CUXHAVEN, Germany (Reuters) – Wind turbine maker Siemens Corace hopes to restore its reliance on China in some critical parts of its supply chain, its chief executive said, adding that while there is interest from customers, this will boost prices.
Jochen Eickholt said Siemens Gamesa is almost 100% dependent on China for rare earths and permanent magnets, which are some of the critical materials needed to make wind turbines.
“We consider offering a larger supply chain in the future. If that’s what the customers want,” Eickholt told reporters at the company’s Turbine factory in the German municipality of Cuxhaven.
“This is more expensive and can add a few percentage points to the price,” Eickholt added, without making a difference to what an acceptable supply chain mix would be.
China’s reliance on key materials and technology has become a major problem for Europe, especially for Germany, which has asked its largest companies to reduce risks, which in fact means reducing exposure to the Asian region in the supply chain.
However, Germany’s new policy will face delays in its relations with China due to political differences within the German government, three sources told Reuters, adding that no time is ready for bilateral talks before May 20.
Siemens Gamesa last month signed an agreement with Australia’s Arafura Rare Earth to supply 200 barrels/year of the material needed for permanent magnets, helping the Siemens Energy-owned company diversify into China.
(Reporting by Christoph Steitz; Editing by Rachel More and Alexander Smith; Editing in Spanish by Darío Fernández)