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Europe taking steps to cut reliance on China for raw materials

The date of: 2021-06-21
viewed: 9


Speaking at the European Raw Materials Alliance Summit, the European Commissioner for Internal Market, Thierry Breton, rang the alarm bell regarding the EU’s dependence on third countries for 99 products – mostly raw materials – needed for the energy-intensive industries ecosystem. 

Breton made a case point regarding rare earths supply, 98% of which are delivered to Europe from China, either raw or refined. 


“It is not an enviable position to be in, but we are not alone: the US, Japan, the UK, Canada, Australia, India and others are rushing to address this vulnerability as well,” the commissioner said. “I believe we are in a similar situation with rare earths and permanent magnets as we were a few years ago with batteries and lithium: Total dependence on China, very limited EU production, no European regulation to encourage ethical sourcing of rare earths, create demand for recycled materials or give a competitive advantage to European manufacturers through carbon footprint requirements, and downstream industries which benefit from the current situation in terms of cost/benefit ratio.”

Given this context, Breton said that it is important for member states and regions to follow the directions established in the EU Action Plan on Critical Raw Materials and work together on identifying critical raw material and rare earths mining, processing and waste valorization projects that can be operational by 2025. 

The former French Minister of Economy pointed out that to work towards this goal, the EC has set up the European Raw Materials Alliance, ERMA, to deal with the rare earths magnets and motors value chain as a priority.

According to Breton, ERMA has prepared an investment pipeline that is expected to contribute to solving the dependency problem. 

“If these projects were realized, 20% of Europe’s rare earth needs could be sourced from the EU. Up from close to zero today,” he said. What is needed now is to find financing, both public and private.”

In his view, the national recovery plans could provide funding in this respect, which would be aided by the Important Projects of Common European Interest, IPCEIs. This initiative is available to member states to de-risk investment and mobilize private actors.

“Secondly, I will also launch a dialogue with downstream market players. I have already spoken with rare earth and magnet producers, so I know that it is feasible for the EU to diversify throughout the whole supply chain, from rare earths to magnet recycling. Now it is time to speak with the downstream manufacturers in the automotive, wind energy, defence and digital sectors using these magnets about what their concerns are and how they can contribute to resilient EU value chains,” Breton said. 

As a third pillar in the strategy to reduce Europe’s reliance on China, the Commissioner for Internal Market said that as part of the EU Action Plan, his office has been fostering a number of partnerships with resource-rich countries to secure a diversified supply of sustainably mined critical raw materials away from a single source. These partnerships focus on the integration of raw material value chains between the EU and third countries, cooperation in the area of research and innovation and social and environmental criteria.

Breton highlighted a recent deal signed with Canada but said that the goal is to also connect with some African countries, while the partnerships on the ground are to be implemented by the members of the European Raw Materials Alliance and the European Institute of Innovation and Technology.

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