Global carmakers are in a race to secure vital rare earth minerals before new Chinese export restrictions take effect in November. According to industry veterans, restrictions on exports by the Chinese Government will cause a massive shortage of key mineral products, which will further impact the production timeline.
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Rare Earths: Powerhouse for modern cars
Rare earth minerals are used in the manufacturing of various crucial car components, including motors, oil pumps, mirrors, and braking sensors. In electric cars, they are even more critical, as they power the systems that make EVs efficient and quiet.
Analysts estimate it controls around 70 per cent of global mining, 85 per cent of refining and almost 90 per cent of magnet production is sourced from Chinese exports. The new restrictions cover materials such as ytterbium, holmium and europium, all key to automotive manufacturing.
China’s export restrictions are causing industry anxiety
“The situation is very tense,” said Nadine Rajner, CEO of German supplier NMD. “Customers are desperate to buy from anywhere but China.” Although some European nations hold reserves, few have the mines or refineries needed to use them. However, for heavy rare earths, China’s control is nearly total. Rajner said her company’s stock is already exhausted.
Recycling is seen as a potential alternative, but the sector remains small. French company Neutral, supported by Renault, currently extracts rare earths from around 400,000 old vehicles each year. “The challenge is scaling this up,” said CEO Jean-Philippe Bahuaud.
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Pressure builds ahead of November deadline
Even if Chinese firms rush to fill orders before 8 November, shipping times to Europe stretch to six weeks. Any delay could trigger supply bottlenecks and halt assembly lines. China has also tightened rules on exporting lithium-ion batteries and related materials, adding further pressure on EV production.
Ryan Grimm of Toyota warned that “China could shut down the entire auto industry in two months” if supplies stop. Bosch executive Bruno Gahery said manufacturers are “overstocking rare earths”, but many suppliers say existing reserves have already run out.
To counter China’s dominance, the United States and Australia have signed a new critical minerals pact, with plans for mining and refining projects outside Chinese control. However, experts say such initiatives will take years to bear fruit.
Meanwhile, firms like BMW, Renault and General Motors are developing electric motors that use few or no rare earths. To keep up with this, Monumo, a UK-based engineering firm, is helping carmakers reduce the usage of rare earths through advanced engineering techniques.
Despite innovation, new supply chains will take time, which means China can still undercut rivals on price, making competition difficult.
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