Germany is giving technology away for free — where are neodymium magnets, which Beijing blocks to Europe, used in Germany?
Amid escalating trade tensions between the West and China, Germany — regarded as Europe’s industrial powerhouse — is making a cardinal mistake: handing advanced neodymium magnet (NdFeB) production technologies to Beijing for free. These magnets, crucial for the green transition and defense, are now being blocked by Chinese export restrictions introduced in 2025. China, controlling 90% of the global rare earth elements (REE) market, is using them as a weapon in response to U.S. and EU tariffs. The effect? European factories, including German giants like Volkswagen and Siemens, struggle with shortages, 15–30% price increases, and production delays. Why is Berlin transferring know-how to a rival that is squeezing Europe? We analyze this below, with a map of NdFeB applications in German industry.
Conflict background: China as a monopolist of REE and NdFeB
Neodymium magnets, composed of neodymium (Nd), iron (Fe), and boron (B), are the strongest permanent magnets in the world, reaching magnetic flux density up to 1.4 tesla. They are essential in technologies requiring compact, efficient motors and generators. China dominates: 95% of REE mining (including neodymium, dysprosium, terbium) and 90% of NdFeB production. In April 2025, Beijing introduced Announcement No. 18 — export licenses for seven REE and magnets — in retaliation for U.S. tariffs on Chinese EVs (electric vehicles) and technologies. In October 2025 this was expanded to Announcement No. 61, covering even products with 0.1% Chinese REE, hitting semiconductors, defense, and green energy. Neodymium prices rose by 10–20%, dysprosium by over 20% (to USD 204/kg). For Europe, importing 98–99% of NdFeB from China, this is a disaster: production line shutdowns, billions in losses.
German strategy: Technology transfer for illusory benefits
Germany, dependent on Chinese imports (99% of NdFeB), instead of building independence, engages in joint ventures, transferring patents and know-how. This is “geopolitical naivety” — as CSIS calls it — where Berlin gives away tech for access to a cheap market and energy, but Beijing uses it to strengthen its monopoly.
Examples:
1. BASF and Ganfeng Lithium: From 2023–2025 a joint venture in Changzhou (China). German REE separation technology handed over for free, enabling China to produce NdFeB more cheaply. Now BASF suffers from export blocks to Europe.
2. Siemens and Baotou Steel: Transfer of magnet technologies for wind turbines at a plant in Inner Mongolia. Siemens “localizes” production, giving up patents for high-efficiency NdFeB.
3. Volkswagen and CATL/BAIC: In Hefei, EV factories are being built where VW shares its know-how on NdFeB motors. It’s a market-for-technology swap, but now VW faces shutdowns in Wolfsburg due to a lack of magnets.
4. ThyssenKrupp: Cooperation in REE-containing steel, transferring processing methods. The effect? China blocks exports, and Germany loses EUR 2bn per month in automotive.
| German company | Technology handed to China | Effect on Germany | Citation source |
|---|---|---|---|
| BASF | REE separation | Blockades in chemicals | [DW] |
| Siemens | Magnets for turbines | Delays in energy | [Handelsblatt] |
| VW/BMW | EV motors | Factory shutdowns | [Reuters] |
| ThyssenKrupp | Processing of REE-containing steel | Risk in defense | [CSIS] |
Where is NdFeB used in Germany — and how painful is Beijing’s blockade?
German industry consumes thousands of tons of NdFeB annually, mainly in strategic sectors. Restrictions cause chaos: 45-day licensing delays, +20% price increases, lack of stock.
Key sectors: automotive, renewable energy, defense, home appliances, robotics and medicine.
| Sector in Germany | NdFeB consumption/year (tons) | Impact of restrictions | Estimated 2025 costs (bn EUR) |
|---|---|---|---|
| Automotive | 10,000 | VW/BMW shutdowns | 5 [Reuters] |
| Energy | 5,000 | Wind farm delays | 3 [Handelsblatt] |
| Defense | 2,000 | Risk for F-35/Leopard | 1 [Bloomberg] |
| Home appliances/Electronics | 3,000 | +15% product prices | 2 [Financial Times] |
| Total | 20,000 | Complete chaos | 11 [CSIS] |
Lesson for Poland and Europe: Diversification instead of naivety
Polish importers feel the same: delays, prices +30%. The German lesson? Build stockpiles (3–6 months, N42/N52 without heavy REE), diversify (partnerships with Canada, Australia via the CRMA — Critical Raw Materials Act). The EU has launched RESourceEU (EUR 50bn for recycling), but it’s too late — mines in Sweden will start in 2027.
Conclusion: Time to wake up — a Europe without China’s noose
By giving technologies away for free, Germany weakens the entire EU. Trump in the U.S. is building alternative chains (with AUS, JPN), while Berlin begs for licenses. The EU–China summit in November 2025 may bring relief, but without radical diversification EV prices will rise by 8–12% and defense will weaken.
Source:
- At the monopolist’s mercy: Germany’s dependence on Chinese rare earth elements | OSW Centre for Eastern Studies
- China tightens its rare earth choke hold on Europe – POLITICO
- China’s New Rare Earth and Magnet Restrictions Threaten U.S. Defense Supply Chains | CSIS
- The Race Is on to Make Rare Earth Magnets Outside China - The New York Times
- Rare Earth Statecraft Phase Two | German Marshall Fund of the United States
- Export restrictions on rare earth metals for magnetic materials from China - Goudsmit Magnetics
- How to Loosen China's Stranglehold on Rare Earths - CEPA
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czwartek 2025-10-30T12:00:00