Austria's industry in danger: dependence on rare earths explodes!

Austria's industry in danger: dependence on rare earths explodes!

Austria's industry is exposed to a growing threat due to the dependence on rare earths, especially with regard to e-mobility, wind power and high-tech electronics. A current study by the Supply Chain Intelligence Institute Austria (ASCII) explains that Austria and the EU are in strategic risk, since China has rarely control over 91 percent of global processing capacity. This control means that even the smallest disorders in processing can lead to massive problems in the supply chains, warns study author Peter Klimek, and ultimately endangered the entire industry.

With a focus on critical preliminary products such as permanent magnets, the extent of dependency becomes clear. Austria imported magnets worth 46.9 million euros in 2023, with almost half of China. Forecasts show that global need for permanent magnets from 5,000 tons will increase to up to 70,000 tons in 2019 to 2030. Experts expect the dependence on China to be over 85 percent by 2040, which endangers the resilience of domestic industry.

Critical dependencies and risks

The supply situation for rare earths affects not only Austria, but all of Europe, especially Germany. According to ecomento.de, the supply chains are highly at risk due to geopolitical tensions and logistical bottlenecks. The study identifies systematic risks in 168 product groups in 170 countries that have been examined since 2007. Germany and the EU are among the most endangered regions worldwide when it comes to availability of crucial technologies.

In the German economy, 77 out of 168 product categories are particularly relevant for export, and despite initiatives for diversification, the structural dependence on China remains high. The need for critical intermediate products such as catalysts, special ceramics and electric motors could lead to a main risk of the production landscape of Germany and the EU.

Global crises and their effects

Global episodes such as the Covid 19 pandemic, chip deficiency and trade interruptions have illustrated the fragility of the international value chains. According to Wirtschaftsdienst.eu, over 46 percent of companies in the EU have experienced significant challenges in logistics and when accessing raw materials. These conditions show that companies and political decision -makers in the EU recognize the need to rethink the dependence on global trade and to implement risk management strategies in order to ensure competitiveness.

German companies, which are strongly dependent on international trade relationships, face enormous challenges. It is considered crucial that your providers who work in automotive and electrical engineering develop diversifying strategies in order to reduce the risks of poor supply chains, which are tightened by geopolitical and economic trends.

In this context, stress -based tests in supply chains as well as improved transparency and market research are identified as central measures in order to increase the resilience of European industry and prevent future crises.