Wreaking Havoc: How China's Rare Earth Shortage Hits Auto and Defense Industries
Automotive Sector Faces Contributing Setbacks due to Decreased Rare Earths Production
In an unexpected turn of events, the global auto and defense industries are feeling the heat due to China's export restrictions on rare earths.
The Auto Industry's Nightmare
- Component Conundrum: Japanese manufacturer Suzuki was forced to halt production of its popular Swift model for over a week, thanks to a shortage of components stemming from the rare earth supply crisis.
- Chain Reactions: German supplier ZF has also alerted to potential short-term production halts due to a bottleneck in the supply chain. Electric motor parts, which require rare earths, are notably affected.
The Defense Sector in Peril
- National Security At Stake: The rare earths crisis is posing a threat to the U.S. defense infrastructure as well. Critical materials are used in various military applications, from aircraft and tanks to night vision devices.
- Vulnerabilities in the Supply Chain: The U.S.' reliance on imported processed critical minerals, including rare earth elements, poses significant national security risks, demanding urgency for diversification and locally-produced alternatives.
Bracing for Impact
- No Silver Lining: Industry representatives warn that companies have not adequately prepared for this emergency, with supplies for germanium, essential for night vision devices, and other materials in short supply.
- Astronomical Price Hikes: Andreas Kroll, manager of Berlin-based raw materials trader Noble Elements, states that the market is "dry" and prices are soaring due to the scarcity.
China's Strategy
- Trade Wars and Leverage: Introduction of export controls on seven rare earths and magnetic materials in April, amid the ongoing trade conflict with the U.S., is strategically being utilized to put pressure on global industries.
- Negotiations Tactics: Reports suggest that China is aiming to discuss European export controls in negotiations over Chinese export controls, particularly focusing on easing restrictions on machines for high-tech chips provided by the Dutch market leader ASML.
Sources:
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Keywords:
- Rare Earths
- Automotive Industry
- Defense Industry
- China
- Trade Conflicts
- The small and medium-sized undertakings within the global auto industry, such as Suzuki, are grappling with production halts due to a scarcity of components reliant on rare earths, as a result of China's export restrictions.
- The small and medium-sized undertakings in the defense sector are facing threats to their operations, as China's control over rare earths has led to critical material shortages for various military applications, including night vision devices.
