EU leaders warn of risk to industry over shortage of magnesium from China

EU leaders have raised issues {that a} scarcity of magnesium might pressure carmakers and different customers of aluminium to close down manufacturing inside weeks except China restarts its magnesium smelters.

Germany’s outgoing chancellor Angela Merkel warned her fellow leaders of the potential disaster at their summit in Brussels on Thursday, diplomats informed the Monetary Occasions.

Merkel stated the rise in international vitality costs was having sudden knock-on results, with China’s magnesium shortage hurting automotive producers in Europe, based on diplomats accustomed to the dialogue. Her issues have been echoed by Andrej Babis, prime minister of the Czech Republic, one other large car-producing nation.

Magnesium is an integral part for aluminium alloys utilized in automobiles, packaging, and different on a regular basis merchandise. Some 87 per cent of world provide, and 95 per cent of European consumption, comes from China, which has reduce output drastically to save lots of energy as costs rise.

Twelve enterprise associations representing makers of automobiles, metals, packaging and different industries warned on Friday of an “imminent threat of Europe-wide manufacturing shutdowns” as a result of they solely have sufficient shares of magnesium to final till the tip of November.

The value of scarce magnesium imports has jumped fivefold throughout the 12 months, the teams stated. They referred to as on Brussels and nationwide governments to work with China to “mitigate the short-term, crucial scarcity subject in addition to the longer-term provide results on European industries,”

“Hundreds of companies throughout Europe, their total provide chains and the tens of millions of jobs that depend on them” have been probably in danger, stated the assertion, co-ordinated by European Aluminium, the foyer group. Trade our bodies together with Acea, the carmakers’ physique, and Eurofer, the metal foyer group, additionally signed.

The EU is drawing up a method to turn out to be much less reliant on imports of uncooked supplies, together with magnesium, after fears have grown that China might choke off provide.

The European Fee stated it was conscious of the state of affairs. “We’re elevating this subject with our Chinese language counterparts with the intention to tackle speedy shortages and are assessing long-term options to sort out this strategic dependency,” it stated.

Further reporting by Man Chazan in Berlin

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