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By Ozan Ergenay and Marie Mannes
GOTHENBURG, Sweden (Reuters) -European truckmaker Volvo (OTC:VLVLY) Group has been seeking alternative sources of rare earths and Daimler (OTC:MBGAF) Trucks has been building inventories to deal with supply issues linked to Chinese export curbs, saying lessons had been learned from the chip crisis.
The automotive industry currently fears that the supply of rare earths, which are needed for magnets, will be hurt by recent export regulations in China. Since April, exporters have had to apply for new licences, which are only slowly being approved.
China dominates the market for the raw materials, which are used in various components from electric motors to window mechanisms in cars and trucks.
Daimler Truck’s CEO Karin Radstrom told reporters on Tuesday on the sidelines of a conference in Gothenburg that, as with the chip crisis during the COVID-19 pandemic, the group was boosting inventory levels rather than relying as heavily on a just-in-time strategy.
"With everything that’s going on in the world right now, this seems to be a good and necessary strategy," Radstrom said.
She said the situation is currently a major focus for Daimler, which it is closely monitoring. "So far, we seem to be getting what we need," she added, saying there have been no production outages so far.
Volvo Group’s CTO Lars Stenqvist also noted "a little bit of turmoil" around rare earth supply, and said in the long term, there had been "a clear move" to be less dependent on the minerals.
Stenqvist, who also said the group’s output had not been affected, emphasized like Radstrom that there had been many lessons learned from the chip crisis.
"We learnt during the semiconductor crisis a few years ago that we maybe have had a history of working too much with the tier 1 suppliers," he said. "We are never hesitating to go down in the value chain, down to tier 2, 3, 4, 5 if necessary."
"During that (chip) crisis we learned how to navigate down to the mines, and that is what we also need to do when it comes to rare earth metals and minerals," Stenqvist added.