The European Union is rushing to resolve a trade dispute with China over controls on rare earth exports. At the same time, it seeks to reduce its dependence on these precious metals from the giant country of East Asia, according to a text of the European Newsroom, an excerpt of which follows.

But while the EU is still looking for a response to Chinese restrictions, the United States has moved forward in its negotiations with China.

US President Donald Trump said on Thursday he had reached an agreement with Chinese President Xi Jinping in the dispute over Chinese controls on rare earth exports. However, it is unclear what impact, if any, this agreement will have on the talks between the EU and China.

A European Commission spokesman said Thursday in Brussels: “In principle we welcome any development that removes barriers to global trade flows.” He added, however, that “the EU is fully focused on its own bilateral trade engagement with China, which includes rare earth minerals” and confirmed that high-level technical talks will take place this Friday in Brussels.

Earlier this month, China announced new controls on exports of rare earths, which are critical to making magnets used in the automotive, electronics and defense industries. The crisis erupted after the Netherlands decided to put Chinese-owned microcircuit maker Nexperia under surveillance and suspended its Chinese chief executive. Beijing responded by banning re-exports to Europe.

The crisis prompted European Commission President Ursula von der Leyen to propose on Saturday a package of measures to rapidly reduce Europe’s dependence on imports of raw materials from China.

The EU announced that the restrictions forced some of the European coalition’s companies to stop production and caused financial damage. Export restrictions, recently announced by the Chinese government, threaten the stability of global supply chains and European companies should expect an immediate impact, von der Leyen said.

“In the short term, we are focused on finding solutions with our Chinese counterparts, but we are ready to use all the tools in our toolbox to respond if necessary,” he added.

Why is the EU so dependent on China for rare earths?

Europe is highly dependent on imports of raw materials from China, which are critical for the transition to zero-emission energy and the green transition, experts told Czech news agency CTK.

These imports include rare earths, lithium, cobalt, nickelbut also the solar panels. The dependence also applies to batteries or semiconductors, according to these experts.

China dominates global rare earth production and processing. These ores and the magnets made from them are used in key technologies such as smartphonesthe televisionsthe electric ones enginesthe semiconductors and the turbines.

While rare earths are abundant in China, their extraction is expensive and harmful to the environment, requiring large amounts of water and energy. The big offer has given them to China almost monopoly control of the world market – although Brazil, India and Australia also produce rare earths.

According to Dominika Remzova of the non-governmental organization Union for International Affairs, based in Prague, the biggest risk is connected to the processing phase. Rare earth elements, needed for wind turbines, and lithium for batteries are particularly vulnerable. Although Europe has its own reserves, it does not have the ability to process them, which China has been systematically developing for decades.

“Most of these dependencies threaten European industryparticularly in the automotive, energy and renewables and chemical and pharmaceutical industries,” says Susana Kruličová of the Institute of International Studies at the Faculty of Social Sciences of Charles University in Prague.

The EU recognizes these dependencies and therefore passed the Critical Raw Materials Regulation, through which it seeks to ensure a reliable and sustainable supply. Remzova warned, however, that demand is growing faster than Europe can reduce its dependence.

The EU’s road to independence

According to Volker Trier, head of foreign trade at the German Chamber of Commerce and Industry (DIHK), the EU should independently establish contact with China regarding rare earths. “The EU itself must start talking to the Chinese. Toeing the line of the US is not a sustainable strategy for Germany and Europe,” he told RBB Inforadio in Berlin.

“Whether it’s energy or raw materials, defense or the digital industry, Europe must fight for its independence and now is the time to do it,” said Commission President von der Leyen on Saturday. Investments in strategic programs for the production and processing of important raw materials in the European Union will increase and partnerships with countries such as Ukraine, Australia, Canada, Kazakhstan, Uzbekistan, Chile and Greenland will be accelerated, the head of the European Commission said.

Earlier this year, the Commission selected 47 “strategic programmes” to secure and diversify its access to raw materials in the European Union. The programs are located in 13 EU member countries: Belgium, France, Italy, Germany, Spain, Estonia, Czech Republic, Greece, Sweden, Finland, Portugal, Poland and Romania.

The European Commission is creating a common platform for the purchase and storage of critical raw materials, similar to the model it has adopted for energy – the so-called REsourceEU programme.

Details are expected to be presented in November.

The European Newsroom text was jointly compiled by the European news agencies AFP, ANSA, CTK, DPA, EFE, Lusa.