New mines that will reduce the costs of electric cars: European plan is on the way

Opening new mines by reducing bureaucracy. But we also encourage innovation, the development of alternative materials and recycling. And diversify the third countries from which to source. These are the main points of EU law on critical raw materials that have received the green light from member states and the European Parliament. The stated goal is to increase Europe’s capacity to stockpile strategic materials for the ecological and digital transition, such as lithium for electric cars, as well as strategic materials for the defense and aerospace sectors. The challenge is to reduce supply costs and dependence on a small group of third countries, primarily China.

Why we go back to the mine (or almost)

Every year, Europe imports raw materials with a total cost of 31 billion euros. Until recently this wasn’t a problem. However, in recent years, the acceleration of ecological and digital transition at the global level and the increasingly heated tensions between the USA and China have caused alarm bells to ring in Brussels. Thus, the EU Commission has prepared a list of raw materials considered “critical” for the future of European industry, from lithium to phosphorus, copper to rare earths. With the last update, the number of these materials increased to 36 with the addition of synthetic graphite and aluminum.

Only 3 of these raw materials are currently mined in good quantities in the EU, while 17 have a dependency ratio on third countries of 80%. Under the new law, Europe will no longer be able to rely on a single source of supply for more than 65% of its consumption. How to be successful in this venture? The first step, although not the main step, is to return to the mine.

Bureaucracy and Nimby

The law sets 2030 as the target year: by this date, the EU must have the capacity to extract at least 10% of the critical raw materials it uses. It won’t be easy: Europe’s subsoil looks promising, but the latest scandal affecting one of the most interesting lithium extraction projects in Portugal reminds us of the difficulties EU countries have in implementing new mine construction. Mineral extraction comes with environmental costs that affected communities are unwilling to pay, but there are also legal restrictions that make authorization mechanisms long and cumbersome. The law, approved by governments and the European Parliament, will give the mines the status of “projects of significant public interest”, which will allow national authorities to issue permits faster, bypassing environmental restrictions set by the EU itself.

Diversification of resources and recycling

But a piece of paper is not enough to overcome bureaucracy and local resistance. And most importantly, the EU’s subsoil does not have to be this generous. The law therefore emphasizes the role of strategic partnerships with supplier countries in order to diversify supply sources: Brussels has already moved in this direction with Chile, Canada, Congo, Kenya, Namibia, Kazakhstan and Argentina, not forgetting Ukraine, which has reserves. It could solve many problems of EU industry. In this context, recycling plays an important role: The law sets a target of reaching at least 25% recycled raw materials by 2030.

Transformation

Improving supply is not the only way to ensure that industry has sufficient supplies of materials at competitive costs: One of the critical nodes of the supply chain for Europe is the conversion of mines. Here China’s role is even more pronounced: Beijing controls the refining of 80% of the main critical materials. Will the EU be able to rid itself of these dependencies? European Parliament member Nicola Beer says that with the new law, “the path to open, economic and geopolitical sovereignty of Europe is being drawn.” Now we need to follow the specified path.

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