Can Europe safe its personal vital uncooked supplies? – DW – 05/22/2024 | EUROtoday

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In Bitterfeld-Wolfen they’re used to chemical processing. But a lithium refinery is one thing totally new to the jap Germany city’s industrial park that appears again to greater than a century of chemical business historical past. So new, it is the primary of its sort in the entire of Europe.

As the European Union is scrambling to make sure sufficient provides for its resource-hungry industries, AMG Lithium has arrange store in Bitterfeld-Wolfen with the goal of taking part in an important position within the EU plan.

The German subsidiary of US-based AMG Critical Materials N.V. desires to construct a refinery plant for battery-grade lithium that it hopes will feed Europe’s nascent battery business with out relying on Chinese provides of the mineral.

AMG Lithium’s CEO Stefan Scherer instructed DW the corporate will be capable of minimize out Chinese intermediaries from its lithium provide chain by 2028, and contributing to the EU’s bold goal of turning into self-reliant with regard to so-called vital uncooked supplies. These embrace lithium, phosphorus and bauxite in addition to so-called rare-earth minerals comparable to niobium, amongst 34 different parts.

CRMA to counter China’s dominance

This Thursday (May 23), the 27-nation EU’s first complete minerals’ technique is comig into pressure. Called the Critical Raw Materials Act (CRMA), the regulation units clear benchmarks for home capacities alongside the strategic uncooked materials provide chain and to diversify EU provide by 2030.

Of the EU’s annual consumption, at the least 10% should be extracted domestically from throughout the bloc. At least 40% of the processing and 15% of the recycling capacities should be based mostly within the EU. Overall “not more than 65% of each strategic raw material at any relevant stage of processing is to be sourced from a single third country.”

“In order to geopolitically compete with other big players such as China and the US, it is quite important that the [CRMA ] regulation allows to coordinate the needs and demands of different member states,” Melanie Müller, senior affiliate on the German Institute for International and Security Affairs (SWP), instructed DW.

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At the second, the EU’s total demand of rare-earth magnets, for instance, is being met by Chinese exporters. China dominates world metals markets by mining itself, however particularly by controlling the processing and refining of uncooked supplies.

Meanwhile, the EU is concerning China’s dominance as a menace to European provide chains and the continents inexperienced transition of numerous industries.

Unveiling the draft laws in March 2023, EU Commission President Ursula von der Leyen mentioned a dependable home uncooked supplies base was “vital for manufacturing key technologies for our twin transition — like wind power generation, hydrogen storage or batteries.”

A matter of money and time

In order to spice up the EU’s minerals mining output from at present 3% to the specified 10% by 2030, a lot of new mining websites must be opened up.

But Alice Yu, an analyst with S&P Global Commodity Insights, instructed DW that it takes “on average, 17 years to develop a lithium mine from initially being discovered to go into production.”

A picture of Stefan Scherer at the construction site of AMG Lithium's plant.
Stefan Scherer estimates the brand new plant will to value about €140 million — €5 million are a grant from the regional authoritiesImage: Felix Pauschinger/DW

And AMG Lithium’s Stefan Scherer estimates that whole funding prices to supply lithium hydroxide in a brand new plant would vary between €500 million ($541 million) to €1 billion.

But Scherer mentioned investing in commodities tasks is troublesome. The lithium value, for instance, has crashed 80% since 2022. “People are very, very cautious putting money into lithium projects at this point, because with the current price level, it’s very hard to make an investment case.”

A joint initiative by France, Italy and Germany is planning to boost €2.5 billion in preliminary funding to help personal useful resource tasks. But commodities professional Alice Yu doubts that state cash alone will spur vital funding. “If we put these funds in perspective for lithium alone, you’re looking at a mid-single-digit billion euros of investment needed just to meet the EU’s 2030 target.”

And what if China opens its big funding purse in search of to take part in EU-based tasks?

“So far the EU has been collaborative with Chinese battery production capacity investment in the EU. So if we go down looking at lithium refining, will you look to work with Chinese expertise and capital in this space, too?,” Yu added.

Edited by: Uwe Hessler