After the rude awakening caused by the military aggression by Russia on Ukraine and the assessment of the overwhelming dependency of countries - especially Germany - on gas supply from Russia, thinktanks in the EU reflect about how not to repeat the same mistake with other commodities such as rare earths, titanium or graphite, writes WELT:
The Ukraine war and the gas crisis are causing politicians to view Europe's heavy dependence on a few raw material suppliers with greater concern than before. When it comes to mining and processing strategically important raw materials, countries such as China hold quasi-monopolies – and of all things when it comes to the materials on which the European energy and mobility transition depends.
The business-oriented think tank Center for European Politics (CEP) has now investigated how dependent the EU is on such raw materials. Germany and other European economies are therefore too dependent on raw materials from a few countries for future key technologies and should end this dependency as quickly as possible. "The chances of survival of the European economic and social model are also decided on the international commodity markets," says the unpublished study, which is available to WELT.
For the study, the researchers specifically identified resources that are indispensable for future technologies, but whose supply situation is critical. To do this, they brought together two analyses: on the one hand, a study by the German Raw Materials Agency (DERA), which identifies groups of raw materials that are essential for the energy transition and digitization, and on the other hand, a list from the European Commission of 30 raw materials for which there are supply risks.
The researchers have identified twelve substances that are equally promising and supply-critical. The list includes materials such as lithium, cobalt and rare earths, which also dominate the public debate about the scarcity of raw materials. However, substances such as titanium, graphite and more exotic substances such as scandium and vanadium also appear.
They are in wind turbines, solar systems, batteries for electric cars, fuel cells, electric motors or in microchips, displays and fiber optic cables. And for all the substances examined, a few or even just individual countries dominate the global supply.
"Not only is a large part of the relevant raw material deposits outside of one's own sphere of influence," says study author André Wolf. “The global markets are currently also predominantly dominated by countries that represent strategic rivals or that do not share the environmental and social standards that are essential for the EU’s self-image. The move away from fossil resources threatens to replace old dependencies with new, unwanted ones.”
The dominance of China is particularly striking: The country was the most important sponsor of eight of the twelve substances examined in 2020. If one also takes into account the processing of raw materials, China's dominance is likely to be even greater.
And the leadership in Beijing has shown in the past that it is willing to use this power. At the end of 2010, China had stopped exports of rare earths to Japan because of a diplomatic dispute in order to extort concessions from Tokyo.
The realization is not new, but Brussels and national capitals have been alarmed since Russia invaded Ukraine. The fact that geopolitical upheavals are jeopardizing the supply of raw materials is suddenly no longer an abstract danger.
“Russia is blackmailing us. Russia uses energy as a weapon,” said Ursula von der Leyen, President of the European Commission recently. There is concern in her authority and in the national capitals that such a scenario could happen again.
Because geopolitically the world threatens to split into two blocs again: on the one hand the western world, on the other hand countries like Russia, China and other authoritarian systems. Against this background, the EU states want to secure the supply of critical raw materials and end one-sided dependencies.
Two years ago, Industry Commissioner Thierry Breton's staff presented an action plan on raw materials, but it was relatively non-binding. Since the outbreak of the Ukraine war, the agency has tightened its course. In March von der Leyen announced a law on critical raw materials. The draft should be available by the end of the year.
One of the things discussed in Brussels is that companies or even states should build up strategic stocks of important raw materials. The increased mining of critical raw materials in Europe should also make the EU more independent from the rest of the world.
However, the CEP experts warn that the Commission's plans could overshoot the mark. In particular, the scientists consider plans to mine critical raw materials in Europe to be misleading. "Massive state support for the mining of future raw materials in the EU area would be a questionable strategy from an economic policy point of view," says the study.
The EU does have significant deposits of lithium and rare earths, for example. States like China are not only so dominant on the raw materials markets because of the deposits there, but also thanks to state subsidies, low wages and low environmental standards. “The EU cannot and should not copy such a strategy.”
Instead, in the short term, Europe should look around for new sources of raw materials in friendly countries that have large deposits, good infrastructure and share Europe's values. Norway, Canada and the USA in particular are ideal partners.
In fact, the EU is striving for such strategic raw material partnerships, but so far it has only agreed on two: with Canada and, of all places, Ukraine. However, a sense of proportion is required for the agreements, after all, new one-sided dependencies must not arise.
In the long term, the EU must expand the recycling of strategically important raw materials in order to secure supplies, write the CEP researchers. The EU Commission is also in favor of this. According to a study by the authority, the recycling rate for cobalt and platinum metals, which are mainly used for electric motors, was 20 percent in the EU in 2020. In the case of iridium or lithium, however, the quotas would be close to zero.
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