EU leaders have raised concerns that a shortage of magnesium could force carmakers and other users of aluminium to shut down production within weeks unless China restarts its magnesium smelters.
Germany’s outgoing chancellor Angela Merkel warned her fellow leaders of the potential crisis at their summit in Brussels on Thursday, diplomats told the Financial Times.
Merkel said the rise in global energy prices was having unexpected knock-on effects, with China’s magnesium shortage hurting car manufacturers in Europe, according to diplomats familiar with the discussion. Her concerns were echoed by Andrej Babis, prime minister of the Czech Republic, another big car-producing country.
Magnesium is an essential component for aluminium alloys used in cars, packaging, and other everyday products. Some 87 per cent of global supply, and 95 per cent of European consumption, comes from China, which has cut output drastically to save power as prices rise.
Twelve business associations representing makers of cars, metals, packaging and other industries warned on Friday of an “imminent risk of Europe-wide production shutdowns” because they only have enough stocks of magnesium to last until the end of November.
The price of scarce magnesium imports has jumped fivefold during the year, the groups said. They called on Brussels and national governments to work with China to “mitigate the short-term, critical shortage issue as well as the longer-term supply effects on European industries,”
“Thousands of businesses across Europe, their entire supply chains and the millions of jobs that rely on them” were potentially at risk, said the statement, co-ordinated by European Aluminium, the lobby group. Industry bodies including Acea, the carmakers’ body, and Eurofer, the steel lobby group, also signed.
The EU is drawing up a strategy to become less reliant on imports of raw materials, including magnesium, after fears have grown that China could choke off supply.
The European Commission said it was aware of the situation. “We are raising this issue with our Chinese counterparts in order to address immediate shortages and are assessing long-term solutions to tackle this strategic dependency,” it said.
Additional reporting by Guy Chazan in Berlin
Source: Economy - ft.com
