Automotive angst as China's critical minerals export curbs take hold
Magnets held up at Chinese ports
Shipments of the magnets, essential for assembling everything from cars and drones to robots and missiles, have been halted at many Chinese ports while licence applications make their way through the Chinese regulatory system.
The restrictions have triggered anxiety in corporate boardrooms and nations' capitals from Tokyo to Washington as officials scrambled to identify limited alternative options amid fears production of new cars and other items could grind to a halt by summer's end.
"If the situation is not changed quickly, production delays and production outages can no longer be ruled out," Hildegard Mueller, head of Germany's auto lobby, told Reuters on Tuesday.
Chinese state media reported last week that China was considering relaxing the curbs for European semiconductor firms while the ministry of foreign affairs has said it would strengthen cooperation with other countries over its controls.
However, rare earth magnet exports from China halved in April as exporters grappled with the opaque licensing scheme.
Frank Fannon, a minerals industry consultant and former US assistant secretary of state for energy resources during Trump's first term, said the global disruptions are not shocking to those paying attention.
'I don't think anyone should be surprised how this is playing out. We have a production challenge (in the US) and we need to leverage our whole of government approach to secure resources and ramp up domestic capability as soon as possible. The time horizon to do this was yesterday,' Fannon said.
Diplomats, carmakers and other executives from India, Japan and Europe were urgently seeking meetings with Beijing officials to push for faster approval of rare earth magnet exports, sources told Reuters, as shortages threatened to halt global supply chains.
A business delegation from Japan will visit Beijing this month to meet the ministry of commerce over the curbs, and European diplomats from countries with big car industries have also sought "emergency" meetings with Chinese officials in recent weeks, Reuters reported.
India, where Bajaj Auto warned further delays in securing the supply of rare earth magnets from China could "seriously impact" electric vehicle production, is organising a trip for car executives in the next two to three weeks.
Last month the head of the trade group representing General Motors, Toyota, Volkswagen, Hyundai and other major carmakers raised similar concerns in a letter to the Trump administration.
"Without reliable access to the elements and magnets, automotive suppliers will be unable to produce critical automotive components, including automatic transmissions, throttle bodies, alternators, motors, sensors, seat belts, speakers, lights, motors, power steering, and cameras," the Alliance for Automotive Innovation wrote in the letter.
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