China's Rare Earths Grip Forces Ford to Close Factory

China's Control Over Rare Earths

Ford CEO Jim Farley recently highlighted how China's grip on rare earth minerals has significantly impacted the automaker's operations. The shortage of these essential materials led to the temporary closure of one of Ford's factories last month.

The Importance of Rare Earth Minerals

Rare earth minerals, which comprise a set of 17 metallic elements, are vital for several automotive functions. They are essential for features such as windshield wipers, seat belts, and speakers to operate effectively. Approximately 90% of the U.S.'s rare earth minerals are sourced from China, the largest global producer.

Trade Implications and Export Controls

• China has utilized its dominance in rare earths as leverage during the ongoing trade war with the U.S.
• In April, Beijing imposed new export regulations on these critical materials, complicating matters for U.S. firms.
• Automakers, including Ford, face challenges in obtaining the necessary licenses to export rare earths.

Recent Developments

Just recently, U.S. and Chinese diplomats reached an agreement to resume regular exports of rare earths to the U.S., offering a potential lifeline to Ford and other manufacturers struggling with supply chain disruptions.