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Europe races to fix its rare earths import dependency: Report

The date of: 2021-10-11
viewed: 10


LONDON: Europe is on a mission to wrest back control of its rare earth magnet supply chain from China.

Permanent magnets, commonly using a neodymium-iron-boron chemistry, are one of the hidden enablers of modern technology, powering everything from robots to refrigerators to laptop speakers.

They also help power electric vehicle (EV) and wind turbine motors, placing them at the heart of the energy transition.

However, as the rest of the world has come to realise, these critical minerals are also critically dependent on China, which dominates the global supply chain from rare earth processing through magnet production.

The United States has already laid out a funding and policy strategy to build out its domestic rare earths capacity.

Now it is Europe's turn.

'A European Call for Action' by the Rare Earth Magnets and Motors Cluster, part of the European Raw Materials Alliance (ERMA), proposes fast-tracking 1.7 billion euros of investment into projects to kick-start a regional mine-to-magnet processing industry.

The European Union (EU) imports around 16,000 tonnes per year of rare earth magnets from China, accounting for around 98% of the bloc's needs.

Demand is only going to grow as EV production and sales scale up. Around 95% of all EVs use traction motors containing rare earths and global usage from this sector alone is forecast to rise from 5,000 tonnes in 2019 to 70,000 tonnes per year in 2030.

As a consequence the 'political impact of not regaining control over the rare earth value chain is tremendous', according to ERMA's Sep. 30 report.

While the global magnet market itself is relatively small at around 6.5 billion euros, 'its downstream leverage is enormous', the report's authors note. The EU27 mobility and automotive sector alone is forecast to grow to around 400 billion euros with six million jobs by 2030, all of which is at risk from magnet supply disruption.

Europe currently has one rare earths separation facility, Estonia's Neo Performance Materials, and a very limited number of magnet makers, the largest of which is Germany's Vacuumschmelze.

All are trying to compete with China, where the rare earth supply chain is considered a 'highly strategic asset' and the largest producers are 'state owned and (...) sustained by various direct and indirect state subsidies', according to ERMA.

The guiding question, it argues, should not be whether EU manufacturers can compete with Chinese ones - a European magnet costs around 20-30% more than a Chinese one right now - but rather what are the real costs of having a sustainable regional supply chain.

And indeed the real costs of 'not having access to these materials at a given point in time'.


Given the immense challenges of trying to compete with China's rare earth magnet monopoly, the report's proposals are for a pan-European state-led investment drive.

ERMA has already identified 14 projects spanning the value chain from mining (Finland, Norway, Sweden), separation (Poland), metallurgy (Estonia), recycling (Belgium and France) and magnet making (Germany and Slovenia).

The cumulative 1.7-billion euro investment would lift European magnet production from 500 tonnes per year to 7,000 tonnes by 2030, covering around 20% of European demand.

ERMA proposes the creation of a new raw materials bridge fund to de-risk projects and an IPCEI for the magnet sector. A so-called Important Project of Common European Interest facilitates the navigation of Europe's state subsidy rules for strategic sectors.

There have already been two such investment rounds in the battery materials sector, the last one in January of this year, when 12 member states contributed 2.9 billion euros of funding.

At least four member states have indicated they would support a similar funding mechanism in the rare earths sector, according to ERMA.

Even more fundamentally, the call for action includes the European Commission exploring 'measures to balance

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