Carmakers rush to secure rare earth elements as China tightens controls

Global carmakers are racing to secure critical rare earth elements in the hope of avoiding supply bottlenecks and production shutdowns.

China today dominates the rare-earth chain, controlling about 70 % of global mining, 85 % of refining capacity and up to 90 % of metal-alloy and magnet production.

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These elements are essential to many vehicle components: from side-mirror motors, audio speakers and windshield-wipers to sensors in oil-pumps and brakes. They are especially crucial in electric vehicles (EVs).

Beijing has expanded export controls, adding five more rare earth elements to its list of regulated materials, including holmium, erbium, thulium, europium and ytterbium, and tightened licensing in magnet and processing technology.

Another noted heavy rare earths refining capacity outside China is near-negligible as China holds 99.8 % of that market.

Automakers are reacting with urgency. AlixPartners estimates that China controls up to 70 % of mining and 85 % of refining globally. Renault-backed recycler Neutral currently recovers rare earths from 400,000 cars a year but says scaling remains a major hurdle.

Efforts to build new mines and processing plants outside China face another barrier: they are years from mass production while China undercuts with low pricing.

Some car and motor-component makers are also shifting direction. General Motors, BMW, ZF and BorgWarner are working on EV motors with reduced or zero rare-earth content. One UK specialist reported average reductions of 24 % among its major clients.

Still, these alternatives are not ready for large-scale deployment. One supply-chain analyst stated: “It’s a precarious investment”, given that cheaper, rare-earth-rich motors will continue to dominate unless demand signals change.

Industry executives warn the auto sector could face shutdowns if supplies tighten further. “They can shut us down in two months, the entire auto industry,” said Ryan Grimm, Toyota Motor’s North America group vice president of purchasing supplier development.

With the deadline for new controls set for Nov. 8, the race is on.