German car industry: Significant shortages of raw materials from Russia and Ukraine

Following the shortage of semiconductors in the international market and disruptions in the supply chain due to the pandemic, the German car industry is receiving another blow, as the war in Ukraine continues. Officially, those directly concerned remain cautious. Answering a question from Deutsche Welle, a representative of the Volkswagen Group, the largest car manufacturer in the world, said: “We accept many questions, as the situation is potentially dangerous, but also very volatile. In the end, the report will be made “.

For his part, Stefan Bratschel, political scientist and founder of the Center for Automotive Management (CAM), told Deutsche Welle that “we should not underestimate the shortages of important raw materials for manufacturers, but also for their suppliers. The result will be higher prices, longer delays in the delivery of new vehicles and additional obstacles to efforts to promote e-mobility. “

Neon from Ukraine, palladium from Russia

Example: As the Association of German Automobile Manufacturers (VDA) points out, Ukraine is one of the world’s largest suppliers of the noble neon gas needed to build semiconductors. But also from Russia the car industry and its suppliers import palladium and nickel. Palladium, a precious metal, is used to make catalysts for conventional vehicles. “Russia is the second largest supplier internationally with 38% of the world market, followed only by South Africa with 39%,” said Michael Schmidt, a spokesman for the German Raw Materials Association (DERA). According to experts, in recent years its price is constantly rising. In June 2021 it had reached a record price of $ 2,900 per ounce, then dropped to $ 1,800, but with the start of the war in Ukraine it started to rise again, to reach $ 2,270 earlier in the week. “Palladium has been in great demand in the market for years,” Smith said, noting that “this situation is not going to change quickly,” as production in South Africa can not increase either in the short term or indefinitely … »

Nickel fluctuations are even more unpredictable. After the Russian invasion of Ukraine, the price of tuna exceeded $ 100,000, compared to $ 20,000 in the recent past. Analysts predict a decline in the coming weeks, but stabilization at higher levels, around $ 34,000 in mid-2022. “Today the Russian Federation is the third largest producer of nickel in the world,” Michael Sourlis of the Federal Foundation for Agriculture . Nickel is considered absolutely essential for lithium batteries, which are used, among other things, in the electrification of vehicles.

Electricity in Germany

The London-based consulting firm GlobalData estimates that continuing shortages in the Russian market would drive up the prices of electric motors, undermining Western governments’ efforts to reduce carbon dioxide emissions and implement ambitious climate measures. But the longer electricity is delayed, the more we will depend on Russian oil and gas. “We are going through a critical period for the introduction of electric motors, as industrialized countries are accelerating the process to end the use of fossil fuels,” said Daniel Clark, a GlobalData contributor.

When China benefits …

At the same time, manufacturers of electric vehicles and batteries in China could benefit from Western sanctions against Russia by buying Russian production at more affordable prices. “China already has a dominant position in battery production,” says Daniel Clark. “It would have strengthened it even more if it had bought nickel at lower prices, benefiting from Western sanctions.” The only alternative for the industrialized countries of the West would be to turn to alternative providers, such as Indonesia or the Philippines.

But this development raises other problems, says Lil Redd, an analyst at GlobalData. This is because “distances from buyers in the West are widening, resulting in increased pollutant emissions during transport and intensifying environmental problems in the mining countries themselves.” In addition, today’s independence from Russia would be followed by a greater future dependence on China, as “Chinese companies play a dominant role in the operation of nickel mines in Asia.”

New technological solutions

There is also the alternative of new technologies, which, however, take time. Red believes that “in battery technology, innovation is growing at an impressive rate, but changes do not happen overnight. However, we believe that in the medium term, especially if the war continues, we will see more new generation lithium ion (LFP) batteries, for the construction of which neither nickel nor cobalt is needed. “

DW: Klaus Ulrich – Giannis Papadimitriou

Follow Skai.gr on Google News
and be the first to know all the news