Victoria Waldersee and Christoph Steitz
5 min read
By Victoria Waldersee and Christoph Steitz
BERLIN/FRANKFURT (Reuters) -Some European auto parts plants have suspended output and Mercedes-Benz is considering ways to protect against shortages of rare earths, as concerns about the damage from China's restrictions on critical mineral exports deepen across the globe.
China's decision in April to suspend exports of a wide range of rare earths and related magnets has upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.
China's dominance of the critical mineral industry, key to the green energy transition, is increasingly viewed as a key point of leverage for Beijing in its trade war with U.S. President Donald Trump. China produces around 90% of the world's rare earths, and auto industry representatives have warned of increasing threats to production due to their dependency on it for those parts.
"It just puts stress on a system that's highly organised with parts being ordered many weeks in advance," said Sherry House, Ford's finance chief, at an investor conference on Wednesday.
She said China's export controls add administrative layers that are sometimes smooth, and sometimes not. "We're managing it. It continues to be an issue, and we continue to work the issues."
EU trade commissioner Maros Sefcovic said on Wednesday that he and his Chinese counterpart had agreed to clarify the rare earth situation as quickly as possible.
"We must reduce our dependencies on all countries, particularly on a number of countries like China, on which we are more than 100% dependent," said EU Commissioner for Industrial Strategy Stephane Sejourne.
"The export (curbs) increase our will to diversify," he said as Brussels identified 13 new projects outside the bloc aimed at increasing supplies of metals and minerals essential.
Europe's auto supplier association CLEPA said several production lines have shut down after running out of supplies, the latest to warn about the growing threat to manufacturing due to the controls.
Of the hundreds of requests for export licenses made by auto suppliers since early April, only a quarter have been granted so far, CLEPA added, with some requests rejected on what the association described as "highly procedural grounds".
It did not identify the companies but warned of further outages.
While China's announcement in April coincided with a broader package of retaliation against Washington's tariffs, the measures apply globally and are causing worry among business executives around the world.
