EU to establish European raw materials industry alliance

New York — The European Commission will establish a European Raw Materials Alliance later in September to ensure the secure and sustainable supply of raw materials to meet the need for clean and digital technologies to avoid different sectors competing with each other for finite resources.

EC Vice-President Maros Sefcovic told a Sept. 3 press conference that raw materials were critical for the ongoing transition toward a green and digital economy as well as growing and modernizing economies in a sustainable way, especially in the context of recovering from the coronavirus pandemic.

Sefcovic pointed out that Europe was currently highly dependent on a limited number of non-EU countries for its raw material, with 75%-100% coming from outside the EU and China supplying 98% of the EU's rare earth elements.

"Our strategic foresight tells us that the demand for raw materials is only going to rise. For example, Europe will need almost 60 times more lithium and 15 times more cobalt by 2050 for electric cars and energy storage alone. Demand for rare earth used in permanent magnets, critical for products like wind generators, could increase ten-fold in the same period.

"The simple truth also is that we are largely dependent on unsustainable raw materials from countries with much lower environmental and social standards, less freedoms or unstable economies," he said.

New alliance to be modeled on EBA

Sefcovic said the new alliance would be modeled on the "highly successful" European Battery Alliance and would outline concrete steps to respond to these challenges to make Europe more resilient and less dependent on others for the supply of critical raw materials.

"The Raw Materials Alliance will mobilize industrial and innovation actors, member states, the EIB [European Investment Bank], investors, social partners and civil society in order to help build our capacities along the entire value chains from mining to waste recovery and the task will be to identify bottlenecks, opportunities and investment cases or projects that should be operational by 2025," he said.

"Strategy foresight will be contributing continuously, as part of this we will look at vulnerabilities and capacities of member states in relation to raw materials, especially how member states put in place policies that increase our resilience," he added.

Sefcovic said it would not help to replace the current reliance on fossil fuels with one on critical raw materials, and to this end, the alliance would aim to assist in diversifying supply and making better use of the EU's available resources, while also applying the highest environmental and social standards.

The alliance would also promote the engagement of a strategic trade policy and economic diplomacy.

Sefcovic said it would also focus on scaling up the re-use, repair and recycling of products, with support for innovation for alternatives and resource efficiency.

He noted that 9.9 million mt a year of electrical and electronic equipment waste was generated in the EU, with around 30% collected and recycled, but critical raw material recovery was below 1%. He pointed out that if this rate increased, it could eventually satisfy a larger part of critical raw materials demand.

Lithium added to list of critical raw materials.

The EC also updated its critical raw materials list and action plan for 2020, adding lithium due to its economic importance.

Sefcovic said the EU had an overreliance on Chile for lithium supply, with the South American country currently providing some 78% of the EU's overall needs.

However, he said through the work of the EBA, domestic capacities were already being boosted, with key industry projects and sustainable mining and processing projects totaling almost Eur2 billion currently underway in Europe, with these expected to cover 80% of the EU's lithium needs in the battery sector by 2025.

Eurometaux welcomes EU policy support

In response to the announcement, European metals industry body Eurometaux said that the metals industry was willing to work through the upcoming European Raw Materials Alliance to address regulatory and financing bottlenecks and mobilize new investment into the wider range of metals needed.

It said the EU's critical raw materials list and action plan would recognize that shortages of metals used to make batteries and renewable energy could threaten the bloc's climate-neutrality objective and 25 CEOs and leaders from major European metals companies had declared their shared ambition for investing to help supply Europe's climate goals, with the right EU policy support in place.

"We welcome signals from EU leaders that they're ready to stand up and address our continent's growing metals insecurity, which could stand in the way of the bloc's climate-neutrality goal," Eurometaux President Mikael Staffas said.

"The reality is that Europe's been falling behind for years, losing its production capacity while China and others have massively expanded their global metals footprint. Turning the ship around will require a major EU policy shift and company action. We're keen to start working together with policymakers to address the regulatory & financial bottlenecks holding back new investments into metals mining, refining and recycling," he said.