Concerned carmakers race to beat China’s rare earths deadline

Global Automakers Racing to Secure Rare Earths Amid Looming Chinese Export Controls

In the wake of looming Chinese export controls on crucial rare earths, global automakers are scrambling to secure alternative sources to avoid potential parts shortages and plant closures. Rare earth magnets are essential components in various car parts, including side mirrors, speakers, oil pumps, windshield wipers, and sensors for fuel leakage and braking. They play an even more significant role in electric vehicles (EVs).

While a U.S.-China deal temporarily diverted a supply threat, stockpiles were depleted earlier this year due to similar restrictions. Beijing has also tightened its grip on export licenses, leading to concerns about global supply shortages. Consultancy AlixPartners estimates that China controls a significant portion of global rare-earths mining, refining capacity, and production of rare-earths metal alloy and magnets.

The new Chinese export control list includes elements like ytterbium, holmium, and europium, which are also used in the automotive industry. Nadine Rajner, CEO of German metal-powder supplier NMD, stated that customers are actively seeking alternative sources for rare earths outside of China. To counter Chinese dominance, President Donald Trump and Australian Prime Minister Anthony recently signed a critical minerals agreement that includes U.S. investments in rare earth mining projects in Australia.

Despite the availability of rare earths in countries like Sweden, the lack of mining and refining capacity poses a challenge. China controls a vast majority of global refining capacity for heavy rare earths, making alternative sources virtually insignificant. Rajner highlighted that stocks are limited, and demand for rare earths is high.

Efforts to recycle rare earths from old cars are still in their early stages. Neutral, a Renault-backed company in France, currently recycles rare earths from 400,000 cars annually and has contracts with 15 brands in Europe. However, scaling up these recycling activities remains a challenge.

The auto industry is also facing additional hurdles, such as export restrictions on lithium-ion batteries and battery materials from China. An intellectual property dispute involving a Dutch chip-maker, Nexperia, has raised concerns about potential factory closures due to chip shortages for car components.

Automakers are exploring ways to reduce their reliance on rare earths. Companies like General Motors, ZF, and BorgWarner are developing EV motors with low-to-zero rare-earth content. BMW and Renault have already produced rare earth-free motors. Monumo, a UK firm, has utilized AI and deep-tech simulation to reduce rare earth content in motors currently in production.

Despite these efforts, industry experts caution that the development of rare earth-free motors and alternative supply sources outside of China may take years. The U.S. government is taking the threat more seriously than Europe, as China continues to exert its power over rare earth supplies by keeping prices low.

In conclusion, the global auto industry is facing significant challenges in securing rare earths amid looming Chinese export controls. With the need for alternative sources and efforts to reduce reliance on rare earths, automakers are navigating a complex landscape to ensure a stable supply chain for their production needs.