File picture: Daimler AG.
File picture: Daimler AG.

Forget the semiconductor, magnesium could be the car industry’s next big hurdle

By Jason Woosey Time of article published Oct 20, 2021

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International - By now you would have heard a lot about the semiconductor chip shortage and how it is currently crippling car production around the world, sending some factories into temporary closure and creating a general shortage of new cars.

But things could get even worse by the end of this year, according to industry analysts, thanks to a looming shortage of magnesium.

According to Mining.com, global carmakers are facing another potential crisis as a result of this shortage, which is being indirectly caused by China’s electricity crisis. China currently supplies around 85% of the world’s magnesium, and the power woes have reportedly forced authorities to shut down 35 of the country’s 50 magnesium smelters until the end of 2021.

Germany’s association of metal producers said this week that Europe’s magnesium stockpiles could be depleted by the end of November.

But why is magnesium so important to car production?

According to Jalopnik, magnesium is used in the production of many aluminium alloys, which are found in body panels, unibody structures, engine blocks, fuel tanks, axles and other crucial components. The particularly worrying part of all this is that there is no way to produce aluminium sheets without magnesium.

“Thirty-five percent of downstream demand for magnesium is automotive sheet - so if magnesium supply stops, the entire auto industry will potentially be forced to stop,” a Barclays analyst told the Financial Times recently.

While Europe is likely to be hit particularly hard, North America might be spared the worst of it, given that the US is a global supplier of magnesium, Jalopnik reports.

As for semiconductor chips, some industry leaders believe that the problem might be under control by next year. Tesla’s Elon Musk is particularly optimistic about the situation:

“There are a lot of chip fabrication plants that are being built,” Musk said recently. “I think we will have good capacity for providing chips by next year. I certainly hope so, but it appears that way.”

Sadly, however, it appears that magnesium could well become the new semiconductor chip.

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