February 24, 2024

The EU is very depending on third nations to acquire the uncooked supplies wanted for the vitality transition and digital transformation.

Russia’s battle in Ukraine and the necessity to divest from fossil fuels to fulfill local weather targets have prompted the EU to hurry up its inexperienced transition in current months, however have additionally pressured it to acknowledge its dependencies on entry to uncooked supplies. elementary premiums.

Within the international race for uncooked supplies, the EU faces a number of challenges.

The primary is China, which not too long ago started proscribing gallium and germanium exportstwo important metals for the manufacturing of semiconductors, in response to Western obstacles to Beijing’s entry to microprocessing expertise.

The EU considers each supplies of nice strategic significance. Along with semiconductors and different digital gadgets, they’re used for navy purposes corresponding to missile protection and radar techniques.

Beijing’s restrictions are a stark warning at a time when the EU is making an attempt to diversify and enhance home provides of uncooked supplies to scale back reliance on third nations.

Dependency on “low governance” nations

However diversifying provide chains might power the EU to supply from nations that don’t meet the identical requirements.

Current information signifies that EU sourcing is very depending on nations with a low stage of governance, primarily based on indicators corresponding to political stability, rule of legislation and management of corruption.

The EU’s Crucial Uncooked Supplies Act (CRMA), handed in March this yr, stipulates that strategic EU tasks to extend provide have to be assessed bearing in mind all facets of sustainability, together with environmental safety. , socially accountable practices and respect for human rights, corresponding to girls’s rights.

However many nations that offer the EU should not aligned with European values. This raises considerations in regards to the affect on native communities the place the supplies are mined, in addition to the potential exploitation of pure assets.

For instance, the Democratic Republic of Congo, whose governance indicators are among the many lowest on this planet, provides 63% of the EU’s cobalt, important for making batteries for electrical autos.

Diversifying the availability, a problem

The EU can also be extremely depending on a single nation for key supplies corresponding to magnesium (China, 97%), lithium (Chile, 97%), iridium (South Africa, 93%) and niobium (Brazil, 92%). . These dependencies make provide chains weak.

The Crucial Uncooked Supplies Regulation goals to make sure that no third nation provides greater than 65% of the Union’s annual consumption of any uncooked materials.

However diversifying the availability is complicated when the processing of many important supplies is monopolized by one or a number of world powers. China dominates the marketplace for processing many important uncooked supplies.

The Russian invasion of Ukraine and the following vitality disaster have highlighted the grave risks of over-reliance on the availability of uncooked supplies. The more and more antagonistic stance of China and the political instability of many African nations have additionally served as a reminder of the fragility of the EU’s commerce relations.

A spiraling international demand

Demand for uncooked supplies is skyrocketing as developed nations rush to digitize and decarbonise their economies. This will solely occur with a ample provide of uncooked supplies, which signifies that nations should increase their extraction, processing and recycling operations.

The worldwide demand for lithium, for instance, will multiply by 89 by 2050, in accordance with the European Fee. The demand for gallium will multiply by 17 in the identical interval.

The Crucial Uncooked Supplies Regulation units targets for the Union to extract 10%, course of 40%, and recycle 15% of its annual consumption of uncooked supplies by 2030.

To satisfy these targets and compete on the world stage, the President of the European Fee, Ursula von der Leyen, has said that the EU must speed up funding in analysis and improvement, recognizing that the bloc’s international share of R&D spending It has fallen by 10% within the final 20 years.