China pretty much has the world’s supply of rare-earth elements cornered, producing around 90 percent of them. These materials are critical to our high-tech world, helping power advanced electric motors, aircraft, and even energy-generating windmills. With one country essentially having a monopoly on the supply, getting enough rare earths may be a challenge going forward, especially as China clamps down on exports, though the Hyundai Motor Group appears to have thought ahead.
A Strategic Reserve Of Important Materials
According to a report from Reuters, the gargantuan South Korean automaker has stockpiled enough rare-earth materials to last about a year. Thanks to this supply, the company “does not expect any near-term impact from global supply chain disruptions caused by China’s export curbs,” the story claims.
This forethought on the part of the Hyundai Group, which operates the Kia, Genesis, and, yes, Hyundai brands, puts the company in an enviable position going forward. The automaker could have a significant leg up over rivals that may no longer have easy access to much-needed rare-earth minerals. An investor relations person at Hyundai said this stockpile gives them some breathing room going forward, and will allow the firm to continue producing electric cars regardless of what China does, at least in the near term.
Reportedly, Hyundai has not commented on the nitty-gritty specifics of this stockpile situation, but the automaker did tell Reuters, “We continuously evaluate market conditions to ensure operational stability and maintain a diversified global supply chain.” This strategy is one of the automaker’s “standard business practices” that helps the company’s assembly lines keep running uninterrupted.
TopSpeed’s Take
With its rare-earths dominance, China has enormous power, at least for the foreseeable future. The large Asian nation can dictate the rules of the game to other countries that need these advanced materials, including the United States, which appears to have a new trade deal with China, though only for six months. Of course, there are some other sources of these minerals, but it will take time – probably years – before new mines open and refining capacity comes online.
For the time being, companies and countries alike will have to play nice with China to get the rare-earth elements that are needed to power our modern world. It will be interesting to see how this plays out on the global stage and whether any other companies have had the foresight to set aside rare-earth materials like Hyundai did.
Read the full article here