Discovery of rare earths in Sweden could boost energy transition in Europe

The Swedish state mining company LKAB announced last Thursday (12) that it had discovered large amounts of rare earth minerals. The discovery raises hopes that the EU can reduce its dependence on China for elements considered crucial in the development of a range of modern technologies, many of them linked to combating climate change.

According to LKAB, the area around its gigantic iron mine in Kiruna —the largest in the world— contains more than 1 million metric tons of rare-earth oxides. According to the company’s statement, the “significant” amount of ore found in the far north of the country would make the region the largest known deposit of rare earths in Europe.

Currently, China dominates the rare-earth market, accounting for more than 80% of global production and covering around 95% of European demand.

What is the importance of rare earths?

“This is good news not only for LKAB, the region and the Swedish people, but also for Europe and the climate,” said Jan Monström, CEO of the company, in a statement.

“[A descoberta] can become a significant building block for the production of critical raw materials that are absolutely crucial to enabling the green transition,” he added.

Moström said it is difficult to estimate the size of the deposits compared to others outside Europe. While the discovery is believed to be the largest on the continent, it remains small on a global scale, representing less than 1% of the 120 million tons estimated worldwide by the US Geological Survey.

According to LKAB, a request for an exploration concession should be submitted this year. The company stressed, however, that it will likely take 10 to 15 years before mining work can start and ore reaches the market.

“Electrification, EU self-sufficiency and independence from Russia and China will begin at the mine,” Swedish Minister for Energy, Business and Industry Ebba Busch said in a statement.

The discovery of rare-earth elements plays a crucial role in preserving the climate, as the ore is essential in the production of electric cars, smartphones and other renewable energy systems, among other uses.

Contrary to what the name implies, rare earths are actually found in abundance on Earth, aggregated with other minerals. According to mineralogists, the term “rare” is a reference to the fact that these ores are scattered across the planet in relatively low concentrations.

Europe remains highly dependent on China

Europe remains highly dependent on Beijing for both rare earths and strong permanent magnets made from alloys of elements from the ore, used mainly in products such as electric cars and smartphones.

It is believed that there are rare-earth deposits in the territory of several European countries, particularly in the Nordic nations. But there are currently no mining and extraction sites in operation. Within the EU, there is only one rare-earth separation facility in Estonia.

But the eventual exploration of rare earths in Europe faces a potential obstacle: the relatively high costs of extraction operations in European countries – due to better wages and working conditions, for example, or Chinese subsidies.

China supplies 95% of the EU’s magnets, which are also important for the defense sector. Estonia is slated to launch a magnet factory this year, with manufacturing slated to start in 2025.

Fast rising prices

The EU’s aim now is to secure its own supply of rare earths and limit its dependence on China, especially given the lessons learned after the Russian invasion of Ukraine. The bloc found itself struggling to meet its energy needs after, amid EU sanctions, supplies of Russian fossil fuels were suddenly limited.

“Our green and digital transition will make or break through how our supply chains work,” said Swedish Energy Minister Busch. “Look at China, with its near-monopoly on rare earths and permanent magnets and prices going up 50% to 90% just in the last year. The supply of raw materials has become a real geopolitical tool. That has to change. In the short term we need to diversify our trade, but in the long term we cannot rely on trade agreements alone. Electrification, self-sufficiency and independence from the EU will start at the mine.”

Sweden has just taken over the EU’s rotating presidency, with the state’s announcement coinciding with the arrival of the bloc’s commissioners in the country.

In light of plans to transition to a green and digital economy, the EU estimates that demand for rare earths will increase fivefold by 2030.

Amid rising trade tensions with Washington, Beijing has recently threatened to cut off supplies of rare earths to the US. Although the ores are also found in American territory, “China strategically flooded the global market with rare earths at subsidized prices, expelled competitors and dissuaded new entrants to the market,” said a report by the US Department of Defense.