German Industry Fears Rare Earth Export Restrictions Could Trigger New Crisis
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Industry leaders warn that limitations on rare earth exports from China could lead to a crisis mirroring the 2022 energy situation.
The German industry is on alert, warning that the rare earth export restrictions imposed by Chinese authorities in April could spark a crisis reminiscent of the 2022 energy crisis. The concerns stem from the vital role these minerals play in various sectors.
Wolfgang Niedermark, director of the federal Association of the German Industry (BDI), told ‘Der Spiegel’ that the sector is “alarmed” and foresees potential production stoppages if the situation persists. “We face a metal crisis, similar to the energy crisis of 2022, when Russia stopped supplying gas,” he stated, highlighting the automotive, machinery, energy, and defence technology industries as particularly vulnerable.
Niedermark emphasized the “critical” dependence on Chinese imports for manufacturing electric motors, robotic devices, and drones. A spokesman for the Ministry of Commerce in Beijing responded, stating that China gives “great importance” to “European concerns” and is prepared to establish a “green channel” to expedite the approval of rare earth export requests that meet the necesary criteria.
China’s Export Measures
The International Energy Agency (AIE) reports that China controls over 60% of rare earth extraction and 92% of refined production globally. Since April 2, amidst escalating tariffs with the United States, Beijing implemented a new licensing system requiring foreign companies to obtain permits for exporting specific raw materials, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, yttrium, and related magnets, citing national security considerations.
The European Association of Automotive Teams (CLEPA) reported last Wednesday that only 25% of export licenses have been approved since the beginning of April. They added, “The procedures are opaque and incoherent from one province to another, some licenses are rejected for procedural reasons while others require the dissemination of sensitive facts of intellectual property.”
“We face a metal crisis, similar to the energy crisis of 2022, when russia stopped supplying gas.”
Understanding Rare Earth Elements
Frequently Asked Questions
What are rare earth elements?
Rare earth elements are a set of seventeen metallic elements crucial for various high-tech applications, including electronics, renewable energy, and defense technologies.
Why is China’s control over rare earth elements a concern?
China’s dominance in rare earth extraction and refining gives it significant leverage over global supply chains, perhaps impacting industries dependent on these materials.
What industries are most affected by rare earth export restrictions?
Industries such as automotive, machinery, energy, and defense technologies are particularly vulnerable due to their reliance on rare earth elements for manufacturing critical components.
