Wind turbines, electric cars, solar panels, semiconductors are just some of the high tech products that are considered essential in any modern economy. Some of them are helping Europeans overcome their energy dependence on Russia in recent years. Only for the production of these products, European countries have fallen into another kind of dependence, this time from China. This is where mainly industrial metals and the so-called “rare earths” come from, chemical elements absolutely necessary for state-of-the-art technologies.
According to Siriam Al Barazi, an associate at the Berlin-based German Institute of Raw Materials, raw material”. For industrial metals required in the production of high-tech products, the EU is dependent on imports, at a rate of 75 to 100%. Of the 30 chemical elements that are considered absolutely necessary (rare earths, magnesium, bismuth, etc.), 19 are mainly imported from China.
China has won the trust of Europe
Dependence on Chinese exports will increase in the coming years. According to EU estimates, the demand for cobalt will increase fivefold by 2030, while the development of electric propulsion will increase by … 60 times the demand for lithium, an element used in the batteries of electric vehicles. For decades, there has been concern that China may begin to use its dominant position in raw material exports as a lever of political pressure. But an incident dating back to 2010 has renewed Europeans’ confidence. At the time, Beijing had curtailed exports of rare earths, and Europeans turned to the World Trade Organization (WTO). “China has complied with the ruling of the arbitral tribunal within the WTO, and this has strengthened the confidence of Germans and all Europeans in Beijing,” said Raimund Blaiswicz, director of the Leibniz Institute for Science at the University of Bremen.
It seems that the issue is not closed definitively. According to the German economic review Handelsblatt, the Chinese Ministry of Industry is considering scenarios for reducing rare earth exports to the United States, while the latest “five-year plan” of central economic planning in Beijing provides for larger quantities of rare earths to cover inland. The goal is considered even more urgent, since China wants to become “climate neutral” by 2060, so it will need more and more rare earths to modernize its industrial production.
“Differentiation” is what is required in the import of raw materials
The Germans have been aware of the problem for many years and are constantly looking for alternatives. For example, rare earth imports have started from Brazil, so that there is an alternative market in China. But as Raimund Blaiswicz points out, industry and politics do not pay the necessary attention to this issue, except at very specific times. “When prices rise, as it does today, the issue comes back and it is fashionable, we would say,” says the German expert. “But as soon as prices fall, the issue is forgotten again and in the end nothing happens …”
And so China remains today the largest producer and exporter of industrial metals and rare earths that are considered absolutely necessary in European industry. This situation carries risks, even if China has no intention of harming the Europeans. A typical example, experts point out, was the forced restrictions on magnesium production for reasons of environmental protection at the end of 2021, resulting in a tripling of its price in international markets.
The question remains, of course, why Europeans do not use their own stocks of raw materials, which may not be enough to meet all needs, but still exist. A first answer is that Europeans do not want the “dirty work” of mining at their door. In addition, says Siament Al Barazi of the German Institute of Raw Materials, “Europe often does not have the necessary investment funds to finance mining”, when in fact China supports its own mines with state resources.
DW: Inza Brende – Giannis Papadimitriou
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