Automakers say magnesium shortage is not a problem at present

In recent days, European carmakers, frustrated by global chip shortages, have rushed to reassure shareholders that magnesium shortages do not currently pose a risk to their production plans.

However, auto parts suppliers and industry associations warn that carmakers could face severe material shortages if production in China, which accounts for 85 per cent of the world's magnesium supply, does not accelerate quickly.

Carmakers don't usually buy large amounts of magnesium themselves. But component makers that supply key parts to carmakers rely heavily on magnesium, which can be used alone or in combination with aluminum to reduce the weight of cars.

Making cars lighter is particularly useful for extending the mileage of electric vehicles, which is crucial to Europe's energy transformation plans.

The shortage of chips has extended the delivery time of new cars, even for as long as a year. An auto industry source said that if China's magnesium exports do not recover quickly, then the queue time for new car delivery could be extended.

Stellantis and BMW said they saw no immediate problems on the supply side. Others in the industry say their stocks and magnesium already in transit will be available until early 2022.

But Volkswagen's purchasing director said on an earnings call that shortages were expected.

木拉提 Aksel of Volkswagen said: "We can't predict whether the magnesium shortage will be bigger than the semiconductor shortage. It will definitely happen as planned."

Magnesium production in china is about 50 per cent of normal levels, according to industry sources, as soaring coal prices and energy rationing have prompted smelters to cut or close operations.

China has allowed some magnesium producers to resume production, but not enough to significantly ease the shortage. Prices have fallen from all-time highs, but are still more than double their January levels.

"We are very worried that this will affect us in a few weeks," said Jonathan Oriodan (Jonathan O'Riordan), director of international trade at ACEA, the European Automobile Manufacturers Association.

Germany's ZF, which uses magnesium in gearboxes and steering wheels, said it was seeking new sources of magnesium from other countries, but had limited effect in offsetting Chinese supply losses given the size of its market share.

"this is the calm before the storm," said Teresa Schad, a spokesman for the German metal association WV Metalle.