The EU is "pulling out all the stops" to avert a China trade war by backing 46 new critical minerals projects. Industry commissioner Stéphane Séjourné announced on Friday that the bloc will support these strategic projects to accelerate supplies of critical raw materials by 2030. With €21bn in funding, the initiative aims to secure lithium, gallium, and rare earths essential for auto, defence, and renewable energy industries.
"We could face a crisis in the coming months," Séjourné warned. "We may face trade tensions that could also trigger a crisis in a number of sectors. We need to be prepared for that. And we're getting ready right now." The move comes as trade commissioner Maroš Šefčovič continues talks in Beijing to reduce China's "unsustainable" £1bn-a-day trade surplus with the EU.
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EU's Critical Minerals Strategy
The EU's critical minerals strategy is a direct response to growing geopolitical risks. By supporting mines, factories, and financing agreements, the bloc aims to build a resilient European value chain. "Mines are opening, factories are being built, financing agreements are being signed, and a European value chain is emerging," Séjourné added.
This strategy is part of the European Critical Raw Materials Act, which sets benchmarks for domestic extraction, processing, and recycling. The 46 projects are expected to significantly boost the EU's self-sufficiency in key materials.
Key Minerals and Their Uses
| Mineral | Primary Use | 2023 EU Import Reliance |
|---|---|---|
| Lithium | EV batteries, energy storage | 100% |
| Gallium | Semiconductors, LEDs | ~90% |
| Rare Earths | Magnets, wind turbines, defence | ~98% |
Implications for Global Trade
The EU's push to secure critical minerals could reshape global trade dynamics. China currently dominates the supply chain for many of these materials, and the EU's move is seen as a way to reduce dependency. However, some analysts question whether the EU can achieve its targets without provoking further tensions with China.
The €21bn funding will be distributed across various projects, including mining, processing, and recycling. The EU aims to have 10% of its critical raw materials extracted domestically, 40% processed, and 15% recycled by 2030.
Key Takeaways
- EU backs 46 critical minerals projects with €21bn funding to secure supply chains.
- Focus on lithium, gallium, and rare earths to support auto, defence, and renewable energy.
- Aims to reduce reliance on China and avert a potential trade war.
- Part of the European Critical Raw Materials Act, targeting 2030 benchmarks.
FAQ
What are critical raw materials?
Critical raw materials are resources that are economically important but have a high risk of supply disruption. They are essential for key industries like renewable energy, digital technology, and defence.
Why is the EU focusing on these minerals now?
The EU is focusing on these minerals to reduce dependency on China and to prepare for potential trade tensions. The goal is to secure supply chains for the green and digital transitions.
How will the EU fund these projects?
The EU will provide €21bn in funding through various channels, including public and private investments, to support the 46 strategic projects.
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