Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Munich Auto Show
    • Geneva Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Podcasts
  • Car Cutaways
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: Invent Head on automotive takeaways from CES 2023
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: The circular economy is spurring new thinking on EV batteries
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Automakers
September 05, 2020 09:41 AM

Europe struggles to cut China reliance for rare earths

Bloomberg
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Bloomberg

    China accounted for 80 percent of total U.S. imports of rare-earth compounds and metals last year.

    The U.S. and Europe's ambition to boost production of rare raw materials used in electric vehicles and reduce dependence on China will face obstacles, including higher costs and environmental concerns.

    The European Union stepped up a push to become less reliant on imported raw materials, with the European Commission vowing to create a raw-materials alliance by the end of the year due to their importance in growing industries.

    Two U.S. Congressmen this month introduced bipartisan legislation aimed at reducing dependence on China for rare earths, similar to what Senator Ted Cruz introduced in May.

    Concern about the outsized influence of China gained more prominence as trade tensions increased between the U.S and China. Cost, access to the raw materials and environmental concerns may be the biggest stumbling blocks for creating an independent supply chain, according to analysts.

    "It's very difficult to sustain, it's expensive to sustain," said Jennifer Bisceglie, the CEO of Interos, a supply-chain risk management company. "If you create an entire local supply chain, think about the expense in training the labor and getting the raw materials if they're not in your country."

    Large multinational corporations rely heavily on smaller suppliers who have access to localized raw materials they might not be able to get elsewhere, she said.

    China accounted for 80 percent of total U.S. imports of rare-earth compounds and metals last year. President Donald Trump ordered the U.S. Defense Department to spur production of rare-earth magnets as the trade war between the two countries sparked concern China will restrict exports of the products.

    Tax incentives

    The bills introduced in the U.S. House and Senate offer tax incentives, which would make the domestic industry more competitive, according to Hu Yan, an analyst with SMM in Shanghai.

    Still, it will take time for countries to build up technology and equipment locally and environmental hurdles are higher for mining and exploration, which can cause significant damage. Yan said the U.S. -- which is rich in rare-earth resources but has high production costs including labor and energy -- needs to weigh those environmental costs against the benefit of an onshore industry.

    Europe's plan is coming in for criticism from groups who say it focuses too much on mining and not enough on recycling. While officials across Europe and the U.S. may be hoping to end dependence on China for the raw materials, executives at rare earth miners say they only need to gain a portion of the market to incubate successful domestic industries.

    "It doesn't need to be the entire industry, it just needs to be some significant part of the supply," said Jim Litinsky, the incoming CEO of MP Materials, the lone miner of rare earths in the U.S. "As long as there are one or a handful of major Western competitors that keeps the entire supply chain honest and shields us from getting squeezed."

    MP Materials has to ship its raw materials to China for final processing because it's the only nation with refining capabilities. If the U.S. and other countries bring production back home and cut China's share down to 60 percent of the supply chain, China won't have that kind of control anymore, Litinsky said.

    "In general discussions even about two years ago, people were saying ‘free trade is going to solve everything - what's the big problem?'," Mikael Staffas CEO and president of miner Boliden, said by phone. "There has always the world market, where we can buy whatever we want. I think that mindset has changed very quickly -- I think we have become more and more aware that that might not always be true."

    Diversification

    Encouraging diversification of supply chains is smart and makes sense, said Lewis Black, the CEO of Almonty Industries, which produces the rare metal tungsten. Black said the right amount of federal support might be a good solution, otherwise companies will keep relying heavily on China.

    Moving supply chains is also easier said than done, especially when someone else can do it at a cheaper cost. Black said Chinese companies are "incredibly good" operators, and can build up stockpiles without the fear that their balance sheets will take a hit with the devaluation of the inventory. For most buyers, the lowest cost may still outweigh the location from where they purchase.

    When buyers "have nowhere else to go, they have to go to China. It's like having one more fix and then saying they're going to get right on it," Black said.

    RECOMMENDED FOR YOU
    BMW to invest $866 million in Mexico in EV push
    Recommended for You
    BMW San Luis Potosi Mexico 2023
    BMW to invest $866 million in Mexico in EV push
    Ford Red Bull F1 RB19 2023
    Ford returns to Formula One as partner to Red Bull
    Production of the Range Rover at Jaguar Land Rover's plant in Solihull, England.
    Tata considers Spain, UK for EV battery plant, report says
    Capgemini Invent Head on automotive takeaways from CES 2023
    Sponsored Content: Capgemini Invent Head on automotive takeaways from CES 2023
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Munich Auto Show
        • Geneva Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Podcasts
    • Car Cutaways
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
    • More
      • Publishing Partners
        • Capgemini: Invent Head on automotive takeaways from CES 2023
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: The circular economy is spurring new thinking on EV batteries
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us