Is the German Industry Facing a Metal Crisis?
The Federation of German Industries (BDI) warns of an impending metal crisis that could be triggered by temporary export restrictions on heavy rare earths and magnets from China. This situation could be as far-reaching as the energy crisis of 2022 when Russia reduced its gas supplies. The BDI’s concern is based on the high dependence of the German industry on Chinese raw materials, especially in sectors like the automotive industry, machinery and plant engineering, as well as energy and defense technology.
Background and Impacts
- Dependence on Chinese Raw Materials: China covers 99% of the global demand for heavy rare earths and 93% for magnets. These materials are crucial for the production of e-motors, robotics, drones, and other critical technologies.
- Export Restrictions: The Chinese government implemented export controls on rare earths in April, seen as a reaction to U.S. tariffs. These measures could lead to an acute shortage of these raw materials.
- Potential Impacts: If China maintains these restrictions, it could lead to production stoppages and cross-sector issues. The German industry could be significantly impacted since the dependence on these raw materials is not only high but also system-critical.
Possible Consequences for the Industry
- Automotive Industry: The production of electric cars could be affected by the lack of magnets for motors and other components.
- Machinery and Plant Engineering: The availability of rare earths and magnets is crucial for the manufacture of robotics and other machinery.
- Energy and Defense Technologies: These sectors are also heavily dependent on the availability of these raw materials.
Strategies for Risk Mitigation
To mitigate the risks of such a crisis, companies and governments could pursue the following strategies:
- Diversification of Raw Material Sources: Searching for alternative suppliers of rare earths and magnets could help reduce dependence on China.
- Research and Development of New Technologies: Developing technologies that are less reliant on rare earths could reduce dependence on these materials in the long term.
- Recycling and Reuse: Promoting recycling and reuse of metals could also help alleviate shortages.