Automakers facing rare earths deadline

Global automakers are scouring the globe for crucial rare earths ahead of looming Chinese export controls, with executives worried they could lead to parts shortages and plant closures.

- NICK CAREY CHRISTINA AMANN

An employee of German automaker Mercedes-Benz works on a Mercedes CLA class model at the factory in Rastatt, Germany.

(REUTERS)

Rare earth magnets power motors in car parts such as side mirrors, speakers, oil pumps, windshield wipers and fuel leakage and braking sensors. They play an even bigger role in EVs.

While a US-China deal diverted a supply threat, stockpiles were depleted by similar restrictions earlier this year, while Beijing has also made it harder to get export licences.

China has since dramatically expanded export curbs, with companies facing global supply shortages.

Consultancy AlixPartners estimates China controls up to 70% of global rare-earths mining, 85% of refining capacity and about 90% of rare-earths metal alloy and magnet production.

The new Chinese export control list includes elements like ytterbium, holmium and europium, also used in making cars.

"The situation is very tense," said Nadine Rajner, CEO of German metal-powder supplier NMD, adding customers want to source rare earths from anywhere but China.

Ms Rajner said that while there are plenty of rare earths available in countries like Sweden, they do not have the mines or refining capacity to make them usable. And for heavy rare earths, China controls 99.8% of global refining capacity, making alternative sources negligible.

"We are pretty much sold out and have limited stocks," Ms Rajner said.