Essentially, you can’t make cars without aluminum. You can’t work with aluminum without using magnesium. And as of December, you may not be able to work with magnesium much — if at all. Amos Fletcher, analyst for Barclays, put it succinctly: “If magnesium supply stops, the entire auto industry will potentially be forced to stop.”
China has been in the midst of an energy crisis recently, with factories shutting down to conserve power. Unfortunately for the car industry, China is also the world’s primary supplier of magnesium — 85% of the world’s supply comes from the country.
The most prevalent magnesium-producing town in China, Yulin, just ordered 35 of its 50 production facilities to shut down. The remaining 15 have been told to scale back operations by half, leaving production drastically reduced.
This slowdown in magnesium wouldn’t be such an issue if the metal could be easily stored, but it’s got an incredibly short life span on its own. Magnesium oxidizes relatively quickly, and European reserves are expected to run dry by the end of November.
Hey, speaking of China’s grip on our gonads… how are we faring on the pharmaceutical front?