Why discovery of Europe's largest rare earths deposit 'doesn't mean anything yet'

16 January 2023

One million tonnes of rare earth minerals have been identified in the largest known deposit of its kind in Europe, offering the potential to reduce reliance on China for supplies.

Mining firm LKAB discovered the deposit in the city of Kiruna in northern Sweden. Rare earths are essential for the green transition because they are used in the manufacturing of electric vehicles and wind turbines. 

No rare earth elements are currently mined in Europe, and the European Union (EU) currently sources 98% of its rare earth elements from China, leaving it vulnerable amid rising geopolitical tensions.

The demand for rare earth elements is expected to increase fivefold by 2030 due to demand for green energy and electrification, according to the European Commission (EC). 

The EU is “virtually import-dependent” for the raw materials, LKAB said.

Jan Moström, president and group CEO of LKAB, said: “This is good news, not only for LKAB, the region and the Swedish people, but also for Europe and the climate.”

He said the discovery “could become a significant building block” for producing critical raw materials that are “absolutely crucial to enable the green transition”. 

However, LKAB warned the “road to possible mining of the deposit is long”.

Moström said it will “be at least 10-15 years” before the firm can begin mining the elements due to a lack of mining infrastructure.

“We expect that it will take several years to investigate the deposit and the conditions for profitably and sustainably mining it. We are humbled by the challenges surrounding land use and impacts that exist to develop this into a mine and that will need to be analysed to see how to avoid, minimise and compensate for it. Only then can we proceed with an environmental review application and apply for a permit,” he said.

Kiruna, Sweden's most northern city, was established as a mining community in 1900 and is home to the world's largest underground iron ore mine, according to the Swedish government.

Nabeel A Mancheri, secretary general of the Rare Earth Industry Association, warned the discovery will not help reduce Europe’s dependency on China for the materials any time soon.

He told Supply Management: “In the short term it doesn’t mean anything as they say it will take 15-20 years to develop the project. Even if they develop the project, Europe needs to develop the rest of the sectors in the value chain to reduce the dependency on third countries.

“Just mining doesn’t help here, Europe needs to develop and build factories on metals making, and rare earth permanent magnet manufacturing capacitors as well.”

Ebba Busch, Sweden’s minister for energy, business and industry, said: “Electrification, the EU’s self-sufficiency and independence from Russia and China will begin in the mine. 

“We need to strengthen industrial value chains in Europe and create real opportunities for the electrification of our societies. Politics must give the industry the conditions to switch to green and fossil-free production. Here, the Swedish mining industry has a lot to offer.”

The EU announced a Critical Raw Materials Act last year, which looks to reduce dependency on China by supporting projects and attracting private investment into local mining, refining, processing and recycling.

Ursula von der Leyen, EC president, said in September that “lithium and rare earths will soon be more important than oil and gas” and the EU “must avoid becoming dependent again,” as it did previously with Russian oil and gas supplies. 

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