Europe risks being left behind in global race for critical raw materials supply base

Although the ‘Brussels Effect’ may have influenced global markets by setting strict regulatory standards for Critical and Strategic Raw Materials (CSRM), Europe risks being left behind by other global players when it comes to building a resilient supply base.

An analysis of the French Institute of International Relations (Ifri), a think tank based in Paris, assesses European de-risking policies in the context of international concerns over the concentration of supplies and capabilities in the hands of a few countries, particularly China.

China’s export controls on materials such as germanium, gallium, and rare earths highlight the risk of using critical dependencies as a geopolitical tool. This has driven countries in the Organisation for Economic Cooperation and Development (OECD) to focus on national security, strategic autonomy, and the governance of critical raw materials (CRM) supplies.

Both the EU and the United States have implemented policies to diversify their supply chains. The bloc’s approach through legislation like the Critical Raw Materials Act (CRMA) and the Green Deal emphasises sustainability and strategic autonomy.

The US emphasises national security, with investments in new supplies through funding mechanisms like the Development Finance Corporation (DFC). Japan has also begun addressing CRM dependencies as early as 2010.

Offering alternatives

The EU and US have increased bilateral and multilateral CRM partnerships since 2021 as an alternative offering to China’s Belt and Road Initiative. Yet, the analysis states that these initiatives need to deliver tangible benefits quickly to be effective.

Elsewhere in the world, Middle Eastern countries are seeking to integrate into CRM value chains, while resource-rich developing nations aim to retain more value locally by focusing on processing and manufacturing.

Although the EU is praised for its progress in defining its CRM needs and ambitions, the lack of external financing risks falling short of strategic goals. The analysis mentions challenges such as limited funding, public opposition, and volatile market conditions as factors that can hinder Europe from building a resilient CRM supply base, eventually leaving it behind other global players like the US, Japan, and Middle Eastern countries.

Reshaping geopolitics

The global race for lithium, nickel, and rare earth elements (REEs)–crucial for achieving green energy goals–is reshaping geopolitics and intensifying international tensions with countries striving for independence.

This analysis describes the EU’s CRMA as “a bold move to reduce energy dependency on China by ramping up the production of essential minerals needed for everything from clean energy to advanced computing.”

Similar to the previous analysis, it also notes the challenges the EU faces in its efforts to diversify sources amid supply risks and persisting geopolitical tensions. Global competition for resources has led to trade conflicts, with restrictions on exports affecting international relations.

Recycling and innovation in reducing CRM usage are key focuses under the CRMA, but challenges remain, especially with low recycling rates for certain materials. The EU is investing in research and development to improve recycling and explore alternative technologies, but these efforts require substantial financial support.

The analysis concludes that the EU needs a balanced approach that includes developing local supply chains, securing CRM imports, fostering strategic partnerships, and making significant investments if the bloc wants to meet its climate neutrality goals by 2050.

Mining modernised

To meet the target of extracting 10 per cent of its annual demand for key raw materials needs by 2030, set in the CRMA, the EU must significantly boost its metal extraction and refining capabilities.

According to EIT RawMaterials, the bloc needs at least ten new mines, 15 processing plants, and 15 recycling facilities to achieve this goal, but public opposition is a major hurdle.

Peter Tom Jones, a sustainable mining expert, speaks of the need for public support and education to change perceptions about modern, environmentally responsible mining practices, which differ from outdated notions of mining.

He highlights that modern mining is essential for producing clean technologies, underscoring the importance of promoting responsible mining models, which includes building relationships with local communities and prioritising environmental, social, and governance (ESG) standards. Nordic countries serve as examples.

The expert stresses the importance of educating the public and policymakers on the necessity of local mining to reduce dependency on less sustainable sources outside Europe. He argues that responsible mining within Europe is preferable to importing materials from countries with lower ESG standards.

Jones finally urges the EU to balance opposition to new projects with the broader public interest, ensuring the CRMA’s goals are met. He envisions a future where mining operations are safe, automated, climate-neutral and integrate local communities as stakeholders.

“A modern mine worker is not digging into rocks with a pick and shovel but operates a hi-tech mining device with a Playstation controller while sitting in a nice, air-conditioned control room. So, let’s use a Playstation-like icon for the future,” Jones said.

[Edited By Brian Maguire | Euractiv’s Advocacy Lab ]