses granted are valid for at least six months and refer to suppliers to companies such as General Motors, Ford and Stellantis.
This decision comes at a critical time as the auto industry suffers from a shortage of rare earths. Loud n-tv Export restrictions that China has introduced since the beginning of April have already led to production losses. Japanese manufacturer Suzuki, for example, had to stop production of its Swift model for more than ten days, highlighting the impact of scarce resources.
Production downtimes and suppliers at risk
The German supplier ZF has warned that production line shutdowns could occur in the short term as essential parts for electric motors are affected. Europe is also struggling with the shortage of rare earths; some production lines have already had to stop.
The situation is particularly tense as hundreds of export licenses have been applied for since April, but only one in four applications has been approved. Jens Eskelund, President of the European Chamber of Commerce in Beijing, describes the situation as “very tense”. A German arms manager also points to slow deliveries of germanium, which is needed for night vision devices and other military applications.
China's market dominance
China remains the dominant player in the rare earths market, controlling at least 95 percent of global supplies. Andreas Kroll, managing director of raw materials trader Noble Elements, explains that no company is sufficiently prepared for the existing situation and that it is an emergency.
The import dependency of rare earths is classified as system-critical in various industries, including electric motors, robotics and drones. An auto supplier manager has already warned that the global situation could become even tighter after June, exacerbating challenges for manufacturers and suppliers.
At the political level, the Chinese government could also address European restrictions in negotiations over export controls. Hundreds of companies in Europe are affected by the new regulations and many applications are backlogged with the Chinese authorities, further increasing the uncertainty in the market.