Exclusive-China's rare earth export curbs risk halting German car production, lobby group warns

By Victoria Waldersee

BERLIN (Reuters) -Germany's auto lobby warned on Tuesday that export restrictions by China on rare earths alloys, mixtures and magnets posed a serious risk to the industry and could cause production delays and outages if a solution was not found quickly.

Slow granting of export licenses, as well as lags in customs clearance of exports with valid licenses, was causing significant problems for automakers, the head of auto lobby VDA, Hildegard Mueller, said in a statement to Reuters, marking the first time the lobby has warned of an impending stop to output.

Diplomats, automakers and other executives from India, Japan and Europe are urgently seeking meetings with Beijing officials to push for faster approval of rare earth magnet exports, sources told Reuters earlier on Tuesday, after China imposed new rules in April demanding exporters obtain licenses from Beijing.

"Although some licenses have now been granted, this is currently insufficient to ensure smooth production... If the situation is not changed quickly, production delays and even production outages can no longer be ruled out," Mueller said.

The shortage threatens to wreak further havoc to the already strained supply chains of automakers like Volkswagen, Mercedes-Benz and BMW as well as suppliers including Bosch and others who rely on rare earths for applications including motors for electric cars.

(Reporting by Victoria WalderseeEditing by Ludwig Burger)