【By Observer Net, Qi Qian】
Recently, the European Union has been uneasy and has been trying hard to get rid of its reliance on China for rare earths.
"The EU wants to get out of China's control. The question is, can they afford it?" On October 30, Politico EU, the European edition of the US political news website, posed a "soul question" to EU countries.
According to reports, in the current geopolitical storm, the European Commission is accelerating the development of a new plan, which aims to invest heavily in key mineral sectors by the end of this year to diversify Europe's supply sources and reduce dependence on China.
However, the report pointed out that European industries are concerned that the EU is just reviving old initiatives, reusing similar plans from two years ago as a temporary fix. Many industry leaders and analysts lament that given China's almost monopolistic control over rare earth processing globally, the money the EU is investing is just a drop in the bucket. Some experts have stated outright that as long as Chinese materials are cheaper, European producers and others will have no chance.
The report said that with the escalating Sino-US trade tensions and China tightening export controls on key minerals, European Commission President Ursula von der Leyen was forced to take hasty actions. Europe is caught in the conflict - China accounts for 17% of the supply of 99 types of rare earths to the EU, and 98% of the supply of rare earth permanent magnets.
"Europe can no longer follow the old path," von der Leyen said at a weekend event in Berlin, "We learned a painful lesson from energy, and we won't repeat the same mistake with critical raw materials. So now is the time to accelerate and take necessary actions."
Von der Leyen revealed that the European Commission will propose a plan called "RESourceEU". This plan will focus on recycling, joint procurement, reserves, and investment in the field of key minerals.
Video screenshot of Von der Leyen speaking in Berlin
So far, the European Commission has disclosed very few details about the new plan, but it mentioned that its model will refer to the "REPowerEU" plan proposed by the EU in 2022 to promote energy transition. After the outbreak of the Russia-Ukraine conflict in 2022, the EU proposed an investment of 225 billion euros to diversify supply routes and gradually reduce dependence on Russian fossil fuels.
"The problem is that the EU is not the first to issue similar initiatives," Politico EU mentioned, stating that as early as 2023, the European Commission had previously launched its first ambitious plan aimed at breaking the excessive reliance on China - the Critical Raw Materials Act (CRMA). At that time, European industry leaders and analysts mostly lamented one thing: there was a lack of funding on the table.
The report said that European industries are worried that the EU is only reviving old initiatives and do not dare to hope that the EU can truly solve the main obstacles to diversifying the alliance's mineral supply chain - the lack of funding support for mining, processing, and manufacturing inside and outside the EU.
Rare earths are known as "industrial vitamins," and they are the key raw material support for strategic industries such as advanced weapons and equipment, aerospace components, wind power, new energy vehicles, robots, and smart manufacturing. Over the past 30 years, China has always had a leading position in rare earth mining and refining.
According to data from the International Energy Agency, in 2023, China accounted for more than 60% of global rare earth mine production, but its control over the processing stage accounted for 92% of global production, giving it almost monopolistic control over the global rare earth processing sector. Politico EU pointed out that for the EU, reducing reliance on China is a difficult task because China has already established a "de facto monopoly" in the rare earth sector.
Bloomberg map
"Everything is still in the early stages," said Florian Andechs, Deputy Director of the European lobbying group Euromines, when talking about the European Commission's initiative. "We hope that there will be greater momentum beyond implementing old initiatives. If everything is just new wine in old bottles, it would be of no benefit to anyone."
Tobias Glocker, a senior policy researcher at the European Council on Foreign Relations, also said, "Funding has always been the real bottleneck in the European raw materials agenda. Mining, processing, recycling, and reserves all require serious and sincere financing."
Glocker pointed out, "As long as European industries can purchase cheaper materials from China, other producers will have no chance."
The report cited expert analysis stating that if the EU fails to release more resources, it will be difficult to achieve the set goals, namely, that by the end of this decade, Europe will mine at least 10% of the annual consumption of selected minerals locally, and no single country will supply certain raw materials by more than 65%."
Politico EU said that it's not just a matter of funds, the EU's hasty launch of the plan has raised doubts about whether the plan can meet the needs of a highly complex market while ensuring environmental protection. The report mentioned that expanding mining in the EU comes with high social costs, and new mines often face local resistance, usually related to environmental and social concerns. This is the main obstacle to the new project, and investors often hesitate to inject capital due to these issues.
Recently, the EU and member states have been discussing options to address shortages of rare earths and automotive chips.
Currently, the EU is developing emergency plans, including increasing local production of minerals, diversifying supplier networks, and reusing certain materials, while planning to establish joint procurement and strategic reserve centers. However, European officials admit that with the continued deterioration of Sino-European relations, there is no quick solution.
Although the EU is committed to seeking negotiation solutions, the European Commission is also preparing trade options. According to media reports, French President Macron called for using the "anti-coercion" mechanism. European Commission President Ursula von der Leyen also said that all options are under consideration.
Chinese Minister of Commerce Wang Wenbao reiterated on the 21st that regarding the issue of rare earth export controls, China's recent measures are normal practices to improve its export control system in accordance with laws and regulations, reflecting China's responsibility as a major country to maintain world peace and stability. China is committed to maintaining the security and stability of the global industrial and supply chains and has always provided approval convenience for EU enterprises.
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