USA
Supply chain issues may arise with a magnesium shortage in China and the ongoing global microchip shortage heavily impacting auto industry production, including for General Motors.
A recent report stated that the current Chinese magnesium shortage could impact automakers with a wide-sweeping shortage of aluminium. Magnesium is required in aluminium production as an alloying agent, which means if there is a substantial magnesium shortage, aluminium production could stop as a result. A few examples of aluminium car components would include wheels, vehicle bodies and frames, engine components, and transmission components.
Now, China is in the midst of an energy crises, with rising energy costs that result in increased costs for magnesium production. China provides the majority of industrial magnesium, while a magnesium shortage could precede an aluminium shortage that impacts the auto industry.
Roughly 85% of the world’s magnesium production takes place in China. However, some magnesium production also takes place in North America, with one large domestic producer, US Magnesium, offering a small degree of protection from a large Chinese magnesium shortage.
For the moment, no automakers have issued warnings over the magnesium shortage or how it could impact aluminium production, and as a consequence, automotive production. Nevertheless, European companies are already feeling pressure as Chinese magnesium stockpiles run dry. The current magnesium supply shortage is a clear example of the risk the EU is taking by making its domestic economy dependent on Chinese imports, as per European Aluminium in a recent statement.
Source: GM Authority
Image Source: Google Images
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