The European Union earlier introduced the Critical Raw Materials Act (CRMA), which set targets for the mining, refining and refining of critical metals such as lithium and cobalt needed for the green transition, in an attempt to reduce dependence on third parties, especially China. However, Reuters wrote on December 18 that although the EU has set targets for critical minerals, they are "out of reach" in the face of difficulties such as lack of funds, high energy costs and local opposition.
According to the report, global mineral processing is dominated by China, which the EU claims "poses a risk" to its access to raw materials. To get out of the lock-ins of China on critical minerals, the EU needs to find ways to cut demand, find alternative materials, and build partnerships with other companies. The Critical Raw Materials Act, which will come into force in early 2024, stipulates that by 2030, for 17 critical raw materials, the EU should provide at least 10% of the EU's annual consumption through local mining, at least 40% of its annual consumption through processing, and at least 25% of its annual consumption through **production.
Reuters noted that while the CRMA has proposed to speed up the approval process for EU-related raw material minerals projects, from the current 10 to 15 years to no more than 27 months, other hurdles remain.
The ore processing plant is scrapping aluminium metal from the European Commission.
Eurometaux, the European non-ferrous metals industry association, said Europe has the potential to meet its CRMA targets, but needs cheaper energy and more EU financing. By 2030, the identified projects could meet nearly 40% of the EU's metal**, but the exact figure is uncertain.
The EU has previously relaxed its rules on state subsidies and plans to spend 3 billion euros (about $3.3 billion) to boost battery production, but these amounts are insignificant compared to the $369 billion in green subsidies in the US Inflation Reduction Act (IRA). The EU once counted on European sovereignty** to finance the development of clean technologies, but then failed.
Industry groups point out that the gap in subsidy funding between the US and Europe is so stark that some miners are prioritizing US metal**, mining and smelting projects ahead of EU projects.
At the same time, higher energy costs in the EU have forced electricity-intensive metal smelters to idle on a large scale. EU aluminium production fell by 35% in 2022 and further this year, the data showed. The EU plans to reform its electricity market, but it will take time to ensure access to affordable renewable energy.
Lawrence Dechambenoi, global head of external affairs at global mining giant Rio Tinto, said that in the case of lithium metal, Europe urgently needs new mines. But Portugal has postponed the auction of a battery-grade lithium mining licence due to corruption scandals surrounding the project. Serbia revoked the license for Rio Tinto's $2.4 billion lithium project in 2022.
Faced with the dilemma of capital and energy costs, Niclas Poitiers, a researcher at Bruegel, a Brussels think tank, bluntly said that if Europe wants to achieve its ultimate goal of becoming a leader in clean technology, "supporting" mineral production may not be the best way, and buying minerals directly from reliable allies, or focusing on high-end products such as batteries, may be more appropriate.
Focus on manufacturing the most value-added parts and outsource low-value-added industries. This is the foundation of our wealth, and it is very difficult to change. Pothier said.
At the end of October, the European Union and the United States signed a memorandum of understanding to cooperate on the development of critical minerals with several African countries such as the African Finance Corporation (AFC).
As the world accelerates the transition to green energy and green economy, the United States and Europe have repeatedly "talked about China's color change" on industrial chain issues ranging from key minerals to electric vehicles, trying to build "small courtyards and high walls" to hinder the process of globalization.
In February, France and Germany** called for the creation of a "critical minerals buyers' club" during a visit to the United States. According to Wall Street, the agency was originally intended to reconcile the differences between the United States and Europe over the Inflation Reduction Act, but now another important purpose - "transferring the clean energy ** chain from China" is more exposed.
European Commission President Ursula von der Leyen previously said that the EU is heavily dependent on a small number of third countries in terms of strategic raw materials, and that "98% of rare earths come from China, 93% of magnesium comes from China, and 97% of lithium comes from China". She said she hopes to increase support for European companies to extract more ore in Europe.
In addition, on October 4, the European Commission launched a countervailing investigation into Chinese electric vehicles on its own without an application from the EU industry, which caused strong dissatisfaction from China.
In late November, the U.S. Treasury Department announced that starting next year, electric vehicles produced in the U.S. that contain battery components manufactured or assembled in countries such as China will no longer be eligible for the up to $7,500 tax credit provided by the U.S. Inflation Reduction Act. According to US media analysis, Biden's move is intended to "strangle" China's role in the US electric vehicle chain.
Wall Street** bluntly said in a report earlier this month that in the face of competition, whether it is the passage of the Inflation Reduction Act by the United States or the anti-subsidy investigation launched by the European Union against Chinese electric vehicles, it is a means to "stumble".
China has previously responded to the issue of critical minerals. At a regular press conference held in November last year, a reporter mentioned the issue of Australia and the United States trying to reduce their dependence on China's critical minerals through cooperation. In response, a spokesperson for China said that China has always believed that countries with critical mineral resources should play an active role in ensuring the safety and stability of relevant industrial chains, jointly assume the responsibility of global related minerals, and ensure the normal development of relevant economic and trade cooperation. At the same time, the world economy should not be politicized, instrumentalized, and reformed, undermining the stability of the global industrial chain and impacting the existing world economic system. China will continue to deeply participate in the global industrial division of labor and cooperation, and maintain a diversified and stable international economic structure and economic and trade relations.
This article is an exclusive manuscript of the Observer.com, and it is not allowed to be unauthorized and shall not be allowed.