Mahindra acts to secure rare-earth magnet supply amid China curbs
What's the story
Mahindra & Mahindra is taking proactive measures to tackle potential supply disruptions of rare earth magnets. The move comes in the wake of China's export restrictions on these critical components. The company plans to secure alternative sources for the next nine months and invest in engineering solutions for long-term supply chain stability. This comes as Maruti Suzuki and Hyundai India have not yet been affected by production issues due to this shortage.
Component importance
China restricts rare earth magnet exports
The export restrictions imposed by China on key rare earth magnets have created supply chain bottlenecks. This has affected user industries such as the auto and electronics sectors. These magnets are critical components in a range of sectors, including automobiles, household appliances, and renewable energy. Mahindra's Group CFO Amarjyoti Barua told PTI that despite these challenges, they have managed FY26 with their current actions but need to consider medium and long-term strategies.
Strategic approach
Mahindra building inventory through alternative sources
Barua revealed that the company has taken steps to build inventory through alternative sources. He said, "It has panned out well for us so far, and we do not foresee any major risk for the next nine months." However, he added that given their growth plans, they need to think about a larger strategy beyond tactical plays. This will require more engineering effort from their team.
Industry impact
Maruti Suzuki and Hyundai India update
Last week, Maruti Suzuki said its engineers are working to mitigate the rare earth magnet shortage issue. The company confirmed that there hasn't been any impact on production so far. Hyundai Motor India also confirmed that it isn't facing any production issues due to this shortage. However, in June, rating agency ICRA had warned about the potential depletion of rare-earth magnets used in critical automotive components by mid-July this year.