FRANKFURT (Bloomberg) -- Continental AG and Robert Bosch GmbH, Europe's biggest auto-parts makers, are pushing regulators in the region to secure the supply of rare-earth metals as China limits exports of the metals.
Continental, which buys electric motors and engine parts containing rare-earth magnets, said it's talking to suppliers about alternative sources. Bosch is evaluating the “potential risks” linked to China's export policy.
Prices of rare earths, a group of 17 metals also used in the manufacture of non-automotive products such as disk drives and smart bombs, have climbed as much as sevenfold in six months as China reduced its second-half export quota by 72 percent.
The European Association of Automotive Suppliers, which represents about 3,000 companies, has asked the European Commission to look at available options to secure access to the materials.
“This will be hugely important in the future when electric cars will be mass produced,” said Lars Holmqvist, chief executive officer of the Brussels-based group also known as Clepa. “In two years when we make a lot of electric cars we'll be lacking these key components.”
Even as development of electric vehicles in Europe lags behind Asia, where Toyota Motor Corp. and Honda Motor Co. are the leaders, production is set to increase.
About 2.2 percent of an estimated 14.5 million cars made in the European Union in 2013 will be electric cars, said Andrew Close, an analyst at IHS Automotive in London. The figure may rise to 6 percent of 17 million cars, or 1 million vehicles, by 2020.
Rare earths are on the agenda of the CARS 21 forum on Nov. 10 in Brussels, which will be attended by industry ministers from countries including Germany, France and Italy as well as company executives, Holmqvist said.
Clepa wants the European Commission, the 27-nation EU's executive arm, to consider trade talks with China to get the country agree not to limit exports, explore ways to secure delivery contracts from other export nations such as Australia and look at domestic production in the region.
“The access to rare earths is a key concern for the European Commission and a key element of European industrial policy,” EU trade spokesman John Clancy said in a statement on Oct. 29. “We are therefore monitoring the situation closely and rely on our trade partners to allow markets to function without impediments or distortions.”
The commission said it couldn't confirm claims that China may be blocking exports of rare earths.
Windshields, mirror motors
China controls more than 90 percent of world supply, leading Japan, the U.S. and Germany to seek new supplies. Japan said Oct. 29 that it had no evidence China resumed exports of rare-earth metals, after the New York Times reported that China ended an unannounced embargo on exports of rare earths to the U.S., Europe and Japan.
China's customs bureau said there has never been a cutoff in outbound shipments.
Rare earths are also present in parts of non-electric cars such as windshields, exhaust systems and seat and mirror motors. While the elements aren't as rare in nature as the name implies, they are difficult to find in profitable concentrations, expensive for Western producers to extract and are often laced with radioactive elements.
China has come to dominate the market because it has been able to produce the elements more cheaply and with fewer environmental restrictions than competitors.
Continental is exploring options including recycling, new ways to manufacture components and more efficient uses of rare earths, spokeswoman Simone Geldhaeuser said. Giving up the use of rare earths could mean heavier and bigger parts for Europe's second-largest auto-parts supplier, she said.
“We must not underestimate the issue,” Geldhaeuser said in an e-mail. “On the other hand, you have to be careful not to spread panic.”
Bosch uses rare earths mainly in magnets present in electric engines, said Richard Aumayer, the company's head of government relations. “At the moment it's a potential risk.”
Harald Elsner, a geologist at the German Federal Institute for Geosciences and Natural Resources, said the export restrictions mean China is selling only rarer, pricier materials like neodymium and dysprosium used in magnets and lasers, while holding back cheaper elements such as cerium, which is used in automobile catalytic converters. Companies making cerium products are “left high and dry,” he said.
Faurecia SA, Europe's largest maker of car interiors, said it sources materials for exhaust systems and catalytic converters from South Africa. The France-based company won't be affected by a slowdown of Chinese rare-earth exports, a spokesman said.
European suppliers are already researching ways to make electromagnets which don't use rare earths more efficient so that they will eventually match the performance of charge- retaining rare-earth magnets, said Egil Mollestad, chief technology officer at Oslo-based Think Global AS, which makes the Think City electric car.
At the same time, automakers in Europe are preparing to increase their offerings in hybrid and electric cars.
PSA/Peugeot-Citroen, Europe's second-largest carmaker, last month displayed a hybrid version of its 3008 crossover at the Paris Motor Show. Renault SA is aligning its Zoe electric city- car due in 2012 with the 17,500 euro price of its comparably equipped Clio diesel.
Daimler AG set up a venture this year with BYD Co., the Chinese maker backed by Warren Buffett, to develop electric vehicles in China. “Probably the European community has not put enough relevance to that topic,” CEO Dieter Zetsche said in an interview in Beijing last month about rare earths. “It's a mid-term, long-term issue.”