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EU to model Critical Raw Materials Act on CHIPS Act

Business news |
By Nick Flaherty

The availability of key raw materials such as lithium, cobalt and rare earths are critical for the production of batteries for electric vehicles, and the EU is planning moves similar to the European CHIPS Act to build processing plants.

Speaking at the State of the Union, Ursula von der Leyen, president of the European Commission, also pointed to the Battery Alliance, which has stimulated the development of battery gigafactories across the region.

 “Lithium and rare earths will soon be more important than oil and gas and our demand for rare earths alone will increase fivefold by 2030,” she said.

“The only problem is that a single country currently dominates almost the entire market. We must avoid becoming dependent again, as with oil and gas. This is where our trade policy comes into play,” she said

The EU has negotiated deals with Chile, Mexico and New Zealand and is advancing negotiations with major partners such as Australia and India.

“But securing supplies is only a first step.The processing of these metals is just as critical,” she said.

“Today, China controls the global processing industry. Almost 90 % of rare earths and 60 % of lithium are processed in China. We will identify strategic projects all along the supply chain, from extraction to refining, from processing to recycling. And we will build up strategic reserves where supply is at risk,” she said.

“This is why I am announcing a European Critical Raw Materials Act,” she said.

“We know this approach can work. Five years ago, Europe launched the Battery Alliance. And soon, two third of the batteries we need will be produced in Europe. Last year I announced the European Chips Act and the first chips gigafactory will break ground in the coming months.”

“We now need to replicate this success. This is also why we will increase our financial participation to Important Projects of Common European Interest (IPCEI) and for the future, I will push to create a new European Sovereignty Fund,” she said.

This is part of a wider set of changes being proposed.

“We need an enabling business environment, a workforce with the right skills and access to raw materials our industry needs,” she said. “Our future competitiveness depends on it.”

Ukraine is a major potential supplier of lithium, and the invasion by Russia highlighted the vulnerability of the supply chain.

“Ukraine is already a rising tech hub and home to many innovative young companies. So I want us to mobilise the full power of our Single Market to help accelerate growth and create opportunities,” she said.

“In March, we connected successfully Ukraine to our electricity grid. It was initially planned for 2024. But we did it within two weeks. And today, Ukraine is exporting electricity to us. I want to significantly expand this mutually beneficial trade. We have already suspended import duties on Ukrainian exports to the EU [and] we will bring Ukraine into our European free roaming area,” she added.

Details of the framework for the Critical Raw Material Act are emerging. “Our twin green and digital transition will live or die through the functioning of our supply chains,” said Thierry Breton, Commissioner for the Internal Market,

“The USA, Japan and South Korea are all deploying sizable support and investments to lessen their dependence on the extraction, processing and recycling of critical raw materials. As a result, we are experiencing a global race for the supply and recycling of critical raw materials,” he said.

“This is a major concern for all our industrial ecosystems, pushing them to act, sometimes in a scattered manner: last month, two leading German automakers signed a partnership with the Canadian government, notably deepening cooperation on sustainable critical mineral supply chain.

“We have to build a more resilient supply chain, supporting projects and attracting more private investment from mining to refining, processing and recycling,” he said.

“Our industrial alliances in the fields of batteries, chips and hydrogen have successfully helped build partnerships, identify project pipelines, mobilise private and public funding, and address regulatory challenges.”

Vulcan Energy Resources is developing technology for the extraction of lithium from geothermal water for electric vehicle battery production in the south-west of Germany, with a zero carbon footprint of production.

Under the Upper Rhine Graben between Basel and Frankfurt am Main is one of the world’s largest deposits of this raw material. “Producing lithium in the Upper Rhine Graben will not only significantly reduce the CO2 footprint of batteries and thus of electric cars, but also establish a reliable supply of this key raw material that is independent of international supply chains,” said the company.

“We welcome the announcement from European Commission President von der Leyen of a new Critical Raw Materials Act & the extension of IPCEI funding to mining, refining, recycling & other raw materials projects,” it said.

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