A looming metal crisis on the horizon
The Federation of German Industries (BDI) and experts are warning of an impending metal crisis, reminiscent of the energy crisis of 2022. This crisis is exacerbated by temporary export restrictions of rare raw materials from China, which could have immediate impacts on industry and markets.
Background and Causes
- Dependence on China: China dominates the market for rare earths, covering approximately 99% of the global demand for heavy rare earths and 93% for magnets. These metals are crucial for the production of high-tech products, such as e-motors, robotics, and drones.
- Export Restrictions: China has throttled the export of these raw materials, putting pressure on the global supply chain. This could lead to production stoppages in the German industry, particularly in the automotive sector, machinery and plant engineering, as well as energy and defense technology.
Impacts and Reactions
- Industrial Concerns: The German industry warns of the consequences of this scarcity, as the dependency on imports is not only high but also system-critical. This could lead to significant disruptions in the global supply chain.
- Political Tensions: The situation is also characterized by political tensions. China has announced that it will grant the EU faster approvals for the import of rare earths. At the same time, there is an exchange of barbs between the USA and China regarding access to these raw materials, exacerbating geopolitical tensions.
Future Outlook
- Trade Talks: Planned trade talks between the USA and China could address access to rare earths. US President Donald Trump has assured that China will resume deliveries, although this has not yet been verified.
- Diversifying Supply: To reduce dependence on China, a diversification of the supply of rare earths is being pursued. This could be achieved through the development of new extraction sites or improving recycling technologies.
Overall, the metal crisis could have significant economic and political repercussions that affect both industry and geopolitical relations.