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In a recent announcement, the EU Chamber of Commerce in China has revealed that European companies across various industries in countries such as Germany, France, and the Netherlands are experiencing production stops due to China's export controls on rare earth elements.
The mechanism introduced by the Chinese government to provide relief for some companies has only had limited success, according to the European Chamber of Commerce in China's president, Jens Eskelund. As of September 9, the Ministry of Commerce in China had approved 19 out of 141 applications for export licenses for rare earths.
The shortage of approvals for exports of these raw materials is causing the production halts. China, being the global main producer of these rare earths, holds significant negotiating leverage due to their use in sensors and electric motors.
The new mechanism, announced by EU Commission President Ursula von der Leyen in late July during her visit to China, is aimed at providing relief for companies facing problems due to China's export controls on rare earths. The mechanism is focused on addressing both current and future problems that may arise due to shortages of these essential materials.
Between August and early September, the European Chamber of Commerce collected information from its members and published its findings on September 9. The chamber anticipates 46 production halts among its member companies due to Beijing's export controls on rare earths in September. However, the chamber did not disclose which companies in which countries were affected.
Germany, like other countries, has companies struggling with China's complex and lengthy application process for export licenses of rare earths. Decisions on 121 applications, some marked as 'urgent', were still pending. One application was rejected due to a data error.
The new mechanism was introduced in response to China's early April introduction of export controls on seven rare earths and magnets made from them. The chamber also warned that more production stoppages could occur by December due to the same issue.
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