[By Observer Net, Xiong Chaoran] On June 23 local time, the Wall Street Journal cited a senior executive of Ford Motor Company reporting that the company still faces difficulties in obtaining key magnets made from rare earth elements.

Lisa Drake, vice president in charge of Ford's battery and electric vehicle industrial planning, said: "It is a hand-to-mouth situation, which means you have to do regular supply chain emergency scheduling."

Due to the shortage of rare earth materials, Ford's CEO Jim Farley revealed on June 13 local time that the company's Explorer SUV factory in Chicago was shut down for a week last month. Now, Drake told reporters at a press conference held at an electric vehicle battery plant in Michigan that the situation has improved somewhat, but due to material shortages, the company still needs to "move things around" to avoid production stoppages.

Photo of Lisa Drake

On April 2, the Trump administration of the United States raised tariffs globally, imposing so-called "reciprocal tariffs" with a tariff rate as high as 145% on China.

Subsequently, China immediately introduced a series of targeted countermeasures, including additional tariffs and export controls on seven types of medium and heavy rare earth-related items, such as samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. The Financial Times at the time cited industry insiders who revealed that China was establishing an export licensing system. In December of last year, China also announced strict control over exports of gallium, germanium, antimony, super-hard materials, and graphite-related dual-use items.

The Wall Street Journal pointed out that China controls about 90% of the global supply of rare earth elements, which are essential for magnets to operate under high temperatures. Most modern technologies in today's world, from smartphones to fighter jets, depend on these special magnets.

The report stated that Ford is still struggling to obtain these magnets, and it is not the only automobile manufacturer. Several other automobile manufacturers said that the approval speed of export licenses for rare earth magnets by China has not shown significant changes. An executive of an automobile manufacturer said: "Although it is not yet necessary to do it every day, it must be done on a weekly basis."

In the automotive industry, rare earth elements are crucial for electric vehicles because they ensure the engine can run at high speeds at low cost. Automobile manufacturers have warned that if they cannot obtain enough rare earth magnets, they may be forced to stop factory production.

Video screenshot of Ford Motor Company's production plant

Reuters previously reported that as the world's largest supplier and exporter of rare earth magnets, China's current delays in approvals in this area have disrupted the supply chains of automobile manufacturers, semiconductor companies, and other companies. With reserves running out, global automobile manufacturers have begun to shut down some production lines.

On June 3 local time, Hildegard Mueller, chairman of the German Association of the Automotive Industry (VDA), said: "If the situation does not change quickly, it cannot be ruled out that there will be delays or even interruptions in German car production."

In a statement to Reuters, she said that the automotive industry needs rare earth magnets, from wiper motor to brake sensors, and it may be difficult to maintain smooth production. She added that China has already issued some licenses to a few rare earth producers, including a supplier of Volkswagen, but this is not enough to ensure sufficient supply of parts required for smooth production.

The report noted that this is the first time that this industry lobbying organization has explicitly stated that Chinese export controls could pose a risk of production shutdowns, but did not specify a timeline.

On the afternoon of June 12, the Ministry of Commerce held a regular press conference. Regarding the reporter's question about the rare earth issue, He Yadong, spokesperson for the Ministry of Commerce, said that China, as a responsible major country, fully considers the reasonable demands and concerns of countries in the private sector, and legally and in accordance with regulations reviews applications for the export of rare earth-related items. A certain number of compliant applications have been approved, and the approval work for compliant applications will continue to be strengthened.

This news came as American companies that had been crying about a "rare earth shortage" breathed a sigh of relief. The Washington Post published an article on June 13 stating that although uncertainty still exists, American companies welcomed it. However, analysts also warned that China's rare earth magnet export licensing system is permanent, and China will not allow American customers to stockpile rare earth.

Gabriel Virden, managing director of the U.S. consulting firm Teneo, wrote in a report: "China may not approve enough export quantities to allow American customers to stockpile, thus ensuring China's influence in this field remains unchanged. China may not even approve the export of rare earth to American defense companies and their suppliers at all."

This article is exclusive to Observer Net. Without permission, it cannot be reprinted.

Original: https://www.toutiao.com/article/7519360763199373850/

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