Russia's invasion of Ukraine has given an unprecedented boost to the European Union's plans to kick its economic addiction to carbon. The objective of ceasing to depend on a gas and oil supplier as risky as Russia and therefore not being exposed to its blackmail suddenly goes hand in hand with strategies to curb climate change, such as promoting renewable energy and technologies such as the electric car.
The more the green transition progresses, however, the clearer the risks become, in particular the high dependence on the import of certain products and a handful of critical raw materials, especially the so-called rare earths, 17 difficult-to-obtain chemical elements . This is the case of lithium and the rare metals necessary for the motors of electric cars and wind turbines, the gallium and indium that we find in LED bulbs, the silicon in chips, platinum for hydrogen batteries...
Both the production and the processing of many of these materials are practically absent on the continent, which could make Europe once again highly dependent or even vulnerable to a third country, this time China, which in recent times has become has strongly benefited from the high prices in this competitive market in which all the powers are positioning themselves.
"The supply of many fundamental raw materials presents a high degree of concentration," warns the European Commission in its communication on critical raw materials, which in 2020 identified 30 materials as strategic, compared to 14 in 2011. The figures speak for themselves alone. 98% of the rare earths that the EU buys come from China, which enjoys a near-monopoly position in this sector worldwide. 98% of the borate comes from Turkey, while South Africa supplies 71% of the platinum the EU needs, plus an even higher percentage of iridium, rhodium and ruthenium.
The EU's greatest dependence is on China, its main supplier of antinomy (74%), bismuth (85%), fluorspar (65%), gallium (80%), germanium (80%), magnesium (89%) , natural graphite (69%), phosphorus (74%) and metallic silicon (66%), among others. Instead, 88% of the beryllium it imports comes from the United States; 59% of the cobalt, from the Democratic Republic of the Congo; 44% of the lithium, from Chile, and 92% of the niobium, from Brazil. Australia, Turkey, South Africa, Russia and Canada are also relevant actors.
Of the 20 critical raw materials indicated in the current European list, there are only two in which a Union country leads the world market. France is number one in the production of hafnium, a metal in high demand for superalloys and nuclear control rods, while Spain is the world's leading producer of strontium, a mineral used to produce magnets, medical equipment and electronic products such as chips. The two deposits of celestine (strontium sulfate) located in Granada represent 31% of its world production, slightly ahead of Iran (30%) and China (19%), which satisfy 100% of the European demand for this material. .
In view of the demand growth forecasts, these percentages are cause for concern. “Our needs for rare earths alone are going to multiply by five between now and 2030,” warned the president of the Commission, Ursula von der Leyen, in September. It is estimated that the EU will need 18 times more lithium and five times more cobalt than now between now and the end of the decade. By 2050, almost 60 times the amount of lithium and 15 times the amount of cobalt will be needed compared to the current EU supply. The conclusion of the technicians is clear: without a previous proactive strategy, Europe risks suffering supply problems.
To respond to these challenges, the European Commissioner for the Internal Market, Thierry Breton, will present in March a proposal for a law on critical raw materials with a wide range of measures designed to preserve supply while committing to European strategic autonomy. The starting point is the diversification of suppliers, contributing "a strategic vision" to the signing of commercial agreements, as has recently been done with Chile. "But if we only bet on foreign diversification, we would be depriving ourselves of knowledge, employment and, above all, autonomy and ability to act," warns Breton.
First of all, Brussels will point out a dozen especially critical raw materials for which clear objectives will be set in terms of extraction, processing and recycling. Breton will also propose to identify a series of strategic European projects that should be facilitated in obtaining permits, always within the rest of the environmental legislation in force, community sources explain to Dinero. There are several business initiatives underway that are eligible for recognition in this category, which will give them access to public funding through the European Investment Bank. Right now, however, the main challenge is the lack of private investment, hence the importance of signaling to the market that this is a priority sector for the EU.
Brussels is also considering proposing the creation of strategic reserves for certain raw materials, but for the moment there is no consensus on the matter. On the other hand, it is clear that the creation of a European recycling market will be promoted to ensure that, once certain metals and minerals arrive in the EU, they are not taken to third countries for reuse. Finally, it will be proposed that the national agencies that monitor these markets work in a network to identify price and supply fluctuations and thus be able to react in time to avoid situations of shortage. Awareness of the urgency of acting in this field has increased since the legislature began, say community sources, which evoke the "common concern" that exists at the business and political level. “Even the German Greens are aligned with our proposal, the whole world has realized that without critical raw materials there will be no green transition.”
The economist Marie Le Mouel, an analyst at the Bruegel study center, differentiates between the accessibility of the different metals and minerals and, warns, the real risk for the energy transformation is the dependence on the importation of finished products necessary for the change in the energy model . “The green transition is going to require huge amounts of base metals like aluminium, copper, nickel and zinc. These are products that are sold in global markets and security of supply is not an immediate concern”, although the deployment of renewables will increase “considerably” the necessary volumes of aluminum and copper.
"In the long term, as the EU and the rest of the world try to decarbonise their economies, the demand for rare earths will be massive," says this economist. “The global supply chain for raw materials will need to be strengthened to respond to this demand,” says Le Mouel, an expert on decarbonization. “What poses a risk to the objectives of the green transition in Europe is access to finished green technologies, especially solar panels. In other cases, Europe has a strong manufacturing position in finished goods, such as turbines and electric cars, but here the vulnerability is in intermediate components; in the case of wind turbines, we mean permanent magnets, and electric vehicles, batteries,” she points out.
The European Commission has proposed this week to complete the European green pact with an industrial development program that encourages the development of clean technologies in the EU. The other leg of the strategy will be the law on critical raw materials. A fact is repeated tirelessly in all these forums to give an idea of the challenge that lies ahead: an electric car requires five times more metals than a conventional vehicle.
