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Automakers ‘in full panic’ over rare-earths bottleneck

Britain launches AI skills drive for workers, students LONDON: The UK government is to team up with tech giants including Google, Microsoft and Amazon to train 7.5 million workers in AI skills, Prime Minister Keir Starmer announced yesterday. Starmer also unveiled £187 million (RM1.07 billion) in funding to help develop tech abilities for one million secondary school students, as part of its “TechFirst” programme to bring AI learning into classrooms and communities. “We are putting the power of AI into the hands of the next generation – so they can shape the future, not be shaped by it,”Starmer said. “This training programme will unlock opportunity in every classroom – and lays the foundations for a new era of growth.“ The UK’s AI sector is valued at £72 billion and is projected to exceed £800 billion by 2035. It is growing 30 times faster than the rest of the economy, employing over 64,000 people, according to government figures. Alongside TechFirst, the prime minister also announced a government-industry partnership to train 7.5 million workers, with tech giants committing to make training materials freely available to businesses over the next five years. Training will focus on teaching workers to use chatbots and large language models to boost productivity. Google EMEA president Debbie Weinstein called it a“crucial initiative”essential developing artificial intelligence skills, unlocking AI-powered growth “and cementing the UK’s position as an AI leader”. The government was also to sign two Memorandums of Understanding with semiconductor firm Nvidia, “supporting the development of a nationwide AI talent pipeline”, according to the UK government. – AFP L’Oreal buys PARIS: L’Oreal is to acquire British skincare brand Medik8, its owner, Britain-based private equity firm Inflexion, said yesterday, boosting the French cosmetics giant’s offering in the fast-growing dermatological skincare market. The size of the deal was not disclosed. Medik8 focuses on vitamin A-based anti-ageing creams and serums. “The partnership with L’Oreal will allow Medik8 to deepen its presence in existing markets and expand globally. “As part of the transaction, Inflexion will retain a minority shareholding in Medik8,” the private equity firm said in a statement. L’Oreal’s dermatological beauty division, which includes major brands like CeraVe, La Roche-Posay, and SkinCeuticals, has been its fastest growing in recent years, reaching revenues of €7 billion (RM33.8 billion) last year, after growing almost 10% on the year before. The business, which also has the highest profit margin among its four divisions, has boomed on growing consumer interest in science-backed products, though growth has slowed recently due to rising competition. L’Oreal executives said this year they were pursuing acquisitions and looking to revive flagging growth. The company acquired Korean skincare brand, Dr.G, in December and also bought a minority stake in Oman-based perfume house Amourage last year. – Reuters British skincare brand Medik8

A semiconductor shortage wiped away millions of cars from automakers’ production plans, from roughly 2021 to 2023. Before that, the coronavirus pandemic in 2020 shut factories for weeks. Those crises prompted the industry to fortify supply chain strategies. Executives have prioritised backup supplies for key components and reexamined the use of just-in-time inventories, which save money but can leave them without stockpiles when a crisis unfurls. Judging from Eckard’s inbound calls, though, “nobody has learned from the past”, he said. This time, as the rare-earths bottleneck tightens, the industry has few good options, given the extent to which China dominates the market. The fate of automakers’ assembly lines has been left to a small team of Chinese bureaucrats as it reviews hundreds of applications for export permits. Several European auto-supplier plants have already shut down, with more outages coming, said the region’s auto supplier association, CLEPA. “Sooner or later, this will confront everyone,” said CLEPA secretary-general Benjamin Krieger. Cars today use rare-earths-based motors in dozens of components – side mirrors, stereo speakers, oil pumps, windshield wipers, and sensors for fuel leakage and braking sensors. China controls up to 70% of global rare-earths mining, 85% of refining capacity and about 90%

of rare-earths metal alloy and magnet production, consultancy AlixPartners said. The average electric vehicle uses about 0.5kg of rare earths elements, and a fossil-fuel car uses just half that, according to the International Energy Agency. China has clamped down before, including in a 2010 dispute with Japan, during which it curbed rare-earths exports. Japan had to find alternative suppliers, and by 2018, China accounted for only 58% of its rare earth imports. “China has had a rare-earth card to play whenever they wanted to,” said Mark Smith, CEO of mining company NioCorp, which is developing a rare-earth project in Nebraska scheduled to start production within three years. Across the industry, automakers have been trying to wean off China for rare-earth magnets, or even develop magnets that do not need those elements. But most efforts are years away from the scale needed. “It’s really about identifying ... and finding alternative solutions” outside China, Joseph Palmieri, head of supply chain management at supplier Aptiv, said at a conference in Detroit. Automakers including General Motors and BMW and major suppliers such as ZF and BorgWarner are working on motors with low-to-zero rare-earth content, but few have managed to scale production enough to cut costs. The EU has launched initiatives including the Critical Raw Materials Act to boost European rare-earth sources. But it has not moved fast enough, said Noah Barkin, a senior adviser at Rhodium Group, a China-focused US think tank. Even players that have developed marketable products struggle to compete with Chinese producers on price. David Bender, co-head of German metal specialist Heraeus’ magnet recycling business, said it is only operating at 1% capacity and will have to close next year if sales do not increase. As auto companies scout longer-term solutions, they are left scrambling to avert imminent factory shutdowns. Analysts said the constraints could force automakers to make cars without certain parts and park them until they become available. Automakers’ reliance on China does not end with rare earth elements. A 2024 European Commission report said China controls more than 50% of global supply of 19 key raw materials, including manganese, graphite and aluminum. Andy Leyland, co-founder of supply chain specialist SC Insights, said any of those elements could be used as leverage by China. “This just is a warning shot.” – Reuters in several states including Texas and Ohio. “Those are all positive signs, generally,” SEIA president Abigail Ross Hopper said in an interview. “Look at all of this that could be. “And the Congress is threatening all of this development.” Trump campaigned on a promise to repeal the IRA tax credits, calling them expensive, unnecessary and harmful to business. His administration has sought to bolster domestic production of fossil fuels as part of its energy dominance agenda, which excludes renewables like solar and wind. The U.S. solar industry is on track to install 48.6 GW this year, but that will decline to 43.5 GW in 2030, the report said. – Reuters

BERLIN: Frank Eckard, CEO of a German magnet maker, has been fielding a flood of calls in recent weeks. Exasperated automakers and parts suppliers have been desperate to find alternative sources of magnets, which are in short supply due to Chinese export curbs. Some told Eckard their factories could be idled by mid-July without backup magnet supplies. “The whole car industry is in full panic,” said Eckard, CEO of Magnosphere, based in Troisdorf, Germany. “They are willing to pay any price.” Car executives have once again been driven into their war rooms, concerned that China’s tight export controls on rare-earth magnets – crucially needed to make cars – could cripple production. US President Donald Trump said last Friday that China President Xi Jinping agreed to let rare earths minerals and magnets flow to the United States. The industry worries that the rare-earths situation could cascade into the third massive supply chain shock in five years. o Efforts to secure alternative magnet supplies have floundered

Workers transporting soil containing rare earth elements for export at the port in the China city of Lianyungang. – REUTERSPIC

US solar energy growth to slow as govt priorities shift

WASHINGTON: New US solar energy installations are expected to fall over the next five years as the industry grapples with a shift in federal policy that favors fossil fuels, tariffs and other challenges, according to a report published yesterday by a top solar trade group. New solar capacity will be more than 10% lower in 2030 than in 2025, according to a forecast by the Solar Energy Industries Association and energy research firm Wood Mackenzie. The outlook includes the expected effects of new federal tariffs on a range of imported materials that are important to solar projects, including steel and aluminum. But it does not include potential cuts to clean energy tax credits being considered in a Republican budget bill in Congress – another

major threat to the industry if passed into law. Tax credits for clean energy projects and factories contained in former US president Joe Biden’s 2022 Inflation Reduction Act have buttressed industry growth in the last three years. But the bill that passed the House last month could upend what has been a boom in the sector, SEIA warned. Solar accounted for 69% of new electricity generation during the latest quarter. The industry installed 10.8 gigawatts of capacity in the first quarter of this year, a decline of 7% from a year ago but still near historical highs, the report said. At the same time, eight new or expanded solar factories opened during the quarter