Policy incoherence

In an International Peace Information Ser­vice (IPIS) briefing, Hadassah Arian, Guil­laume de Brier and Lotte Hoex identify a contradiction within the desired energy transition which the EU is unable to resolve with its policy on critical raw materials. They argue that the energy transition will merely shift dependence from fossil fuels towards mineral resources. In addition, they note that the increased demand for raw materials needed for renewable energy tech­nologies – so-called green technologies – creates a contradiction: while true that this type of energy production does not emit CO₂, the production of the raw materials needed for wind turbines or solar panels, for example, does. In addition to these eco­logical costs, the risks of infringing upon locals’ social and human rights in the pro­cess of extraction must also be taken into account, according to the authors. They see this as insufficiently addressed in the EU Commission’s raw materials plans and the European Green Deal. In this sense, they argue, one should not only measure the CO₂ footprint of final products, but must also consider sustainability along the entire green technology supply chain.

In his contribution to Mineral Economics, Patrice Christmann looks at EU commodity policy since the early 2000s. He argues that the EU has long prioritised development cooperation and free trade while underesti­mating China’s dominance as a supplier of raw materials; thus the EU has also over­looked its own vulnerability. After the 2007 G8 summit in Germany, however, EU policy has made significant gains, he notes, espe­cially in the field of research and develop­ment. Still, the EU’s dependence on third countries for the supply of critical raw materials increased instead of decreasing.

From the point of view of environmental sustainability, this is a problem in that the extraction and processing of these raw materials outside of the EU is CO₂ intensive. Christmann sees energy-intensive production methods as the main culprit as they often employ high-emission energy sources such as coal. In 2019, for example, China – currently the main supplier of critical raw materials – used coal for 58 per cent of its energy mix. With this reality in mind, the EU would hardly be able to control its actual CO₂ footprint, contradicting its intent to achieve greater sustainability, the author argues. For Christmann, the extraction and processing of domestic resources that adheres to high social and ecological standards is therefore just as indispensable as the further development of the circular economy.

The EU Action Plan provides for impor­tant steps that facilitate coherent EU-wide action, such as the European Raw Materials Alliance (ERMA), which was founded in the autumn of 2020. Still, despite all efforts, the EU’s scope for exerting influence is limited; future developments will depend heavily on China’s actions. Christmann thus points out that the goal of strategic autonomy in itself is difficult to achieve with the current policies.

The “right” choice of partners

Daniel Fiott and Vassilis Theodosopoulos of the European Union Institute for Secu­rity Studies argue in their brief that geo­political factors require diversification of imports of critical raw materials and should therefore be taken into account when choos­ing new trading partners. They estab­lished three criteria that should inform this choice: the degree of state fragility, the risk of economic coercion and a country’s vul­nerability to climate change.

1. State fragility describes the likelihood that a state will no longer be able to fulfil its core tasks, such as ensuring security, pro­viding basic social services and guaranteeing rule-of-law. States that might instru­mentalise trade for foreign policy purposes should not be exchanged for politically and economically fragile states. Trade relations with fragile states are unstable and entail risks.

2. Economic coercion, as seen in the im­plementation of sanctions against or export restrictions to EU states, for example, is a growing problem. Fiott and Theodosopoulos consider the combination of authoritar­ian / non-democratic regimes with strong national economies (e.g. China, Russia and Saudi Arabia) to be particularly risky trade partners.

3. A country’s vulnerability to climate change is a problem insofar as its industrial production and thus its export supply could be affected by natural disasters.

Considering all three factors, the authors point to the need to engage in a delicate balanc­ing act. Through trade, the EU can raise standards and improve norms in vul­ner­able and/or fragile states and increase their stability – and it should. At the same time, however, the authors argue that it must keep an eye on the security of its own supply. Therefore, greater attention should be paid to existing, secure trade relations – in this regard, the authors point to Argen­tina, Australia, Canada, Japan, the United Kingdom (UK) and the US.

Pau Ruiz Guix, a research associate work­ing at the European Council on For­eign Rela­tions until January 2022, picked up this thread in his commentary, arguing that transatlantic cooperation must be en­hanc­ed. In his comparative analysis of US and Euro­pean plans to secure access to raw materials, Ruiz Guix identifies numer­ous similarities that offer the potential for cooperation; a cooperation that would mini­mise the risk of becoming victims of eco­nomic coercion and strengthen the resilience of supply chains. However, the EU and US’s planned policy measures do not currently show any signs of close cooperation.

Still, for Ruiz Guix, EU and US strengths could be merged in three primary areas: first, in establishing a joint research and development plan for areas such as recy­cling, sustainability standards and geo­logical mapping; second, in aligning trade diversification strategies and international investment priorities; and third, in jointly developing strategic reserves of critical raw materials, thus enabling the partners to assist one another when supply chains are dis­rupted.

Cooperation with mining coun­tries in Africa and Latin America

From a social justice perspective, Jewellord Nem Singh analyses the strategies of the US and EU in securing their supply of critical raw materials. In a Wilson Center publication, he criticises how the discussion about the energy transition largely ignores the issue of growing inequality and uneven devel­opment. For him, the extraction of natural resources has played an important role in Latin American development strat­egies so far, and this will probably continue to be the case – also from the point of view of local decision-makers. The governments of resource-rich countries would certainly be interested in shaping (sustainable) global industrial and mining policies.

As examples, Singh cites Chile and Brazil, which have worked intensively on such issues over the past decade. According to him, importing countries should be open to ideas. Both interests and responsibilities must be given equal attention on the sup­ply and demand side. Among other things, for him, this would mean developing joint measures that reduce vulnerabilities and risks for the mining countries and that pro­mote the circular economy and the reduc­tion of consumption in the importing countries.

What Does the European Green Deal Mean for Africa? ask Zainab Usman, Olu­mide Abimbola and Imeh Ituen in their report for the Carnegie Endowment for In­ternational Peace. According to the authors, for Africa, the most prominent consequence of the EU’s plans for a climate-friendly future is its increased demand for critical raw materials. They argue that this is demon­strated, for example, in the EU Criti­cal Raw Materials List that highlights some ma­terials that can be found in African coun­tries. South Africa, for example, is the main sup­plier of platinum, Guinea of bauxite.

The authors see this as an opportunity. However, they also warn that Africa could once again take on the role of a supplier of raw materials without developing locally. Moreover, mining could have negative social consequences and be accompanied by harmful environmental impacts that con­tribute to the fragility of certain states.

In the interest of mutually beneficial part­nerships, the authors argue that the EU must take the positions of African partners more seriously when coming to a decision. At the same time, African states must pre­pare themselves individually and collectively for partnership, as opposed to entering into a relationship marked by dependency. The authors note that updating laws and regu­lations to meet local content requirements could help to promote knowledge transfer, technological development and the linkage of the extractive sector with other areas of the economy. They argue that closer co­operation with local private sectors would also offer opportunities.

Antonio M. A. Pedro, Director of the United Nations Economic Commission for Africa (UNECA), speaks from a similar per­spective in an interview with One Earth about the challenges in the extractive sector and the difficulties facing sustainable devel­opment. Here, he discusses the compatibil­ity of the EU’s goals as an importer of raw materials with those of African countries as exporters. While the EU is trying to secure access to critical raw materials in order to implement its climate policies, the plans of the African Union (AU) run counter to this. Indeed, Pedro notes that the AU’s Africa Mining Vision envisions more local mineral processing, refining and manufacturing as well as value-added and resource-led indus­trialisation. He warns that this could lead to restrictions on the export of raw materials, which are in turn essential for the successful implementation of the EU strategy. How Africa positions itself with regard to this strategy and the role that African represen­tatives will play in negotiations needs to be clarified.

Domestic raw material sources and processing

In an article published in Resources, Ewa Lewicka, Katarzyna Guzik and Krzysztof Galos stress the importance of raw material production from local deposits in meeting the future needs of EU industry. While they note that 11 of the EU’s 30 critical raw materials can be found within EU territory, including lithium, natural graphite and rare earths, they also point out that these deposits alone are insufficient in meeting the EU’s needs. For the authors, in order to reduce dependence on third countries, the use of secondary raw materials and recy­cling is promising, not only in terms of security of supply, but also for environmental and social reasons. In this respect, they argue that domestic supply should not only be understood as mining within the EU and in European third countries, but also as the recycling of already extracted materials. Following this path, the entire value chain could be expanded in Europe. If primary and secondary raw materials are extracted locally, further processing must also take place locally. Otherwise, another form of dependency would simply arise and most of the value creation would take place out­side the EU, the authors argue.

This call for domestic mining is echoed by Frank Umbach in a blog post. For him, even if recycling and supply chain diversi­fication contribute to the strategic autonomy of the EU, domestic mining and processing in Europe – not only in the EU – is indis­pensable. He sees the “Bjerkreim Exploration Project” in Norway as a promising example of this; indeed, it has discovered large deposits of vanadium, titanium and phosphate – all of which appear on the 2020 EU Critical Raw Materials List. He notes that the EU is now providing unprec­edented financial support to projects that aim to develop mines and the expansion of raw material supply chains in Europe. Up until now, such endeavours had often been unprofitable.

Moreover, while Umbach points out that mining in Europe can be more environmen­tally friendly than in other regions of the world, he also observes that conflicts of in­ter­est are already emerging that could slow down the development of European mining capacities. Examples of this include, con­flicts between ensuring security of sup­ply on the one hand and protecting the local environments and communities on the other, especially as locals would suffer from possible negative consequences of raw ma­terial extraction. Umbach points to several protests in Spain and Serbia in 2021 as ex­am­ples in which local communities voiced opposition to planned lithium min­ing opera­tions. In this sense, the author notes that it is important to clarify prior­ities and to manage the balancing act be­tween local conservation and global climate protection. If the EU cannot guarantee a supply of criti­cal raw materials, the energy transition and its larger aims will be jeop­ard­ised.

Germany as a major importer of raw materials

Of all the countries in the world, Germany is one of the largest consumers of several industrial metals, including copper and nickel. As a result, Germany has great inter­est in securing access to raw materials. In a contribution to SIRIUS, Jakob Kullik and Marc Schmid discuss how the German government’s plans to secure raw materials are to be understood in the context of joint action in the EU. They compare the German raw materials strategy of 2010 with that of 2020, both of which were developed under the auspices of the then-Ministry for Eco­nomic Affairs and Energy (BMWi, now BMWK). The authors ascribe little success to the 2010 strategy, saying that Germany’s dependence on raw materials for (critical) metals is still very high; they also see little change in the 2020 strategy. Especially in view of EU plans, it remains unclear how a national German strategy relates to a com­mon European approach.

Kullik and Schmid even express doubts as to whether a German strategy is neces­sary at all. They praise Germany for recog­nising the broad spectrum of challenges, ranging from security of supply through sustainability and environmental protec­tion to the responsibility of companies in the supply chain to safeguard human rights. But there is no question that the bulk of the challenges can only be solved on a common European basis. For the authors, Germany runs the risk of asking too much of itself, setting ambitious goals and engaging in discussions parallel to the EU level, thus preventing the clear distri­bution of tasks that is needed. Kullik and Schmid go on to argue that, in doing so, Ger­many could actually hinder its and the EU’s implementation of projects such as the European Green Deal.