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Lobby group warns that China's export restrictions on rare earths could stop German auto production.

The German auto lobby warned that China's export restrictions on rare earth alloys, magnets, and mixtures pose a serious threat to the industry. This could lead to production delays and even outages if no solution is found.

In a recent statement, Hildegard Müller, head of the auto lobby VDA said that the slow granting of licenses and delays in the customs clearance for exports with valid licences were causing major problems for automakers. This was the first time VDA has warned about an imminent stop in production.

Sources said earlier Tuesday that diplomats, automakers, and other executives, from India, Japan, and Europe, are seeking urgent meetings with Beijing officials in order to press for a faster approval of rare-earth magnet exports. This is after China implemented new rules, requiring exporters to obtain licenses, from Beijing, back in April.

"Although some licences have been granted, they are not enough to guarantee smooth production..." Mueller warned that if the situation does not change quickly, delays in production and even production shutdowns are no longer a possibility.

The shortage of rare earths threatens to further strain the supply chains for automakers such as Volkswagen, Mercedes-Benz, and BMW. It will also affect suppliers like Bosch and other companies who use them for motors in electric cars.

(source: Reuters)