BERLIN: 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 US President Donald Trump. China produces around 90 per cent 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 100pc 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”.
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.
Earlier on Wednesday, Mercedes-Benz production chief Joerg Burzer said he was talking to top suppliers about building “buffers” such as stockpiles to protect against potential threats to supply. Mercedes was currently not affected by the shortage.
BMW said that part of its supplier network was disrupted but its own plants were running as normal.
German and US automakers have complained that the restrictions imposed by China threaten production, following a similar grievance from an Indian EV maker last week.
Mathias Miedreich, board member for electrified propulsion at German automotive supplier ZF Friedrichshafen, said the company has largely been able to get needed permits from China.
In a media briefing on Tuesday, he said he worries though that the situation eventually could resemble the computer-chip shortage during the Covid-19 pandemic, which wiped out millions of vehicles from automakers’ production plans.
Published in Dawn, June 5th, 2025
