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The EU has pressed China to ease rare earth export restrictions due to “a surprising situation” for the bloc’s automotive industry, and there are production lines at risk of crushing it to a halt.
European trade commissioner Malossyvchovich said he questioned China’s commerce minister Wang Weitia about the lack of key rare earth elements and magnets at Tuesday’s meeting.
China’s new licensing system for materials slows delivery to manufacturers of products from automobiles to washing machines.
In early April, the country’s Commerce Department imposed export restrictions on seven rare earth elements and magnets after US President Donald Trump announced higher tariffs on Chinese products.
This impact is already felt in the global automotive industry as Ford temporarily shuts down production due to a magnet shortage at its Chicago SUV plant last week. Automotive executives have repeatedly warned that stockpiles of these rare earth magnets will last only a few weeks to months.
“I informed my Chinese counterparts about the surprising situation in the Chinese automotive industry. Rare earth and permanent magnets are essential for industrial production. This is extremely destructive for industry,” Sifchovich said.
Shafchovich said the two were “comparing the numbers” for their export licenses.
“He was much better than mine,” he said. “The automaker warns of major production difficulties in a short period of time. He said that his information is different and that he will make this clear as soon as possible.”
Private products should be exempt from complex licensing systems, but if that is not possible, companies should be able to obtain annual approval, Shafchovich argued.
“We said that if we clarify the data from both sides we’ll go back to this issue,” he said.
China accounts for 90% of rare earth magnet processing, and the government believes Beijing is putting economic pressure on its world trade tensions.
“The export ban reinforces our will to diversify and perhaps strengthen the relevance of focusing on reducing dependencies,” EU industry head Stephen Sehone said Wednesday.
Séjourné has released a list of 13 projects in third countries, including the UK, to ensure access to raw materials, which is part of the EU’s key raw materials strategy to reduce dependence by 2030.
In a letter to the Trump administration last month, the U.S. Automotive Industry Lobby Group Alliance for Automotive Innovation and the Vehicle Suppliers Association said China’s delay in issuing export licenses “will lead to massive disruptions in the global supply of necessary elements.”
EU officials said several member states have raised the issue recently, and state leaders have also discussed it.
Maximilianbutek, executive director and board member of China’s German Chamber of Commerce, said he believes Beijing is not intentionally trying to curb European companies’ access to rare earths.
China had reached out to the EU to improve relations, he pointed out.
“I think it’s a bureaucratic monster they (Beijing) created,” he said, adding that thousands of applications from licensed exporters probably overwhelm the Commerce Department.
“There are many delegations from China to Germany and a lot of diplomacy. So it appears that China is really trying to create a better atmosphere in relations with Europe.
Jens Eskelund, chairman of China’s EU Chamber of Commerce, said diplomatic and corporate pressures are growing to resolve the rare earth export bottleneck. “For all those who are encouraging relaxation, this really proves the point,” he said.
Lin Jian, a spokesman for China’s Foreign Ministry, said last week that controls were “in line with international practices.”
“They are non-discriminatory and not directed at any particular country. They are willing to strengthen dialogue and cooperation between countries and regions involved in the field of export control.
Additional Reports by Joe Leahy and Ryan McMorrow of Beijing
