Why an alliance is being formed to secure raw material supplies

7 September 2020

The European Commission (EC) is establishing a European Raw Materials Alliance with the main aim to “increase EU resilience in the rare earth and magnet value chains”.

The EC said these materials would be instrumental to key industries going forward, including renewable energy, defence and space, and the alliance would bring together all the relevant stakeholders.

The EC has drawn up an action plan to address current and future supply chain challenges to support the transition towards a green and digital economy, and “bolster Europe's resilience and open strategic autonomy in key technologies needed for such transition”.  

“Improving the resilience of critical supply chains is also vital to ensure both the clean energy transition and energy security,” said a report.

At the same time four new minerals – bauxite, lithium, titanium, and strontium – have been added to the EU Critical Raw Materials list

Bauxite is used for aluminum production and the EU has an 87% reliance on Australian imports. Lithium is used for batteries, glass and metal production and relies 100% on imports. Titanium is used for metals in aeronautics, space, defence and medical equipment and relies 100% on imports, and strontium is used in fireworks, medical equipment and magnets. 

Maroš Šefčovič, vice-president for interinstitutional relations and foresight at the EC, said: “A secure and sustainable supply of raw materials is a prerequisite for a resilient economy. For e-car batteries and energy storage alone, Europe will for instance need up to 18 times more lithium by 2030 and up to 60 times more by 2050. 

“We cannot replace current reliance on fossil fuels with dependency on critical raw materials. This has been magnified by the coronavirus disruptions in our strategic value chains. We will therefore build a strong alliance to collectively shift from high dependency to diversified, sustainable and socially-responsible sourcing, circularity and innovation.”

The EC said: “Through the European Battery Alliance, public and private investment has been mobilised at scale and should lead to 80% of Europe’s lithium demand being supplied from European sources by 2025.”

The action plan will reduce risk of “unexpected disruptions” and dependency on global sources through circular economy resources and sustainable products, domestic sourcing, improved inventories, alternative supply sources, strategic international partnerships, and increased investment. 

A number of actions were outlined in the plan including identifying domestic mining and processing projects to put into production by 2025, the use of the earth-observation programme Copernicus to improve resource exploration, and research into new mining and processing technologies and recycling. 

The EC will develop strategic international partnerships to source supplies outside of Europe, including relationships already established with Canada, Africa and neighbouring EU countries.

The plan was prompted by the need for more resilience in the critical raw materials supply chain as industry is tackling barriers such as “highly concentrated” global markets, lack of investment and innovation, pandemic supply chain shocks, public acceptance and the need to boost sustainable sourcing.

“Gaps in EU capacity for extraction, processing, recycling, refining and separation capacities (e.g. for lithium or rare earths) reflect a lack of resilience and a high dependency on supply from other parts of the world,” said the report.

The report highlighted that the Covid-19 crisis triggered many countries to assess how they organise their supply chains, especially where raw materials sources are highly concentrated and at higher risk of supply disruption. 

According to the EC, China provides 98 % of the EU’s supply of rare earth elements, Turkey provides 98% of the EU’s supply of borate, and South Africa provides 71% of the EU’s needs for platinum, and an even higher share of the platinum group metals. The EU relies on single EU companies for its supply of hafnium and strontium. 

Thierry Breton, commissioner for internal market at the EC, said: “A number of raw materials are essential for Europe to lead the green and digital transition and remain the world's first industrial continent. We cannot afford to rely entirely on third countries – for some rare earths even on just one country. 

“By diversifying the supply from third countries and developing the EU's own capacity for extraction, processing, recycling, refining and separation of rare earths, we can become more resilient and sustainable.

“Implementing the actions that we propose today will require a concerted effort by industry, civil society, regions and member states. We encourage the latter to include investments into critical raw materials into their national recovery plans.”

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