Ian Williams Ian Williams

The car industry’s China crisis


New cars could soon start disappearing from Britain’s forecourts, with the latest supply chain crunch threatening to cripple the global motor industry. It’s a crisis that once again delivers a stark warning about the dangers of over-dependence on China and the costs of succumbing to Beijing’s predatory trade practices.

The automotive industry is currently facing a critical shortage of magnesium, which is an essential raw material for the production of aluminium alloys, including gearboxes, steering columns, fuel tank covers and seat frames. Stockpiles are running low, there is no substitute for magnesium in the production of aluminium sheets, and China has a near monopoly on the market.

In Germany, Europe’s motor manufacturing powerhouse, there are concerns that supplies might be exhausted by the end of next month. ‘It is expected that the current magnesium inventories in Germany and respectively in the whole of Europe will be exhausted by the end of November 2021,’ said Germany’s association of metals producers in a letter to the German government. One Canadian metals company told its clients last week that supplies has ‘dried up’.

There has been much talk in Europe and America of ‘strategic autonomy’, breaking free of an over-reliance on China

The immediate cause of the shortage is China’s power shortage. Some 90 per cent of the world’s magnesium supplies come from China, with a good chunk of that originating from a single town – Yulin in Shaanxi Province. The local government has reportedly ordered 35 of 50 smelters to close until the end of the year in order to preserve energy. Others have been told to cut their output.

The leaders of Germany and the Czech Republic, Europe’s other big motor manufacturer, reportedly raised the issue at an EU summit last week, with Czech prime minister Andrej Babiš saying that the industry is facing ‘disaster’.

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