German engineering group calls on EU to put pressure on China over rare earths

DUESSELDORF, Germany (Reuters) -German plant and equipment makers are increasingly struggling with supply bottlenecks for rare earths, the VDMA industry association warned and called on the European Union to put more pressure on China.

"We are already seeing that rare earths are no longer reaching our member companies," VDMA president Bertram Kawlath told journalists.

China, which controls over 90% of global processing capacity for rare earths used in everything from automobiles and fighter jets to home appliances, imposed restrictions in early April requiring exporters to obtain licenses from Beijing.

The tighter restrictions followed the opening of a trade war between the U.S. and China after President Donald Trump imposed tariffs on Chinese imports.

VDMA CEO Thilo Brodtmann said that a whole range of materials are affected by the bottlenecks, including nitrocellulose and germanium.

Brodtmann, who said China was using the measures to exert pressure, called for the EU to negotiate to resolve the blockade but also stressed that other suppliers needed to be found in the medium and long term.

If there are no other suppliers, the EU and the German government must negotiate with the Chinese at the highest level to lift the export restrictions, Kawlath said.

"We are also in competition with the U.S., which is currently keen to secure special rights to these products," added Kawlath.

U.S. and Chinese officials said on Wednesday that they had agreed to ease China's export restrictions on rare earths.

(Reporting by Tom Kaeckenhoff, writing by Miranda Murray, editing by Rachel More and Thomas Seythal)