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To reduce Europe’s dependence on rare earths and lithium, to avoid supply disruptions, Commission President Ursula von der Leyen announced on Wednesday 14 September that the European Union will build up strategic reserves.
Europe no longer wants the scenario of the energy crisis linked to the invasion of Ukraine to repeat itself with rare earths and lithium. Materials necessary for the manufacture of electric batteries, electronic chips, computer screens and smartphones, but also military equipment or wind turbines. In view of the incessant demand, there is urgency: the EU’s needs for rare earths will be multiplied by five by 2030, and those for lithium will soar with the electrification of the economy.
Problem: the Old Continent, despite a subsoil rich in these materials, does not produce any and does not refine any. It depends on imports and more particularly those from China. Indeed, the Middle Kingdom controls almost the entire world market: 90% of rare earths and 60% of lithium are refined there. So, to avoid supply disruptions in the event of geopolitical and commercial tensions, the European Commission is looking for a way to reduce its dependence.
New partnerships and strengthening existing ones
In the shorter term, Ursula von der Leyen has announced her intention to build up strategic reserves where supplies are threatened. She advocated the creation of new partnerships and the strengthening of existing ones, especially with countries and regions that share the same environmental and social values. Brussels will also propose a law for critical raw materials with specific objectives. Example: the Commission wants at least 30% of European demand for refined lithium to come from the European Union by 2030.
To achieve these objectives, the Commission also relies on recycling. The treatment of the waste should make it possible to recover at least 20% of the rare earth elements it contains. Mining and refining projects on European soil are also on the table. To develop all these projects, the Commission undertakes to create a financial instrument to mobilize investment. Europe must indeed act quickly. The risks of ruptures and rising prices could threaten its energy transition objectives.