Raw materials: German companies in front of bottlenecks in rare earths from China

China’s strict restrictions on the export of certain minerals make worries grow greater in the German economy. “The situation is particularly critical of the so-called difficult rare earths because China has around 70 percent of the funding capacities there,” said the advisor to Alixpartners, Christian Grimmelt, the German press agency. They would be used in particular for permanent magnets that played an important role in most electric motors.

According to Grimmelt, for example, most car manufacturers need such magnets that do not make up much in a vehicle, but according to them are essential for the production of a car. “The rare earths have the potential to become the next chip crisis – that is already in full swing,” he said. Other media had previously reported production cuts in Germany.

Beijing reacts in the trade dispute

In early April, China had issued export controls on seven rare earths and magnetic materials in the current trade conflict with the USA. The measure applies in general and also affects German companies. According to the EU Chamber of Commerce in Beijing, hundreds of companies in Europe are affected. One problem is that many export applications have accumulated by the Chinese authorities that would not be processed quickly enough.

The car manufacturer Mercedes said on request that the current requirements were checked and was in exchange with suppliers. The company rates a recently increasing granting of corresponding export licenses as a positive sign. In general, Mercedes as a teaching from the Corona period and to prevent risks of global supply chain interruptions, with “more optionality” in purchasing worldwide.

So far there have been no effects on vehicle production, it said at Volkswagen and BMW. “Currently, the supply of components that contain rare earths is stable and there are no bottlenecks,” said a VW spokesman on request. “Production in our works is currently on schedule,” said BMW. Parts of the new supplier network are affected by the new export rules in China. BMW is in close exchange with its suppliers in order to recognize supply risks at an early stage.

Other industries also affected

According to its own statements, the automotive supplier ZF does not obtain the raw materials itself, but supplied parts such as electric motors or their components, whose production is needed, as a spokesman said. “Here we see the first effects in the supply chains of some of our suppliers.” Depending on the duration for the granting of new export licenses, short -term delivery interruptions cannot be ruled out.

Other industries in addition to the automotive industry are also worried. “The shortness of rare earths continue to increase and present companies with greater challenges,” said the chairman of the management at the Association of the Electrical and Digital Industry (ZVEI), Wolfgang Weber. The EU Commission must intervene more clearly.

The Association of German Machine and Plant Construction (VDMA) is in contact with affected companies, said Oliver Richtberg, Head of VDMA Foreign Industry. Their number is manageable, the type and intensity of the effects vary from individual cases to individual cases.