Several minerals are presently essential materials for the High- tech and renewable energy sectors worldwide. They include the rare earth elements and other metals such as lithium, indium, tellurium, gallium, and platinum group elements. Since 2011 the EU has compiled a list of critical minerals that is reviewed every three years. The list include 27 materials so far. The next review is scheduled by 2020.
In 2018, the Commission published the “Report on Raw Materials and the Circular Economy”. Despite the usual polite, aseptic language of the European Commission, the report is very clear: technological developments and the rapid growth of emerging economies are driving a frantic, dramatic race to a number of highly sought metals and minerals. Their future global resource use could double between 2010 and 2030. However, like fossil fuels, minerals are finite.
The Commission’s latest assessment show the EU is depended on China for 62% of its 27 critical raw materials. China is the dominant player in the extraction and processing of rare earths and other important minerals to fuel the development of renewable energy. Rare earths are used in wind turbines, and lithium used in electric car batteries. Renewable energy technologies generally require more minerals than fossil fuel-based counterparts. An electric car uses five times as much minerals as a conventional car and an onshore wind mill requires eight times as much minerals as a gas-fired plant of the same capacity. The access to these minerals and materials will define who is in a strong position for the low-carbon transition. Given the increasingly complicated EU-China relationship, there is growing concern on the need to secure a steady flow of valuable raw materials for the EU economy while easing dependence from China. However, domestic mining in the EU is decreasing and import dependency is increasing.
The EU Green Deal recognizes and highlights the strategic importance of securing the supply of clean and affordable energy and raw materials to fulfil EU’s ambition to become climate-neutral by 2050. Greater resource efficiency and recyclability are key elements of the circular economy actions embedded in the Green Deal, and they should help filling the gaps in geological availability and supply of mineral resources. The post-pandemic recovery plan – “Next Generation EU” – aims to further promote strategic autonomy for EU’s key raw materials. However, in many critical raw materials, Europe is resource-poor, and the ability for Europe to increase its mining activity is limited. Industry players complain about the lack of information concerning which materials are available for mining, and are trying to convince the Commission to increase EU’s raw material tracking and mining.
Commission Vice-president Šefčovič is keen to give the EU mining sector a chance on critical minerals. Speaking at a video conference with a group of high-level representatives from industry to discuss how the European Battery Alliance (EBA) can contribute to the European Union’s post coronavirus recovery, he announced four sustainable lithium mining projects totalling € 2 billion have been launched in Europe (ES, PT, DE/CZ, DE/FR), and should be in operation by 2022-2024. Their impact will be significant as they are set to meet up to 80% of Europe’s lithium needs by 2025, thus contributing directly to the EU strategic autonomy. Other potential mining sites are beginning to appear. There are rare earth projects in Norway, and cobalt in Finland.
Even if these projects were successful, they wouldn’t ensure self-sufficiency in the extraction and processing of critical raw material. Additionally, a major question is how they can compete against cheaper imports from abroad. Mining also remains controversial. In Europe, negative perceptions prevails. Regular reports on the environmental and social impacts of mining minerals such as cobalt in Africa reinforce this perception. Therefore, geopolitical hazards associated with the production of many minerals that are essential for energy transitions will likely multiply in the near future, risking to re-proposing scenarios we have experienced throughout the development of the fossil fuels economy.
The Commission seems convinced the EU could use it trade policy leverage to get better environmental and social conditions abroad. The European Investment Bank finances several mining projects in the African, Caribbean, and Pacific (ACP) countries. The Bank claims it pays particular attention to environmental sustainability, the mitigation of and adaptation to climate change, natural resource management, protection of biodiversity and safeguards to improvements of the general and urban environment. However, in December 2018 the European Ombudsman concluded that the EIB mishandled complaints about a major mining project it financed in Madagascar. The Ombudsman ruled maladministration for the EIB massive delays in handling the case and highlighted the poor monitoring on the implementation of the nickel-cobalt mining project on the ground. The project, financed by the EIB in 2007 through a EUR 215m loan failed to bring economic growth to the region, and rather provoked serious social and environmental problems to the surrounding areas and the local communities.
The International Energy Agency has sounded the alarm about the challenges for stable sourcing of minerals amid growing social and environmental concerns in countries producing minerals. It suggests several measures that governments and companies can implement to promote security of mineral supplies. Above all, as energy transition move higher up government agendas, policy makers and the society at large need to be ready to address the challenges of a new paradigm for energy security arising from the rush towards the exploitation and use of critical minerals.