China extends an olive branch to Western auto giants over rare earth shortage
China appears to have offered U.S. and European auto giants something of a reprieve over a rare earth shortage.
China’s Ministry of Commerce on Saturday said it was willing to establish a “green channel” for eligible rare earth export license applications to expedite the approval process to EU firms.
Maximilian Butek, an executive director and board member of the German Chamber of Commerce in China, said the development is certainly good news for European businesses.
China appears to have offered U.S. and European auto giants something of a reprieve after industry groups warned of increasing production threats over a rare earth shortage.
China’s Ministry of Commerce on Saturday said it was willing to establish a so-called “green channel” for eligible export license applications to expedite the approval process to European Union firms.
A Ministry of Commerce spokesperson said Wang expressed hope that the EU would take “reciprocal steps” and adopt measures to promote compliant trade of high-tech products with China
China’s critical mineral dominance
China is the undisputed leader of the critical minerals supply chain, accounting for roughly 60% of the world’s production of rare earth minerals and materials. U.S. officials have previously warnedwarned that this dominance poses a strategic challenge amid the pivot to more sustainable energy sources.
Some analysts have compared the industry-wide squeeze on supplies of rare earth magnets to the global semiconductor crisis that disrupted automotive production during the coronavirus pandemic.
Speaking to CNBC before China announced plans to expedite the approval process of rare earth exports to the EU, the European Automobile Manufacturers’ Association (ACEA) said some of its members were at risk of production outages starting as soon as next month.
The car lobby group, which represents the likes of Stellantis, Renault, Ferrari, Volkswagen and Volvo, said rare earth export licenses by China’s Ministry of Commerce had been taking a “significant” amount of time to process since the April restrictions came into force.
“Generally, global stocks of these magnets are quite low. And, given that China is the bulk global supplier, it has meant that, in the absence of these export licenses, those stocks have been depleting progressively since the start of April,” Jonathan O’Riordan, international trade director at ACEA, told CNBC by phone.
“We’re gradually coming into a very, very critical moment whereby those stocks are now being exhausted, and we are potentially going to see production stoppages,” he added.
China is the undisputed leader of the critical minerals supply chain, accounting for roughly 60% of the world’s production of rare earth minerals and materials. U.S. officials have previously warnedwarned that this dominance poses a strategic challenge amid the pivot to more sustainable energy sources.
Some analysts have compared the industry-wide squeeze on supplies of rare earth magnets to the global semiconductor crisis that disrupted automotive production during the coronavirus pandemic.
Speaking to CNBC before China announced plans to expedite the approval process of rare earth exports to the EU, the European Automobile Manufacturers’ Association (ACEA) said some of its members were at risk of production outages starting as soon as next month.
The car lobby group, which represents the likes of Stellantis, Renault, Ferrari, Volkswagen and Volvo, said rare earth export licenses by China’s Ministry of Commerce had been taking a “significant” amount of time to process since the April restrictions came into force.
“Generally, global stocks of these magnets are quite low. And, given that China is the bulk global supplier, it has meant that, in the absence of these export licenses, those stocks have been depleting progressively since the start of April,” Jonathan O’Riordan, international trade director at ACEA, told CNBC by phone.
“We’re gradually coming into a very, very critical moment whereby those stocks are now being exhausted, and we are potentially going to see production stoppages,” he added.
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