Carmakers usually do not buy large volumes of magnesium themselves, but parts manufacturers who supply key components to automakers are heavily dependent on magnesium. Magnesium is used in the automotive industry either alone or in combination with aluminum to reduce the weight of cars.
Producing lighter cars is an important prerequisite, especially in a situation where car manufacturers are trying to offer more electric cars, for which it is necessary to ensure the longest possible range on a single charge. The move away from cars with internal combustion engines and the move to electric cars are part of Europe’s energy transformation plan.
Škoda Auto so far it has enough magnesium
The Mladá Boleslav-based carmaker Škoda Auto currently has enough magnesium, and possible supply disruptions would mean significant limitations for it.
“Škoda Auto mainly uses magnesium for the production of aluminum alloys, for example for the production of parts for engines, gearboxes and aluminum wheels. We currently have enough of this commodity, any outages in the supply of magnesium would mean significant restrictions for us, “says company spokeswoman Martina Gillichová.
Since the beginning of the year, Škoda Auto, like competing carmakers, has been struggling with a shortage of semiconductor chips. Because of this, it had to stop production several times this year. At the moment, it has enough chips, but the problem is far from solved, and according to experts, the carmakers will continue to face a global shortage of semiconductors next year.
The lack of chips, which are mainly due to the effects of the pandemic, has already significantly extended the delivery times of new cars. Sometimes customers have to wait a year for the ordered car. If magnesium exports from China do not return to their original levels, then these waiting periods may be extended.
Car manufacturers Stellantis and BMW claim that they do not see any impending problem when it comes to magnesium supplies. Others in the industry say that if they take their supplies and the magnesium they have ordered, which is already on the way, they can continue to make cars without any problems, at least until the beginning of next year. However, Volkswagen’s chief purchasing officer, Murat Aksel, said in a statement that the shortage was to be expected.
“At the moment, we cannot predict whether the lack of magnesium, which according to the planning so far will certainly occur, will be more pronounced than the lack of chips,” Aksel told Reuters.
Magnesium production in China is now around 50 percent of normal levels, industry sources say. The main reason is the sharp rise in coal prices and the current situation in China, where electricity is allocated in some areas. Magnesium producers are thus forced to reduce production and in some cases to stop it altogether.
China has allowed some processors to resume production, but not to the extent that they can significantly alleviate the shortage. In the meantime, prices have fallen from records, but they are still roughly double compared to the beginning of this year.
“We are very worried that it will hit us in a few weeks,” Jonathan O’Riordan, director of the European Automobile Manufacturers Association, told Reuters. The German company ZF, which uses magnesium in the manufacture of gearboxes and steering, has already begun to look for new sources of magnesium in other countries. However, the shortfall from China will not fully compensate, given the share of magnesium supplies from China on the world market.
“It’s calm before the storm,” said Teresa Schad, a spokeswoman for the German metalworking association WV Metalle.