Export Restrictions Threaten Germany's Rare Earth Supply Chain
Economic concerns loom over Germany due to potential shortages of critical rare earth elements
More than half (65.5%) of Germany's rare earth imports come from China, making the country highly vulnerable to export restrictions like the ones recently imposed. The shortages of these essential elements, particularly heavy rare earths such as gadolinium, terbium, dysprosium, lutetium, and yttrium, could deal a significant blow to industries relying on them, such as the automotive and electronics sectors.
Crisis in the Auto Industry
Rare earths play a vital role in the production of permanent magnets used in electric motors, power steering, and regenerative braking systems. Trade restrictions have already triggered supply chain disruptions, causing production halts and concerns for companies like BMW.
The Shutdown Begins
With stockpiles depleting, manufacturing plants and production lines in Europe's supplier sector have started shutting down. The situation is expected to worsen over the next three to four weeks.
Electronics and Other Industries at Risk
Rare earths are essential for various electronic components, including smartphones and aerospace components, and medical devices. Disruptions in supply could lead to shortages of these components, impacting production and supply chains.
Facing the Storm
Mercedes-Benz and Volkswagen have so far managed to maintain stable supplies of parts containing rare earths, but they are actively working to mitigate risks from global supply chain disruptions by diversifying their procurement sources.
Call for Action
Industry associations, including the VDMA and ZVEI, are urging the EU Commission to intervene more assertively to support affected companies and ensure the security of rare earth supply chains. European Union initiatives to boost critical mineral production are underway, but their results won't serve as a short-term remedy for the current crisis.
- The community policy should consider the immediate needs of small and medium-sized undertakings (SMEs) in Germany to secure technology solutions that minimize dependencies on rare earth imports.
- As technology advancements continue to rely heavily on rare earth elements, the EU Commission must expedite support for SMEs in developing and adopting alternative technologies to mitigate the risks posed by global supply chain disruptions.
