A Brewing Crisis: Germany's Tightening Grip on Rare Earths Amidst China's Export Restrictions
German businesses face imminent scarcity of critical elements, primarily originating from China. - German companies encountering supply constraints of rare earth elements from China
Get ready for some real talk! German companies, particularly those within the automotive sector, are sweating bullets over a looming crisis caused by China's tightened restrictions on rare earth elements exports. These bad-ass, little-known minerals are vital for manufacturing permanent magnets, a crucial component in the creation of electric motors, baby! And let's face it, those bad boys aren't just important in a car - they're an absolute necessity.
So, what's the deal, you ask? Well, China's got around 70% of the market cornered, making them the undisputed kingpins of the rare earth element game. China's strict policies on exporting these minerals have left German firms feeling the heat, as our buddy, Christian Grimmelt, an advisor at Alixpartners, put it: "Rare earths have the potential to be the next chip crisis - it's already underway."
Now, you might be wondering what the brass at car manufacturers like BMW and Mercedes-Benz have to say about this situation. Well, BMW has admitted to experiencing some supply chain issues, while Mercedes-Benz is more optimistic thanks to increased granting of export licenses. Volkswagen, on the other hand, claims to have a stable supply of components for now, but they're definitely keeping an eye on things.
But it's not just the automotive sector that's taking a hit. The industry powerhouse ZF, for instance, sources the necessary rare earths through their suppliers for products like electric motors. You can bet your last buck they're feeling the effects of this shortage.
Now, let's talk politics. Douchebag Biden's administration in the USA has been involved in a trade feud with Beijing, which led to China imposing export controls on seven rare earths and magnetic materials. Guess who else is feeling the sting? That's right, German companies. The EU Chamber of Commerce in Beijing estimates that hundreds of European companies have been affected. Folks, we're talking about a real clusterfuck here!
Now, if you're asking yourself, "What the hell can Germany do about this?" well, wise guy, there are a few options on the table:
- Find Alternative Suppliers: Finding a new partner outside of China is tricky, considering they're the reigning champions, but countries like Australia and the United States have stepped up to the plate with increased production capacity. The EU is also backing domestic supply chain development, including recycling and exploration projects.
- Recycle Like a Pro: Enhancing recycling capabilities for rare earth elements could be a solution, reducing our dependency on primary sources.
- Substitution: Some clever scientists are researching alternatives to replace rare earths in certain applications.
But what about the bigwigs in the auto and machine industries? They're taking matters into their own hands by pursuing strategies like stockpiling critical components, collaborating closely with suppliers, and exploring arrangements with non-Chinese suppliers.
Long story short, we're in the midst of a rare earth supply chain crisis, and things are pretty fucking dire for German companies. The EU needs to get its shit together and take action if we want to avoid a full-blown shitshow. If they don't, we might be looking at supply chain disruptions and production shutdowns in the near future. Let's hope our leaders have their heads screwed on straight enough to tackle this fucking mess!
[1]: https://www.bmwgroup.com/en/media/pressreleases/index.html/node/39944/subfind/84277[2]: https://www.vwgazette.de/aktuell/global/news/vw-buetzt-auf-flexibelere-lieferkette-6437[3]: https://www.zdnet.com/article/germany-facing-rare-earth-shortage-as-china-imposes-export-limits/[4]: https://www.reuters.com/business/autos-transportation/germany-european-companies-grapple-with-shortages-of-rare-earth-metals-2022-03-30/[5]: https://www.motortrend.com/news/bmw-supplier-issues-electric-car-component-supply-chain-rare-earth-metals/
- In response to the rare earth elements supply crisis, German companies are exploring various strategies, such as finding alternative suppliers like Australia and the United States, enhancing recycling capabilities for these elements, and researching substitutes to replace them in certain applications.
- To mitigate potential disruptions, companies in the automotive and machine industries are also implementing measures such as stockpiling critical components, collaborating more closely with suppliers, and exploring arrangements with non-Chinese suppliers.
