EU to form €20bn Critical Materials club

EU to form €20bn Critical Materials club

Business news |
By Nick Flaherty

The European Union is looking to create a Critical Raw Materials Club to bring together all interested countries that use and produce materials for batteries and green tech to strengthen global supply chains.

This will see investment of over €20bn by 2030, says Thierry Breton, commissioner for the internal market. 

“You have to invest quickly and massively. Just to meet our needs for raw materials for batteries (lithium, cobalt, nickel, manganese and natural graphite), more than €20bn will have to be invested by 2030. However Europe accounts for less than 3% of global spending on mineral exploration,” he said.

This will have global competition issues, particularly with the US and China that will have to be addressed with reforms at the World Trade Organisation.

“Our wider goals of reform of the WTO and to empower it to do more in the climate and sustainability space fit perfectly with this approach,” said Executive Vice-President Valdis Dombrovskis, the EU Commissioner for Trade.

“The bottom line is that we want to be leaders in the green industries of the future. To make this happen, we need critical raw materials – or CRMs – and here, our needs are very clear. Demand for critical raw materials will grow many times over the next decade,” said Dombrovskis.

For the desired level of wind turbine production, demand for rare earth metals is expected to be 5 to 6 times higher by 2030 and 6 to 7 times higher by 2050.

Electric vehicle battery production will see demand for lithium is expected to be 12 times greater by 2030 and 21 times higher by 2050.

“However, we are not a resource-rich continent. Our domestic supply will provide only a fraction of the critical raw materials we need. For many of the critical raw materials , we depend heavily on a small pool of partners. Sometimes, just one partner. This is not a stable nor reliable way to build the industries of the future, so we urgently need to diversify.”

“Our goal is that by 2030, our capacity should reach at least 10% of domestic demand for mining and extraction, at least 40% for processing and refining, and at least 15% for recycling.

“The production chains for CRMs are global, and complex so we need to use our traditional strength of building relationships based on openness, trust, mutual gain, and clearly defined rules. We know that many resource-rich countries are keen to attract partners to develop their own critical raw materials value chains sustainably. And the EU can help – with its institutional know-how and investment power to support capacity-building. This can also promote better product quality, more innovation and reduce costs. As a result, our partner countries will be in a strong position to move up the value chain themselves.”

He points to recent free trade agreements with New Zealand and Chile, which have dedicated raw materials chapters, and the Commission is working on a free trade agreement with Australia, which will also have a raw materials chapter as part of a trade deal alongside strategic partnerships with Canada, Kazakhstan, Namibia and Ukraine.

It is also working to expand our network of critical raw materials partnerships in our region – with Norway and Greenland, and further afield, with the Democratic Republic of Congo and Rwanda in Africa and Argentina.

But it is the US with the Inflation Reduction Act that is subsidising battery makers and the subject to trade negotiations

“We are working on a targeted agreement with the United States aimed at helping to build a green transatlantic marketplace. Specifically, we want to achieve FTA-equivalent treatment for raw material supplies in the context of the Inflation Reduction Act,” he said.

“There is no European Green Pact possible without a “Clean Tech” manufacturing base or without a secure and sustainable source of supply for critical materials,” said Breton. He points to raw materials in solar panels, heat pumps, electric cars and  semiconductor raw materials as essential for technologies and products of strategic importance.

“But the sources of supply of critical minerals are highly concentrated in a few countries. 99% of boron ̶ used for wind turbines, permanent magnets or semiconductors ̶ comes from Turkey. And 97% of the magnesium ̶ essential for the manufacture of telephones, computers or even satellites ̶ comes from China,” he said.

“Strengthening our capacities in critical raw materials does not mean closing ourselves off from our external partners in a protectionist approach. On the contrary. At the same time, we must secure our supply by developing mutually beneficial partnerships with third countries. One will not go without the other.

This will see strategic projects throughout the value chain, in Europe but also beyond, that accelerated environmental permit procedures and easier access to financing.

The permit procedures are too long, he says, taking five years for a mining permit “We will reduce it by more than half,” he said. And he points to more recycling, especially around permanent magnets. Only 12% of the materials used in the region are recycled into the economy today.

This will require modernization of the single market in the same way as the Data Act and Digital Governance Act. “We continue with the launch today of a public procurement data space,” he said,


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