Siemens Gamesa to cut reliance on China for rare earths, permanent magnets

Wind turbine maker Siemens Gamesa is hoping to cut is dependence on China in some critical parts of its supply chain, its chief executive said, adding that while there was interest from customers such a move would lead to higher prices.

Jochen Eickholt said that Siemens Gamesa was nearly 100% dependent on China for rare earths and permanent magnets, which are among the critical materials needed to make wind turbines.

“We are considering offering a more diversified supply chain in the future. If that is what customers want,” he told reporters at the company’s turbine factory in Cuxhaven, Germany.

“This is more expensive and can add a few percentage points to the price,” Eickholt added, without specifying what an acceptable supply chain mix would be.

Dependence on China in key materials and technologies has become a major issue for Europe, particular Germany, which has asked its biggest corporations to de-risk, which essentially means lowering Chinese exposure in the supply chain.

However, a new strategy for Germany in its dealings with China faces delays over policy differences within the government, three sources told Reuters, adding it will not be in place in time for bilateral talks scheduled for June 20.

Siemens Gamesa last month signed a deal with Australia’s Arafura Rare Earths to procure 200 tonnes of materials needed for permanent magnets a year, helping the Siemens Energy owned company to diversify away from China.

(By Christoph Steitz, Editing by Rachel More and Alexander Smith)