European auto parts factories closed

Several factories and production lines of European auto parts suppliers have been closed due to a shortage of rare metals, caused by China's decision to impose restrictions on such exports, the European Automotive Suppliers Association (CLEPA) announced yesterday, warning that more closures are coming, Reuters reports, according to Agerpres.

Of the several hundred applications for export licenses submitted by auto suppliers since the beginning of April, only a quarter have been granted so far, CLEPA revealed, adding that some applications have been rejected due to what the association described as "extremely procedural reasons."

"The procedures appear to vary from one province to another and, in several cases, sensitive information regarding intellectual property has been requested," CLEPA emphasizes.

The association added that if the procedures are not expedited, more plants could be affected in the next three to four weeks as stocks run out.

The decision in April by Chinese authorities to suspend exports of a wide range of rare metals and magnets has disrupted the supply chains of carmakers, aerospace firms, semiconductor companies and the defense industry worldwide, so several representative bodies in Germany, the United States and India have called on politicians in their countries to put pressure on Beijing for a quick solution.

On Tuesday, the German Automobile Manufacturers Association (VDA) also warned that China's restrictions on exports of rare metals, which are used in a wide range of components, could soon cause disruptions in production.

According to VDA President Hildegard Mueller, China has issued some permits to a small number of rare earth metal producers, including suppliers to German carmaker Volkswagen, but the quantities are insufficient to ensure smooth production.

Last week, German car parts maker Bosch said its suppliers were being blocked by China's new, stricter export licensing procedures.

Most analysts believe Beijing is using the restrictions as a tool for diplomatic pressure, as there are no alternatives to the rare earth metals supplied by China.