Critical Raw Materials

CRITICAL RAW MATERIALS

SPECIAL REPORT | NOV. - DEC. 2020 https://eurac.tv/9R-g

With the support of CRITICAL RAW MATERIALS

SPECIAL REPORT https://eurac.tv/9R-g

The European Commission has launched a fresh attempt at securing access to minerals like lithium and rare earth elements, saying those will be critical to un- derpin Europe’s growth in digital and green industries.

Last month, the EU executive launched a strategy to develop a full value-chain for raw materials in Europe – ranging from extraction to processing and waste recovery.

In this special report, EURACTIV looks at Europe’s re- newed drive for “strategic autonomy” on critical raw materials. Contents

Europe faces up to China’s supremacy on raw materials 4

EU’s Sefcovic: Europe must be ‘much more strategic’ on raw materials 8

Raw materials: the missing link in Europe’s drive for batteries 13 Energy: A critical raw material in its 16 own right? Recovery Made In Europe 19 4 SPECIAL REPORT | CRITICAL RAW MATERIALS | EURACTIV Europe faces up to China’s supremacy on raw materials

By Frédéric Simon | EURACTIV.com

“We must insist on fairness and a level playing field,” said Ursula von der Leyen, President of the European Commission. “And Europe will move forward – alone or with partners that want to join,” she said in her first annual state of the union address to Parliament last month, citing ongoing work on a carbon border tax. [EPA-EFE/JOHANNA GERON]

hen COVID-19 hit Europe EU’s problematic dependence on third production of computers, batteries, and disrupted global countries for active pharmaceutical electric vehicles, and wind turbines,” Wsupply chains, the EU came ingredients and medical supplies,” Asimakopoulou wrote in an opinion to a sobering realisation – it cannot said Anna-Michelle Asimakopoulou, piece for EURACTIV. continue to rely solely on imports for a Greek lawmaker in the European raw materials. Parliament. “But we are increasingly reliant on China and other regions for supplying For some EU policymakers in Looking ahead, she warned that the metals and minerals required by Brussels, this awareness of needing Europe should be equally worried those technologies,” she said, calling autonomy when it comes to lithium that the raw materials necessary for on the European Commission to and rare earths, materials critical for the green and digital transitions are defend EU industries against Chinese digital and green industries, was a sourced mostly from other regions. dumping and America’s “out-of- silver lining of the pandemic. control tariff diplomacy” under “Europe’s ‘green recovery’ will be President Trump. “[The pandemic] has revealed the based on industrial leadership in the

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The wake-up call reverberated fast Europeans can develop mining, dependencies, both economically across the EU institutions in Brussels refining and recycling capacities and and geopolitically.” and beyond. how dependent it will be on imports while it does so. The Commission’s action plan “This confirmed our analysis,” on raw materials gives the concept said Thierry Breton, the EU’s internal In some cases, the Commission additional substance. market commissioner, speaking at believes Europe can move swiftly. On a Brussels event to mark the launch lithium, for instance, Breton said the “Global trade and its integrated of the industry-led European Raw EU is positioning itself to be almost value chains will remain a Materials Alliance last week. “We self-sufficient by 2025. fundamental growth engine and will need to think more strategically to be essential for Europe’s recovery,” anticipate other possible disruptions For rare earths, the process will the EU executive remarks in a in future.” be longer, officials told EURACTIV. footnote buried on page 1 of its raw The aim is to have European mining materials communication. As Europe emerges from the and refining capacity operational COVID-19 crisis, it must boost its by the start of the next decade. In “With this in mind, Europe will “own domestic capacity for primary the meantime, that means ensuring pursue a model of open strategic raw materials” as well as secondary “diversified and undistorted access autonomy. This will mean shaping materials obtained through recycling to global markets for sustainably the new system of global economic and re-use, Breton said. sourced raw materials,” Breton said. governance and developing mutually beneficial bilateral relations while But opening new mines in Europe ‘OPEN STRATEGIC protecting ourselves from unfair and isn’t the whole solution, he added. AUTONOMY’ abusive practice.”

“It is not sufficient to have the To encapsulate the seemingly BUY-IN FROM EUROPEAN raw materials if we do not have the conflicting priorities of self- CAPITALS processing facilities in Europe,” he sufficiency and promoting free trade, warned, saying loopholes need to be policymakers have coined a new Remarkably, the Commission’s closed across the raw materials value term: “open strategic autonomy”. wake-up call on raw materials supply chain. seems to resonate beyond EU policy The phrase comes up eleven times circles in Brussels. At the moment, Europe is heavily in the action plan on critical raw reliant imported raw materials from materials, published by the European In Warsaw, the deputy prime a small number of foreign countries. Commission last month. minister in charge of development, China provides 98% of the EU’s Jadwiga Emilewicz, supported the rare earth elements, while Turkey But what does the expression Commission’s drive for “strategic supplies 98% of the bloc’s borate and actually mean? Commissioner autonomy” of raw materials, saying it South Africa covers 71% of the EU’s Breton tried giving a definition could “bring hope for people working needs for platinum. when he launched the Raw Materials in the black coal mines” of Poland. Alliance last week: “There are also many of these Peter Altmaier, the German materials present in Europe. And “When we speak of strategic minister for economic affairs and that’s the good news,” he said, citing autonomy – or what is sometimes energy, was among the speakers at reserves of cobalt, bauxite, beryllium, referred to as sovereignty or the launch event of the European Raw bismuth, gallium, germanium, resilience – we are not talking about Materials Alliance. Eight years ago, indium, niobium and borate. isolating ourselves from the world, when he was serving as environment but having choice, alternatives, minister, he said raw materials were The pressing question now is how competition. Avoiding unwanted not seen as such a pressing issue.

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predicted a 500% increase in the The EU strategy includes applying “Today, we know it is an utmost production of minerals such as anti-dumping measures on imports of important challenge,” Altmaier graphite, lithium and cobalt by 2050, materials like aluminium, which EU insisted, saying the digital noted Seamus O’Regan, Canada’s producers say are currently flooding transformation and the EU’s decision minister of natural resources. the European market. to become climate neutral by 2050 have changed perceptions. “This represents an incredible China’s excess aluminium opportunity. And Canada is ready to production currently stands at 10 German companies have faced lead,” O’Regan told the raw materials million tonnes, 5 times the total “growing international protectionism” event. The North American country is EU production. While European on raw materials, Altmaier pointed “one of the only nations in the western producers are reeling from the corona out. “Many countries are trying to hemisphere with vast deposits of crisis, “China is leveraging the crisis protect their own markets and secure the minerals needed to make the to ramp up aluminium production privileged access to raw materials,” he next generation of electric batteries: even further,” said Gerd Götz, Director remarked, saying this is “a matter of cobalt, graphite, lithium, nickel – we General at European Aluminium, a concern” on which Europeans “have got them all,” the minister said. trade association. to act”. What’s more, “Canada could meet “China is capable of wiping out “We must support companies the entire EU demand for germanium, and replacing the entire European and the actors in the field of raw magnesium, coking coal, niobium aluminium industry in no time if materials,” the German minister and graphite,” O’Regan added, saying the EU does not act assertively,” Götz said, speaking in favour of boosting Canada also harbours the companies warned. domestic production of minerals capable of extracting and processing like lithium, which are necessary rare earth elements. The EU strategy doesn’t stop at for the manufacturing of electric car anti-dumping measures or import batteries. Closer to home, Europe is looking diversification. Another key part at importing raw materials from relates to environmental and labour At the same time, he said boosting countries like Serbia, Albania and standards, which Europe wants to domestic production and recycling Ukraine. These countries have “very impose on all its trading partners efforts wouldn’t be enough to reduce solid reserves” of many critical raw – a concept Šefčovič refers to as imports significantly because demand materials, said Maroš Šefčovič, the “competitive sustainability”. for items like battery cells is going to Commission vice-president in charge “increase exponentially” in the future. of foresight. Back in December, Šefčovič said the EU would only import battery cells “Therefore, we need domestic “I think that would bring a new which adhere to the bloc’s stringent raw materials and, at the same time, positive chapter in our relationship,” environmental and labour standards. we need to make sure that we have he told EURACTIV in an interview. Those that don’t would be banned access to raw materials like lithium from entering the EU market, he and cobalt from other regions of the RAMPING UP PRESSURE warned. world,” Altmaier said. ON CHINA “We believe that sustainability will Canada and Australia are among By diversifying its imports and be the key selling point in the near the countries that have shown interest boosting home production, Europe future,” he told EURACTIV, saying in deepening trade relations with the aims to exert more leverage on European consumers would not EU on raw materials. China when it comes to trading raw accept buying cars or phones made materials. from minerals mined using unethical Earlier this year, the World Bank labour and environmental practices.

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GREEN DIPLOMACY reward for China continuing to European Commission in her first trade with the European bloc is annual state of the union address The move is part of a broader access to the EU’s internal market of to Parliament last month, citing EU push to enforce “reciprocity” 450 million consumers. ongoing work on a carbon border in trade relations, which now tax. “Europe will move forward – includes environmental standards. “The offer to the Chinese is alone or with partners that want to In 2018, the EU and Canada inserted that they will have access to the join.” a climate clause into CETA, the biggest trading bloc on this planet,” bilateral trade agreement which Šefčovič told EURACTIV. “We are European Council President came into force in 2017. the number one trading partner Charles Michel echoed those for China. They’re our number two sentiments. In a recent speech, he Both sides agreed to “promote trading partner.” talked up the concept of “strategic the mutual supportiveness of autonomy” for Europe, emphasising trade and climate policies”, with “So I think that, yes, we are that discussions are now taking reference to their Paris Agreement currently dependent on getting place at the highest level. commitments. Earlier in 2018, a some of these critical materials similar climate clause was added from China, but they’re also very “Autonomy is not protectionism, to an EU-Japan trade deal, a move dependent on having us as an quite the opposite,” Michel said, touted as the first of its kind in a important partner in the future,” he insisting that the EU’s position as major trade deal. added, expressing confidence that “the world’s largest trading bloc” Europe’s “call for fair treatment, for gives it leverage over other nations. The European Commission reciprocity, is well understood” in has threatened to impose a carbon Beijing. Europe’s power “is the ability to border tax on countries doing too spread rules and standards across little on climate change, reflecting Europe’s pressure on China the globe,” he said, citing the EU’s the EU’s more assertive stance seemed to bear fruit last month general data protection regulation, on trade and its determination to when Beijing announced plans to which set a global standard for protect European companies from become “carbon neutral” by 2060, online privacy protections. cheaper products made in countries bowing to one of the key demands seeking a competitive advantage from Brussels. Climate diplomacy, Michel from lower environmental added, is becoming “a new strategic standards. The need to add a green focus to front where Europe can win the Europe’s trade agenda has become battle of standards”. The tax “should motivate foreign more urgent with the EU’s decision producers and EU importers to to raise its carbon reduction target “By pioneering environmental reduce their carbon emissions, for 2030 and aim for climate technologies and setting the while ensuring that we level the neutrality by 2050. relevant standards, we will achieve playing field in a WTO-compatible two goals: taking the lead in that way,” said Ursula von der Leyen, As the European Union embarks field, and helping to win the fight the President of the European on the journey towards net zero against global warming,” he said. Commission. emissions, Europe’s more assertive stance on trade and climate change The EU executive said a concrete are being heard at the highest levels proposal for the tax is being of the EU hierarchy. prepared and should be published in 2021 and implemented in 2022. “We must insist on fairness and a level playing field,” said Ursula For Šefčovič, the potential von der Leyen, President of the 8 SPECIAL REPORT | CRITICAL RAW MATERIALS | EURACTIV

INTERVIEW EU’s Sefcovic: Europe must be ‘much more strategic’ on raw materials

By Frédéric Simon | EURACTIV.com

“Nearly all the future technologies needed to build Europe’s green and digital growth are in dire need of critical raw materials,” said Maroš Šefčovič, the European Commission’s vice-president in charge of interinstitutional relations and foresight. [Source: EC - Audiovisual Service]

he European Union “cannot INTERVIEW HIGHLIGHTS Ukraine about opportunities achieve” climate neutrality on raw materials and is Twithout critical raw materials • The EU is pushing the requesting “reciprocity” in like lithium and rare earths, says concept of “open strategic trade relations with China in Commission vice-president Maroš autonomy” on raw materials, return for granting access to Šefčovič. It now needs to be “much by developing its own its single market more strategic” in relations with supplies of lithium and rare • “Urban mining” will also supplier countries in order to ensure earths while diversifying contribute to the EU’s push the bloc’s “strategic autonomy,” he import supplies for raw materials autonomy, argues. • Europe can be 80% self- with €1 billion going to dependent on lithium by recycling R&I in the next Maroš Šefčovič is the EU Commissioner 2025 and have its own rare seven years (2021-2027) for foresight and interinstitutional earth mining and refining • EU Commission is preparing relations, who is coordinating work on capacity ready by 2030 a new regulation to ensure the European Battery Alliance. He spoke • The EU is talking with all batteries sold in Europe to EURACTIV’s energy and environment countries like Canada, are the “greenest, safest editor, Frédéric Simon. Australia Serbia, Albania and and most sustainable on

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this planet,” including those Today we are acutely aware that this year. China, meanwhile, invested €17 imported into the bloc dependency is something we have billion. And this year, Europe has so far • This will include a “battery to take extremely seriously, which is invested €25 billion – again, twice as passport” to ensure batteries why we created this European Raw much as China. and the raw materials they Materials Alliance in September. contain are sourced in an Europe is really becoming a hub for environmentally and socially Clearly the statement I gave two investment into the battery sector – responsible way years ago is still valid. from extraction, processing, software • Countries that don’t comply development, manufacturing, re-use with new EU rules on batteries If the scope of raw materials use in the and recycling – the whole value chain could be imposed a border economy is larger than before, is the risk is covered. So I hope we can now repeat carbon tax to ensure a level of dependency also bigger? the success. playing field You are right, the scope of our We also have clear milestones we Full interview analysis is larger. And I think we all would like to reach by 2025 or 2030. agree that the COVID-19 crisis can serve We know 2030 is a critical deadline if Two years ago, I interviewed you on as an accelerator for the green and we want to have everything in place to the same topic of raw materials – and digital transitions. We know perfectly reach climate neutrality 20 years later. you issued a stark warning back then, well that we cannot achieve our 2030 saying that “when it comes to the issue and 2050 climate targets without This is a very important decade, of dependency, Europe could end up in a cutting-edge technologies and for all which will I think, decide how Europe situation where raw materials become these we are in a big need of critical raw will fare in comparison with economies the new oil.” Two years on, would you materials. like China or the United States, and say that risk has receded or increased? how well prepared we are in making At the European Commission, we sure that we are climate neutral by I would say we are much more analysed the applications one by one mid-century. aware of that risk now because the and checked where we are dependent, question of critical raw materials is be it on one country or one supplier. The European Commission has launched not only related to Europe’s green an industry alliance on raw materials, ambitions, it is also closely linked I hope we can repeat the success of which will initially focus on building to our digital strategy: nearly all the the European Battery Alliance. When “strategic autonomy” for rare earths future technologies needed to build we launched the alliance in 2017, there and magnet value chains in Europe. Europe’s green and digital growth are were still carmakers that were hesitant. What does this mean, are we going to in dire need of critical raw materials. Today, they are all on board with the start mining rare earths in Europe? transition to electro-mobility and the Let me take an example. Europe’s need to diversify battery cells suppliers. The concept of “open strategic need for lithium used in electric car autonomy” is now being discussed and storage batteries will be 18 times And the supportive role of the widely in the EU, for example among EU bigger by 2030 and 60 times more by European Investment Bank here is ministers at the General Affairs Council 2050. Industrial ecosystems, such as key in this regard. Last year, the EIB where I represent the Commission. aerospace, construction, automotive changed their energy lending mandate and low-carbon energy-intensive and started working with potential On the one hand, it is very clear industries – all highly dependent on European suppliers of lithium, to invest that we will always support free and secure access to raw materials – will in extraction and processing, which is fair trade. But at the same time, I think represent altogether €2 trillion in very important for investors. there was a very clear signal from the economic activity and employ over 30 ministers that we need to focus much million of people by 2030. In Europe today, we are now more on reciprocity with our trading investing three times more into the partners, and ensure open access to For all of these sectors, critical raw battery sector than in China: our global markets. And that will always be materials are absolutely essential. investments reached €60 billion last the interest of the European Union.

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We have to be much more countries – France and Sweden – they positive chapter for EU integration of strategic in ensuring Europe’s are also contemplating the processing, these partners. Ukraine’s President autonomy of action when it comes refining and/or recycling of rare Zelenskyi certainly thought so when I to raw materials. Greek MEP Anna- earths, which are of course needed for raised this with him in the margins of Michelle Asimakopoulou explained almost all advanced technologies. the recent EU-Ukraine summit. it very eloquently at the launch of the European Raw Materials Alliance: And then of course, developing And if they are interested in “auto” in Greek means self, and trade relationships is very important. exporting these critical raw materials “nomia” means law. So autonomy We are for example talking with to Europe, we will do our utmost on our gives us the right to decide for countries like Canada and Australia side to ensure that all these projects ourselves. This is what we have to look about trading opportunities and I am meet the highest environmental and for. sure raw materials will be one chapter labour standards. of our cooperation. On raw materials, it means People in the industry say it takes providing our economy with adequate In terms of rare earths, do you know roughly 15 years to get a new mine and more diversified supplies of how much more autonomy Europe can started – from the geological studies primary and secondary materials gain by 2030? Currently, Europe is 98% to the actual permits. But the to make sure we can take our own dependent on China, which includes Commission’s action plan says some decisions. both extraction and processing… projects could become operational as soon as 2025. What makes you Being self-sufficient and open to trade I don’t know. For lithium needed think this is possible in such a short at the same time – isn’t this a bit for batteries and storage, we’re timeframe? Is it just for lithium or do contradictory? confident that we can be 80% self- you have other critical raw materials sufficient by 2025, but for rare earths, in mind? We are doing our homework about work is in progress. The figures I what kind of critical raw materials we roughly remember is that China The most advanced ones are have in Europe. extracts 70% of rare earth ores, but its lithium because they started earlier. share in metals, alloys and magnets But now the number one goal for the For example, we have quite solid has continuously expanded to 90%, European Raw Materials Alliance is reserves of lithium in Europe. There while we are 100% import-dependent to focus on rare earths and magnets are four mining projects now in the on rare earths. because we see huge dependency pipeline, and if they gain the trust and there – and real potential. support of the local population, as What we need is access to the well as proper financing and support raw materials, but also need to build Rare earths are absolutely critical of the member states, we can secure refining capacity. For example, even if for solar and wind power, but also 80% of our lithium needs by 2025. we extract lithium, we currently still for electric motors and almost all have to ship it over to China to get it digital ecosystems. They will be We also have rare earth reserves refined and then the carbon footprint the first focus. And when it comes in Europe, which until now, have not makes it less attractive for consumers to permits, investment or research been fully explored. We currently don’t who, for example, would like to and innovation, and financial have enough refining, processing and purchase an electric car. So this is a instruments, we are we are currently magnet-making capacity in Europe very important task ahead of us. putting all these different things in for instance. This is why countries place. like France, Germany, Portugal, Spain, We are also looking at the Western Sweden, Greenland and Norway, are Balkans – notably, Serbia and Albania At the same time, we’re also looking into it. – and Ukraine. They have very solid looking very hard at urban mining. If reserves of most of these critical you just collect all the old cell phones There is also a huge potential for raw materials and I think they will we have in our drawers, we can recycling and re-use when it comes be interested in developing these immediately build four million car to rare earths. In at least two of these reserves, which could open a new batteries just from the cobalt.

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skills in coal mining could indeed be in the future. There is also huge potential with very useful for these new extractive electronic waste. Every year, the EU industries. If we want to build our own generates some 9.9 million tonnes capacities when it comes to processing of waste electrical and electronic With the €17 billion Just Transition and refining these critical raw equipment, while around 30% is Fund, we now have the opportunity to materials, I think it is only natural collected and recycled. But the re-skill those people and make sure to shorten the global value chains, recovery of critical raw materials we look at other energy-intensive reduce carbon footprints and make from this e-waste stands below 1% industries: steel, cement, and others. sure supplies are not disrupted. because we do not have the necessary technology and industrial processes in In Poland, some new smart mobility This is a very natural development. place. projects are located in Silesia – they’re We are very open about it. It would bringing the future Giga factory there be very important to be open and free This is why we’re funding research and using the skill sets of that region to traders. But at the same time, we are and innovation in order to develop build something new. So I’d say they’re much more realistic about our needs. these processes. We are currently now going from black to green. And spending almost €1 billion on raw that is a very, very fast transition. What are you offering China in return? material projects as part of the Horizon 2020 programme, with funding You say Europe should seek more The offer to the Chinese is that they channelled through the Commission autonomy from China on critical raw will have access to the biggest trading and EIT RawMaterials. materials like rare earths. Yet, China bloc on this planet. We can see how will probably remain a major supplier important it is for them because we We are also discussing with of rare earths, at least in the short to are their number one trading partner. I member states to use recovery funds medium term. So what is the point think they simply have to understand – and the just transition fund for ‘shovel- of shouting loudly about Europe’s and I think they do – that to have such ready’ raw material projects. And we “strategic autonomy”? Are you trying a rich relationship, both partners have also have these two funds under the to provoke a trade crisis with China? to be satisfied with the conditions. Emissions Trading Scheme (ETS) – one on modernisation, one on innovation. This is a very valid question. When Therefore, I think the call for fair I had the chance to talk to President Xi treatment and reciprocity is well We will try to put together all of last year at the Belt and Road Summit, I understood. We’ve got our trade these elements to make sure there will told him what we want as Europeans – to such a level that we simply have be financial muscle behind this effort. that China treats European companies to take care of this very important in China as well as we treat Chinese relationship and the same goes for the In parallel, we also started what I companies in Europe. difficult discussions. believe could be our deepest review yet of EU state aid guidelines. Here, we’re So we want fair market access, How can Europeans be competitive on trying to address market failures on we want protection of intellectual raw materials when China has lower the single market. The new guidelines property rights, we want participation labour and environmental standards? should be ready by June next year. in research and innovation projects, Can Europe ever become competitive? and other things which form a good The Commission says the raw materials trade relationship. I am absolutely convinced of that initiative opens new opportunities for because I think the world is changing, coal regions. Have you evaluated the We are China’s number one trading especially when it comes to global potential for new mining jobs in those partner. They are our number two standards. regions? trading partner. So I think that yes, we are currently dependent on getting Europe is really developing the Today in Europe, there is something some of these critical materials from concept of competitive sustainability. like 200,000 people working in the China, but they are also very dependent We believe that sustainability will coal mining industry. And some of the on having us as an important partner be the key selling point in the near

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future. Because if we are serious about is very much interested in that. I would In other words, we prevent that tackling climate change, we have to be delighted if we can start to make European markets will be flooded by enforce the Paris Agreement, we have progress at interinstitutional level with cheaper batteries that do not respect to be very serious about our climate the support of Peter Altmaier. I know our high sustainability requirements. goals. it will be very demanding schedule, but we definitely have a lot of support So this would be the approach that I believe that the enormous for that also from the Portuguese you will see through various streams to attention the European Commission presidency, which starts on 1 January. ensure we fill those three imperatives is giving to the Green Deal and clean for the next decade: a green, digital technologies is giving us the first- At the same time, we will start and resilient EU economy. mover advantage. So I do believe this a parallel track on standardisation, will be our competitive edge. clearly aiming at having the highest When do you plan to have those standards on the planet for car batteries standards for batteries coming into You said back in December that used in Europe. The standards – the force? batteries imported into Europe could testing methods and methodologies be banned if they don’t observe EU – will be important for industry to We are aiming to have them in environmental and labour standards. ensure their batteries comply with place as of 2023 onwards. The first Giga How do you intend to put this into the mandatory requirements in the factories in Europe will be operational practice? Will it be through some kind regulation. We simply need to follow in 2021 or 2022 and we would like of certification scheme which could be the rule that only the best available all batteries used in Europe to be made mandatory? technologies are used for smart manufactured according to those high mobility. requirements. I will tell you the concept. Currently, we are working on the battery Another very important element, regulation and we would like to adopt which will have a very important our proposal this autumn. To put it economic impact in Europe and simply, we want to put the regulation globally, is the carbon adjustment in a form that would provide for mechanism. There again, we want to mandatory requirements for the give our trading partners a choice: greenest, safest and most sustainable either you introduce carbon pricing batteries on this planet. at home, like we have done here in Europe with the Emissions Trading We want to measure the carbon Scheme (ETS), or there will be a carbon footprints of batteries over their adjustment mechanism to level up the life cycle. We are considering also price of CO2. something like battery passports that will ensure easy access to information Because we do not want to put about key parameters of batteries our industry at risk. We’re asking and their origin. We also want to a lot from them when it comes to make sure that we will be working reducing their carbon footprint and with raw materials that are traceable environmental standards. With the and respect ecological, labour and battery regulation, we are set to ensure other standards. This is important for a level playing field so that all batteries European consumers. placed on the EU market, regardless of their origin, comply with the same And we want a fast process for stringent sustainability and end-of-life approving this regulation. I know the requirements. German presidency of the EU Council SPECIAL REPORT | CRITICAL RAW MATERIALS | EURACTIV 13 Raw materials: the missing link in Europe’s drive for batteries

By Frédéric Simon | EURACTIV.com

View of the future Tesla Gigafactory construction site in Gruenheide near Berlin, Germany, 01 September 2020. According to the US car manufacturer Tesla this first electric car plant in Europe will be the most advanced high-volume electric vehicle production factory in the world. [EPA-EFE/FILIP SINGER]

hile Europe is rapidly EURACTIV in a recent interview. This McDowell told reporters during an catching up with China on year, Europe has so far invested €25 online briefing in late August. Winvestments into batteries billion – again twice as much as China, for electric cars, it is still lagging he noted. But the catch up is not over yet. behind when it comes to securing Europe’s Achilles Heel is at the start of supplies of the critical raw materials “In terms of investment levels in the value chain, where raw materials that are needed to produce them. Europe, we probably have caught up,” are mined and processed, according says Andrew McDowell, the European to Peter Carlsson, the CEO of Swedish Since the launch of the “European Investment Bank’s vice-president battery maker Northvolt. battery alliance” in 2017, the EU has responsible for economics and made a leap forward in its quest to energy. According to him, there has “We’re building plants but they develop a full battery manufacturing been “a transformation in the level of need to be supported by raw materials, value chain. ambition” in Europe since the battery components and suppliers of alliance was launched in 2017. equipment,” Carlsson told journalists Investments in the EU battery at the August online briefing. sector reached €60 billion last year, “It’s not just about catching up while China invested only €17 billion, anymore, it’s about Europe taking a Northvolt is currently constructing EU commissioner Maroš Šefčovič told leadership position in this industry,” Europe’s first battery gigafactory in

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northern Sweden, and a second site is construction, and low-carbon also looking to the Western Balkans – planned in Germany following a deal industries are also concerned because notably, Serbia and Albania – as well signed with carmaker Volkswagen in they are considered key for the green as Ukraine, which “have very solid Ju ly. and digital transitions. reserves of most of these critical raw materials,” Šefčovič added. “Today, as we’re starting up the “Today we are acutely aware that factory, we will still be dependent on a this dependency is something we have GREEN STANDARDS lot of suppliers from outside Europe,” to take extremely seriously, which is Carlsson said, citing raw materials and why we created this European Raw But developing mining at home and components as part of a wider battery Materials Alliance,” Šefčovič said. diversifying supplies is only part of the “ecosystem” that he says should be answer. The European Commission’s promoted in Europe. The good news is that Europe strategy also relies on recycling and can quickly become independent on green standards for batteries, which “This is where we really need to some of them. “For lithium needed for could help extract huge amounts of continue strengthening the European batteries and storage, we’re confident untapped raw materials contained in ecosystem,” Carlsson said. “It’s going that we can be 80% self-sufficient by electric waste. to require focus and investments.” 2025,” Šefčovič said, citing mining projects currently under development Every year, the EU generates some DEVELOPING HOME across Europe and neighbouring 9.9 million tonnes of waste electrical PRODUCTION countries. and electronic equipment but only 30% of it is collected and recycled, Raw materials like lithium and In April this year, a lithium the Commission says. Worse, some cobalt, which are currently imported mining project in the Czech Republic valuable raw materials are not into Europe, have come under close secured €29.1 million in funding and recovered because they are too difficult scrutiny as part of the EU’s push is expected to become the first EU or costly to extract. to secure raw materials for battery producer of battery-grade lithium manufacturing. compounds. In July, global mining “The recovery of critical raw giant Rio Tinto announced a decision materials from this e-waste stands Demand for lithium is expected to invest nearly $200 million in a below 1% because we do not have the to increase 16-fold by the end of the lithium-borate project in Serbia. necessary technology and industrial decade and be 60 times larger by 2050, processes in place,” Šefčovič said. according to European Commission For rare earths, which are used in “If you just collect all the old cell forecasts. Cobalt, another key magnets founds in wind turbines and phones we have in our drawers, we ingredient for batteries, will also see electric motors, it will be a longer shot. can immediately build four million a spike in demand, growing 500% by The EU is currently 100% dependent car batteries just from the cobalt,” the 2030 and 15 times by 2050. on imports but the Commission hopes commissioner remarked, highlighting the first European mines could open as the vast untapped potential of so- To address this weakness, the soon as 2030. called “urban mining”. Commission launched an action plan on critical raw materials as well as “We also have rare earth reserves in “This is why we’re funding research an industry alliance last September, Europe, which until now, have not been and innovation in order to develop with the aim of strengthening the fully explored,” Šefčovič said. “This is these processes,” Šefčovič added, EU’s “strategic autonomy” on key raw why countries like France, Germany, saying the EU is already spending materials. Portugal, Spain, Sweden, Greenland “almost €1 billion” on raw material and Norway, are looking into it.” projects as part of the Horizon 2020 And the focus is not only on car research and innovation programme. batteries – sectors such as aerospace, To diversify supplies, Europe is

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Finally, the European Commission As part of the new rules, the tests to evaluate them need to be is planning stricter green standards Commission is looking at introducing comparable throughout different for batteries as part of a new battery specific recovery rates for selected brands. A minimum set of design regulation, expected to be tabled on 9 materials used in batteries, such as standards – such as lifting parts – December, spelling out new standards lithium, cobalt and nickel. It also would make the disassembly process for batteries, with the aim of reducing plans to improve the collection rate for recycling cheaper, simpler and less the overall carbon and material of used batteries and pave the way for time-consuming”. footprint of batteries manufactured or the introduction of mandatory levels imported into Europe. of recycled content in new batteries as from 2030. This will include “something like battery passports that will ensure “Recycling is one of the most easy access to information about effective ways towards an efficient key parameters of batteries and their use of our resources in the battery origin,” including the raw materials industry. Especially the recovery of that went into the manufacturing high-impact materials brings a true process, Šefčovič said. improvement to the environmental and social profile of batteries,” “We also want to make sure that we Recharge says. will be working with raw materials that are traceable and respect ecological, Another flagship measure labour and other standards. This is envisaged by the Commission is important for European consumers.” the introduction of a due diligence obligation on battery manufacturers, In total, fourteen new measures are forcing them to trace the materials expected to form the basis of the new based on the model of the EU’s Conflict EU batteries regulation, according Minerals Regulation, which enters to Recharge, a trade association into force in January. representing manufacturers of advanced rechargeable and lithium Further measures include the batteries. promotion of an aftermarket for used EV batteries and an extended “To put it simply, we want to put producer responsibility scheme the regulation in a form that would obliging producers of batteries to provide for mandatory requirements finance collection, take-back and for the greenest, safest and most recycling activities. sustainable batteries on this planet,” Šefčovič told EURACTIV. ECOS, a green NGO, says green standards for batteries are essential RECYCLING to ensure the transition to electro- mobility is done in a truly eco-friendly The recycling of key raw materials way. used in the manufacturing of batteries is one of the flagship measures “We need performant and durable expected in the EU’s updated battery EV batteries, which are easy to repair, regulation, Recharge said in a briefing reuse and recycle,” said Rita Tedesco paper outlining the main elements of from ECOS. “Parameters such as the the future EU law. state of health of the batteries and 16 SPECIAL REPORT | CRITICAL RAW MATERIALS | EURACTIV Energy: A critical raw material in its own right?

By Frédéric Simon | EURACTIV.com

Spanish workers of the Aluminum Company of America (Alcoa) protest against the planned closure of a plant in Galicia, Spain, 01 July 2020. Alcoa has referred to low aluminum prices and high energy costs causing heavy losses, making it impossible for the plant to compete internationally. [EPA-EFE/XOAN REY]

ccess to affordable energy is a competitive prices” is a fundamental planet-warming emissions down to key factor underpinning the building block for the competitiveness net-zero by 2050. Acompetitiveness of European of European industries, the EU industries. But as the green transition executive admits. Green policies, once seen as a trade- gains momentum, pressure is building off with industrial competitiveness, to put a higher price signal on energy “Industry is the motor of growth are now firmly placed at the heart of and CO2 emissions, leaving regulators and prosperity in Europe,” Commission Europe’s revamped industrial agenda, in a quandary. President Ursula von der Leyen said with von der Leyen branding the as the EU executive presented its new Green Deal as “Europe’s new growth When the European Commission industrial policy back in March. strategy”. presented its action plan on critical raw materials in September, the focus “This is more important than ever At the same time, reducing was deliberately placed on “non- as Europe embarks on its ambitious emissions across industry will depend energy” raw materials. green and digital transitions,” she on “a secure and sufficient supply of added, referring to the European low-carbon energy at competitive Yet, access to “low-carbon energy at Green Deal, which aims at cutting prices,” the Commission added in

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its revamped industrial strategy, in the last EU electricity market saying this will require planning Electricity prices in Europe are reform, “shortcomings still exist in and investment in low-carbon on average higher than in most G20 the energy market,” the Commission generation technologies, capacity countries, BusinessEurope says. And added in its 2020 state of the and infrastructure. pressure on energy prices will keep energy union report, saying this growing in the coming years as the “unnecessarily increases costs for Energy makes up between 5.7% EU adopts tougher climate goals. consumers and industry”. and 8.4% of the production costs of industrial sectors such as basic All in all, energy costs are set to Fixing these shortcomings chemicals, iron and steel, or paper, rise from about 11.5% of GDP in 2015 will be “the foundation for the according to Frontier Economics, a to 12.6% in 2030, according to the transition of the economy towards leading consultancy. European Commission’s long-term climate neutrality,” the Commission climate strategy, which aims to reach underlined in its 2020 report on the However, prices can fluctuate net-zero emissions by 2050. state of the Energy Union. widely between countries and industries. In certain sectors like ENERGY TAXATION But reforming Europe’s spaghetti aluminium, the energy bill can reach bowl of national energy taxation up to 40% of production costs, says So why is energy more expensive schemes, state aid and other energy- BusinessEurope, the EU employer’s in Europe than in the rest of the related perks will be no small matter. association, citing EU figures. world? The explanation boils down to one word: taxation. Among market-distorting For big industrial users of barriers are so-called “capacity electricity like the aluminium sector, “The premium that businesses mechanisms” which reward back-up this puts energy on the same level as pay compared with other G20 power plants for keeping on stand- any other raw material. countries is largely due to taxes and by in case of demand peak. Those levies: Without these, both electricity “have had a growing impact on the “Energy is a kind of ‘raw material’ and gas prices tend to be more similar, functioning of the market in recent for the production of aluminium and except for the USA and the Middle years,” the Commission said, but its to several other energy-intensive East,” which have access to cheap and latest attempt to reform the system industries,” said Coline Lavorel, abundant supplies of domestic gas, has mostly failed. public affairs director at European BusinessEurope says. Aluminium, a trade association. Also in the Commission’s firing This analysis is confirmed by the line are fossil fuel subsidies, which “As a consequence, access to European Commission. have remained stubbornly high over clean and affordable energy across the last decade at around €50bn per Europe is also a condition to Europe’s “Taxes and levies remain by year, despite pledges made at the G20 industrial leadership and strategic far the most important source of to phase them out. autonomy,” she added, saying differences in retail prices across that the European Raw Materials member states,” the EU executive “As outlined in the European Alliance, to which the European said in its 2020 report on energy Green Deal, fossil fuel subsidies aluminium industry participates, prices and costs in Europe. “This is should end,” the EU executive stated. “should contribute to the ambition due to the differences in member Again, those calls have so far fallen on of developing a raw material policy states’ policies and fiscal instruments deaf ears, with no single EU state so promoting clean and sustainable affecting the taxation of electricity far having spelt out a comprehensive electricity.” consumption,” it said. phase-out plan.

Bringing energy prices down will Even though some of these And then, there is the most be no small task. national differences were addressed sensitive subject of all – taxation.

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“The Energy Taxation Directive warns, calling for a continuation capacity date back to the 1990s. Since does not achieve anymore its primary of existing compensation schemes 2008, the EU has lost more than 30% objective related to the proper and distribution of free allowances of its primary aluminium production functioning of the internal market,” under the ETS to support the sector’s capacity, she points out. the Commission argues in its 2020 competitiveness. state of the energy union report. At the same time, the carbon The European Commission market was precisely designed to The myriad of exemptions and is aware of this and is currently drive up energy prices, and provide relief measures granted at the national reviewing its state aid regime and the an incentive for industries to invest level “are, de facto, forms of fossil free allocation of ETS allowances in in efficiency measures and other low- fuel subsidies, and not in line with order to bridge the competitiveness carbon solutions. the objectives of the European Green gap between EU industries and foreign Deal,” the EU executive argues, saying rivals in China, the US and elsewhere. “With a high carbon price, the upcoming revision of the energy investments will further prop up taxation directive will aim to reform Should those countries refuse renewable energy that is already those. to match the EU’s climate ambition, cheaper than any fossil fuel,” said the Commission said it will impose a Wendel Trio from Climate Action Still, the biggest source of worry carbon border adjustment mechanism Network, an NGO. for energy-intensive industries is the to restore a level playing field in EU’s carbon pricing mechanism, the selected industrial sectors like cement At the end of the day, “this Emissions Trading Scheme, which or steelmaking. will obviously benefit businesses, drives up electricity prices. industries, but also households,” he ADDRESSING THE added. “European aluminium producers FUNDAMENTALS face much higher electricity prices than their main competitors in Russia, As welcome as they may be, the UAE and China due to increased compensation schemes, state aid or costs linked with the greening of carbon levies by themselves will not power generation systems and the address the fundamental challenges ETS,” Lavorel said, adding that the faced by energy-intensive industries. indirect costs of the ETS can be “up to seven times greater than the direct “Disruptive and breakthrough costs of the electricity”. innovation is the only way to move primary aluminium production Since aluminium is priced on towards carbon-neutrality and reduce global markets, “European producers direct emissions in the production cannot pass on their extra carbon process,” Lavorel pointed out. The costs without losing significant technologies are there, she said, market share and are price takers on “but most of them are still at a low the market,” she pointed out. technological readiness level and will require massive investment, that the And with higher climate industry cannot bear alone”. ambitions expected to further push up the price of CO2, “the quest to To finance those investments, balance competitiveness and the public support will be needed, Lavorel green transformation of our industry stressed, saying the last investments in becomes even more critical,” Lavorel the EU’s primary aluminium smelting SPECIAL REPORT | CRITICAL RAW MATERIALS | EURACTIV 19

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DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network. Recovery Made In Europe

EUMICON

[Shuttertock/ixpert]

here is no doubt that 2020 has been and for the time being will Currently, Europe envisions a Not so long ago, especially young Tcontinue to be an enormous recovery that aims to help its economy people confronted the public with testing period for Europe, its industry get back on its feet and make its value their fears with regards to the future of and especially its citizens. chains more resilient. The fulfilment our planet. They successfully managed of this endeavour resembles a to be heard by politicians and they are As one reflects on these times and tightrope act which, due to the fragility right in their demand for concrete considers the wide-spread fears and of our time and the complexity of actions. In this quest, highlighting the associated pressure under current numerous interrelated mammoth the actual effects of global warming, circumstances, surely many of us can tasks, creates unprecedented pressure carrying ordinary people along relate to the words of Alan Shearer, on the decision-makers in charge. by reflecting their down to earth one of the best strikers and penalty Amid alarming infection rates and perceptions made all the difference. takers in the history of football, when staggering investment sums, another Right now, this approach might be providing insights on his special challenging task at decision-making something that the value-added ability, taking penalties in decisive level is to somehow grasp the everyday industry in Europe can implement moments of the game. pressures and fears of those suffering to ensure that key-decisions of today from the ongoing COVID-pandemic. lead to the hoped-for unfolding of “I always practise penalties, but what As the severely affected industry has tomorrow. For example, what if we people don’t understand is that you can always been the backbone of European started to speak vividly and in a never recreate that pressure situation prosperity, its recovery will certainly be close-to-life manner about the actual that you’re under” crucial to all citizens of our continent. consequences for the everyday life of

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entrepreneurs, employees and our next EUMICON is firmly convinced global scale. generation if Europe were to fall behind that more ambitious CO2 reduction in global competition? targets and the associated regulations We as EUMICON are committed to must go hand in hand with targeted do our part in significantly reducing ACHIEVING A TRULY LEVEL innovation funding in order to enable industrial CO2 emissions and in PLAYING FIELD the long-term success of the economic achieving climate neutrality in Europe. transformation. In this light, the Therefore, we welcome the path taken Looking ahead, China will remain concept of ‘Strategic Autonomy’ is a by the European Commission, to an important trading partner. significant first step to reduce import initiate the transformation to a ‘green’ However, there is the widespread and independencies for raw materials and digitalized economy. Given this fast-growing industrial sentiment and rare earth elements which are enormous undertaking in its nature that ‘one does not have to put up with essential to future technologies, such and the additional quest of overcoming everything’. Currently, China is leading as batteries, wind generators or solar the economic consequences of the the global recovery underscored by panels. In a nutshell, sovereign and COVID-crisis, promoting European recent forecasts which suggest that by comprehensive access to raw materials industrial ecosystems must generally the end of 2021 the Chinese economy is the foundation on which the ‘green be at the heart of present European will be 10% larger than by the end economy’ will be built upon. policy making. of 2019. Vast excess capacities and dumping-products pose an imminent In addition to this, the European Against the background of threat to European value chains and Raw Material Alliance was launched as seemingly innumerable challenges, the contribute substantially to this current an enabling platform for investments in European industrial location is facing, outlook, while future prospects for a future key-innovations. This initiative we firmly believe in contributing to level playing field become increasingly underscores the overarching principle the European Commission’s ambition, sobering. Given our core believe in fair that new environmental regulations to shape an ‘Economy that works for and free global trade, contrasting dull must be matched by equal funding and people’. Just as Alan Shearer excelled protectionism a coherent and robust innovation support. under immense pressure, we believe anti-dumping framework is more in the opportunity presented by the urgent than ever. GREEN AS THE DRIVING challenges of our times to elevate FORCE OF RECOVERY Europe’s industry to higher levels. While specific trade policies can Therefore, EUMICON will expand its be effective, they must be carefully n light of rising site costs and role as a proactive player by fostering considered in view of their impact energy prices numerous companies cross-sectoral cooperation, drafting along entire value chains. In this may wonder whether they will be future-oriented policy solutions, and context, it is vital to underline that able to even survive in the upcoming passionately underscoring the potential Europe’s industrial strength has years. Taking these concerns seriously, of Europe’s ‘Sunrise Industries’. always been linked to the quality of its we encourage leading policy makers products and the associated focus on to considerably foster the access to exports. Proposed and much discussed clean and at the same time affordable measures such as the carbon border tax energy. This includes electricity or the carbon border mechanism are as well as hydrogen since these equipped with the good intention of sources are of utmost significance countering unfair global competitive to the mobility-automotive, the conditions, but must not lead to a renewable energy and the low risk for export-oriented industries carbon energy intensive industrial by potentially causing a spiral of new ecosystems. The open approach of tariffs and trade barriers in global trade. ensuring energy diversification and technology neutrality provides a major STICKS AND CARROTS – steppingstone for European corporates ANOTHER LEVEL PLAYING to become not only sustainability FIELD forerunners but once again also potential future market leaders on a SPECIAL REPORT | CRITICAL RAW MATERIALS | EURACTIV 21