Threats Of Rare Earth Metal Scarcity, Global Car Manufacturer: China Could Kill Us Quickly

Ultium Cells, a joint venture operated by General Motors and LG Energy Solution for LFP battery cell production at its plant on Spring Hill, Tennessee. (Photo: GM)

Car manufacturers around the world are dizzy and vying to secure a crucial supply of rare earth metals (LTJ) amid concerns over new export controls imposed by China. Manufacturers fear these restrictions could trigger shortages of parts and force factory closures, especially as global supplies are running low.

This concern arises in line with the significant expansion of export restrictions by Beijing. China is estimated to control up to 70 percent of global LTJ mining, 85 percent of purification capacity, and about 90 percent of LTJ's metal and magnetic alloy production. These magnets are vital for motors in various car components, ranging from rearview mirrors, wipers, to brake sensors and are even more important components in electric vehicles (EVs).

"The situation is now very tense," said German metal powder supplier NMD CEO Nadine Rajner, quoted by Reuters, Wednesday, October 22.

Rajner added that customers are now trying to find LTJ from any source other than China. Although LTJ is available in countries like Sweden, the lack of mines and purification capacity makes this alternative source not ready for use. For heavy LTJs, China even controls 99.8 percent of the global purification capacity.

Concerns are exacerbated by the fact that global stocks were "expleted" due to similar restrictions earlier this year. The list of new export controls from China includes elements such as ytterbium, holmaium, and europium which are also used in car manufacturing.

Even if China's supplier manages to fulfill new orders before export controls take effect on November 8, delivery time to Europe alone could take 45 days, posing a significant threat of supply.

Efforts Against China And Resources Restrictions

To deal with China's dominance, US President Donald Trump and Australian Prime Minister Anthony Albanese recently signed an important mineral agreement that includes US investment in LTJ mining projects in Australia.

However, LTJ's recycling attempt from used cars is still in its early stages. Neutral, Renault-backed company, currently recycles LTJ from 400,000 cars a year in France and has contracts with 15 brands in Europe, but CEO Jean-Philippe Bahaud notes that the challenge is "increasing the scale of this activity."

This threat is among the most complicated challenges facing the auto industry, including Chinese export restrictions on lithium-ion batteries and intellectual property disputes involving the Dutch chipmaker, Nexperia.

"They can kill us in two months, the entire auto industry," said Ryan Grimm, vice president of the Toyota Motor group for the purchase and development of North American suppliers.

Meanwhile, President Bosch for France and Europe Bruno Gahery estimates the auto industry will "strengthen LTJ" ahead of the deadline.