EU asks China to address ‘alarming’ rare earth disruptions

The European Union’s trade chief, Maros Sefcovic, said he raised industry-wide concerns over Chinese export restrictions on rare earths and magnets with his counterpart Wang Wentao on Tuesday.

“It was one of my priorities to address this issue yesterday and we did,” Sefcovic told reporters Wednesday in Paris, where he’s attending a conference at the Organization for Economic Cooperation and Development.

“I informed my Chinese counterpart about the alarming situation in the European car industry, but I would say industry as such because clearly rare earth and permanent magnets are absolutely essential for the industrial production,” he said.


The EU trade commissioner described the situation as “extremely disruptive.”

Sefcovic’s comments echo concerns raised by other government officials including those in the Trump administration, which has accused China of breaking a deal reached in Geneva last month to, among other things, lower barriers for exports of rare earth materials.

Mercedes, BMW

Automakers are preparing for possible supply crunches. The potential squeeze on rare earth magnets is drawing comparisons to the global semiconductor crisis that disrupted automotive production in the wake of the coronavirus pandemic.

Mercedes-Benz Group AG has intensified discussions with key suppliers about the short-term availability of components containing these materials and whether to stockpile certain items. While its car factories are operating as usual, parts of BMW AG’s supply network are affected by China’s curbs.

During his meeting, Sefcovic said that Wang explained Beijing’s dual-use export system for civilian and military goods, and the two ministers compared trade data. The EU’s trade chief said their figures didn’t match. The bloc agreed to share data with Beijing that had been supplied to the European Commission by affected companies, he said.

He said they would talk again “relatively soon” once data on both sides has been clarified. Sefcovic said the bloc’s preference was to find a systemic solution to the challenge to avoid bureaucratic delays and stress for companies in future.

“If it comes to the permanent magnets which are used clearly for civilian production, because you need them from washing machines to cars to any home appliance we have most probably at home all of us, this is extremely disruptive for the industry,” Sefcovic said.