MINEX Forum

Tag: Critical raw materials

  • How a junior mining company is bringing critical materials supply back to Europe

    How a junior mining company is bringing critical materials supply back to Europe

    Historically, the European Union (EU) has relied on countries like China for its supply of critical raw materials, but companies like Leading Edge Materials are moving to shift the focus back on its own soil.

    Case in point, the EU proposed the Critical Raw Materials Act (CRMA) in March 2023, which aims to boost supply of strategic raw materials that are crucial in advancing the EU’s move towards a sustainable, digital and sovereign future.

    This comes as a move to shift supply away from China, which currently processes almost all rare earth elements. It is estimated that the country currently produces roughly 70 per cent of global production of rare earth elements, however there are three facilities in Europe that are and will be able to produce the materials – in Sweden, France and Estonia – which will effectively reduce China’s overwhelming grip on the permanent magnet industry

  • Battery-grade lithium production to start in Germany

    Battery-grade lithium production to start in Germany

    It has been deemed the “new gold rush” – a frantic pursuit to catch up with China in the production and refinement of materials essential for various products, ranging from computers to cars. However, one must question whether this endeavor has come too late to salvage Europe’s car industry.

    In the heart of a former East German town, lies the initial outcome of the EU’s ambitious plan to mitigate risks and reduce dependence on imports for the green revolution. In Bitterfeld-Wolfen, located 140km southwest of Berlin, a company listed in Amsterdam is racing against time to complete the construction of an expansive factory that will be the first in Europe to yield battery-grade lithium.

    Across Europe, a competition has ensued to both mine the silver-white soft metal and manufacture its refined form, lithium hydroxide, which serves as the key ingredient in batteries powering electric cars, robot vacuum cleaners, and mobile phones.

    Stefan Scherer, the CEO of AMG Lithium, remarks, “Everybody desires access to lithium. This is why they refer to it as white gold; it has sparked a gold rush. There is hardly a company in the raw materials industry that isn’t exploring lithium. It is simply too enticing.”

    The EU finds itself in a state of urgency, having belatedly realized its excessive reliance on China for several critical raw materials. Brussels has identified 16 such materials as priorities in a new industrial strategy aimed at safeguarding the bloc’s economy and achieving the ambitious goal of reducing net greenhouse gas emissions by at least 55% by 2030.

    This dependency also unsettles German and other European car manufacturers, as their domestic markets face threats from high-quality Chinese cars and China’s control over lithium processing.

    The concerns are so significant that Ursula von der Leyen, the President of the European Commission, has initiated an anti-subsidy investigation into Chinese imports, fearing that major manufacturers like Volkswagen and BMW will struggle to keep up with the supply of electric cars from China.

    However, it is worth noting that lithium, for the most part, does not originate from China. So how has China managed to secure such a dominant position? Has Europe been negligent?

    Lithium supplies are primarily controlled by five countries, with the majority of the mineral being mined in Australia and Chile. Yet, it is China that has taken the raw material and become the primary supplier of refined lithium.

    “They have now become the global hub, granting them economic leverage – or more bluntly, the means for economic coercion,” says an EU source.

    The roots of the EU’s dependence on China can be traced back to the 1980s, following the oil crisis when the Chinese leader at the time, Deng Xiaoping, astutely observed, “The Middle East has oil. We have rare earths.”

    Rare-earth materials were once abundant in the United States, Europe, and Japan. However, investors in those regions withdrew from mining, deeming it a costly and environmentally detrimental industry. This retreat handed China a significant share of the market, allowing it to acquire the world’s stockpile and eventually become the global hub it is today.

    The Russian invasion of Ukraine has brought the lopsided trade relationship into sharper focus.

    “Lithium and rare earths are already replacing gas and oil at the heart of our economy. By 2030, our demand for those rare earth metals will increase fivefold,” warned Von der Leyen in her 2022 state of the union address. “We must avoid falling into the same dependence as with oil and gas.”

    Consequently, the EU has embarked on a journey to accelerate the development of green technologies through the Critical Raw Materials Act, which was swiftly passed earlier this year. Peter Handley, the head of the raw materials unit in the commission, describes its passage as an accomplishment in record time. The act relaxes state aid rules to compete with the US’s Inflation Reduction Act, sets higher targets for extraction within Europe, and promotes product recycling, particularly for items like phones that contain lithium. If all goes according to plan, the act will become a regulation in the EU this month, setting a high level of ambition.

    Before embarking on a trip to Latin America to secure deals for raw material production, Von der Leyen stated that the EU is “97% dependent on China for lithium.”

    Back in Bitterfeld, Scherer surveys the colossal plant that will contribute to reducing this dependency. He highlights the towering 20-meter metal vats for lithium solutions and the drying machines that produce a substance resembling sugar crystals – just some of the processes involved in creating the final refined product, eagerly awaited by clients as the first batches of EU-manufactured lithium.

    AMG Lithium anticipates commencing operations by the end of this year, with orders extending to 2026. The demand for fresh lithium salt in Europe is projected to rise to 500,000 tonnes annually by 2030, and Scherer affirms their plan to produce 100,000 tonnes, sufficient to provide the active charging ingredient for 2.5 million cars“`
    It has been dubbed the “new gold rush” – a frenzied race to catch up with China in the production and refining of essential materials for various products, from computers to cars. However, one must question whether this effort has come too late to salvage Europe’s car industry.

    In the heart of a former East German town lies the initial outcome of the EU’s ambitious plan to mitigate risks and reduce reliance on imports for the green revolution. In Bitterfeld-Wolfen, located 140km southwest of Berlin, a company listed in Amsterdam is racing against time to complete the construction of a vast factory that will be Europe’s first to produce battery-grade lithium.

    Across Europe, a competition has emerged to both mine the silver-white soft metal and manufacture its refined form, lithium hydroxide, which is a crucial component in batteries powering electric cars, robot vacuum cleaners, and mobile phones.

    Stefan Scherer, the CEO of AMG Lithium, notes, “Everyone wants access to lithium. That’s why they call it white gold; it has sparked a gold rush. There’s hardly a company in the raw materials industry that isn’t exploring lithium. It’s simply too alluring.”

    The EU finds itself in a state of urgency, having belatedly realized its excessive dependence on China for several critical raw materials. Brussels has identified 16 such materials as priorities in a new industrial strategy aimed at safeguarding the bloc’s economy and achieving the ambitious goal of reducing net greenhouse gas emissions by at least 55% by 2030.

    This dependence also unsettles German and other European car manufacturers, as their domestic markets face threats from high-quality Chinese cars and China’s control over lithium processing.

    The concerns are significant enough that Ursula von der Leyen, the President of the European Commission, has launched an anti-subsidy investigation into Chinese imports, fearing that major manufacturers like Volkswagen and BMW will struggle to keep up with the supply of electric cars from China.

    However, it is worth noting that lithium, for the most part, does not originate from China. So how has China managed to secure such a dominant position? Has Europe been negligent?

    Lithium supplies are primarily controlled by five countries, with the majority of the mineral being mined in Australia and Chile. Yet, it is China that has taken the raw material and become the primary supplier of refined lithium.

    “They have now become the global hub, giving them economic leverage – or more bluntly, the means for economic coercion,” says an EU source.

    The roots of the EU’s dependence on China can be traced back to the 1980s, following the oil crisis when the Chinese leader at the time, Deng Xiaoping, shrewdly observed, “The Middle East has oil. We have rare earths.”

    Rare-earth materials were once abundant in the United States, Europe, and Japan. However, investors in those regions withdrew from mining, deeming it a costly and environmentally detrimental industry. This retreat handed China a significant share of the market, allowing it to acquire the world’s stockpile and eventually become the global hub it is today.

    The Russian invasion of Ukraine has brought the lopsided trade relationship into sharper focus.

    “Lithium and rare earths are already replacing gas and oil at the heart of our economy. By 2030, our demand for those rare earth metals will increase fivefold,” warned Von der Leyen in her 2022 state of the union address. “We must avoid falling into the same dependence as with oil and gas.”

    Consequently, the EU has embarked on a journey to accelerate the development of green technologies through the Critical Raw Materials Act, which was swiftly passed earlier this year. Peter Handley, the head of the raw materials unit in the commission, describes its passage as an accomplishment in record time. The act relaxes state aid rules to compete with the US’s Inflation Reduction Act, sets higher targets for extraction within Europe, and promotes product recycling, particularly for items like phones that contain lithium. If all goes according to plan, the act will become a regulation in the EU this month, setting a high level of ambition.

    Before embarking on a trip to Latin America to secure deals for raw material production, Von der Leyen stated that the EU is “97% dependent on China for lithium.”

    Back in Bitterfeld, Scherer surveys the colossal plant that will contribute to reducing this dependence. He highlights the towering 20-meter metal vats for lithium solutions Critical Raw Materialsand the drying machines that produce a substance resembling sugar crystals – just some of the processes involved in creating the final refined product, eagerly awaited by clients as the first batches of EU-manufactured lithium.

    AMG Lithium anticipates commencing operations by the end of this year, with orders extending to 2026. The demand for fresh lithium salt in Europe is projected to rise to 500,000 tonnes annually by 2030, and Scherer affirms their plan to produce 100,000 tonnes, sufficient to provide the active charging ingredient for 2.5 million cars.

  • Many society organisations are calling on the EBRD to reconsider its approach to mining investments

    Many society organisations are calling on the EBRD to reconsider its approach to mining investments

    Twenty civil society organisations from Albania, Armenia, Azerbaijan, Bosnia and Herzegovina, Georgia, Mongolia, Uganda, Ukraine and Uzbekistan, as well as seven international environmental and human rights organisations, are calling on the European Bank for Reconstruction and Development (EBRD) to reconsider its approach to mining investments.

    In their recommendations, civil society groups urge the Bank to do more to safeguard the environment and welfare of local communities and to take action to reduce the demand for critical raw materials.

    The EBRD is currently in the process of revising its Mining Sector Strategy for 2024 to 2028. The draft document proposes an increase in investments in mining critical raw materials required for the green and digital transition, as well as the promotion of exploration.

    On 15 September, civil society organisations submitted recommendations regarding the EBRD’s mining strategy, advocating for the following measures:

    • Prioritise the circular economy over just mining;
    • Focus on reducing material footprints and promote recycling;
    • Ensure that no mining investments are made in countries that do not enforce environmental laws;
    • Define no-go zones and prohibited technologies;
    • Guarantee Free Prior Informed Consent for Indigenous Peoples and consent from all affected communities;
    • Deliver tangible benefits to local communities in the countries where the EBRD operates.

    Although the draft strategy highlights the importance of improving relations between mining companies and local communities, public consultations on the draft were conducted during the summer holiday period. A very small number of handpicked groups were invited at extremely short notice to local consultation events, seriously limiting public input.

    The mining sector has a shameful track record of pollution, human rights abuses, community resistance and retaliation against activists around the world. It remains the most perilous sector for environmental defenders, with almost 30 per cent of annual attacks occurring within the industry. EBRD-funded projects in Armenia (Amulsar) and Bosnia and Herzegovina (Adriatic Metals) have already prompted complaints by affected communities to the EBRD’s Independent Project Accountability Mechanism (IPAM) due to environmental pollution and lack of public consultation.

    Nina Lesikhina, Policy Officer at Bankwatch, says: ‘Business as usual is no longer an option. Relying solely on environmental and social safeguards is insufficient, given their gaps and inadequate implementation. The EBRD needs to consider each country’s capacity to implement mining projects sustainably and how to reduce demand for critical raw materials in the first place. The imperative for a green transition should not be used as an excuse to reduce efforts, but as a motivation to do more to ensure that the transition is truly green and equitable.’

    Sukhgerel Dugersuren, Chair at Oyu Tolgoi Watch, Mongolia, says: ‘If the EBRD and other development banks increase financing for mining, corporations will scramble to secure critical and/or transition minerals. This will have further negative impacts on climate change, contaminating the environment, depleting water resources and deepening desertification processes. The Mongolian economy is dependent on a single sector – mineral extraction – which is closely tied to the Chinese market. Any future mining strategy must be guided by principles that balance economic, geopolitical and other risks.’

    Gaelle Dusepulchre, Deputy Head of the Business, Human Rights and Environment Desk at the International Federation for Human Rights, says: ‘Mining projects are among the most harmful to human rights and the environment. Any mining strategy must promote a truly just transition. These projects not only require increased due diligence but also rely on the meaningful participation and consent of communities likely to be affected. Protecting human rights and environmental defenders is just as essential.’

  • EU moves to cut dependency on China for battery and solar panel materials

    EU moves to cut dependency on China for battery and solar panel materials

    The European Parliament, in a significant move, has voted to reduce regulatory burdens and diversify the sources of critical raw materials like lithium and silicon. This plan aims to secure a steady supply of these materials, which are essential for the production of solar panels, electric vehicle batteries, and other crucial elements of the EU’s green transition.

    By approving this act with an overwhelming majority of 515 votes in favor and 34 against, the European Parliament seeks to decrease its reliance on a single country for more than 65% of any strategic raw material by 2030. The details of this act will now undergo negotiations between the parliament and the council.

    Nicola Beer, a German MEP from the liberal Renew Europe group, who was responsible for the proposal, expressed that the European Parliament has taken a clear stance on the security of supply, emphasizing the path towards European sovereignty and competitiveness. The EU’s shift towards clean energy necessitates access to critical raw materials like lithium and silicon, as they are vital for electric vehicle batteries and solar panel semiconductors. Presently, the EU depends on a small number of countries, including China, as suppliers.

    Hildegard Bentele, a German MEP from the center-right European People’s Party, stressed the importance of increasing the supply of reliable sources for raw materials, stating that electric mobility cannot thrive without batteries, and batteries cannot be produced without an adequate supply of lithium. She emphasized the need for a credible and strategic raw materials policy to achieve this goal.

    The newly proposed plan establishes targets for the extraction, processing, and recycling of critical raw materials. By 2030, the EU aims to have the capacity to extract at least 10% of its demand and process 50% of its demand for these materials. The plan also includes provisions allowing for up to 20% of new processing capacity to come from partnerships with emerging markets. Furthermore, the recycling capacity is expected to reach 45% for the collection, sorting, and processing of strategic materials from waste.

    Mohammed Chahim, a Dutch MEP from the center-left Socialists and Democrats, highlighted the potential to reduce import demand through improved material efficiency and recycling. He noted that the revised plan expands the scope of national circularity plans to encompass more reuse, refurbishment, and recycling, in comparison to the original proposal put forth by the European Commission.

    According to the International Energy Agency’s net-zero emissions scenario, global demand for key critical minerals, including nickel, cobalt, lithium, copper, and neodymium, is projected to grow by 1.5 to seven times by the end of the decade. This underscores the urgency for the EU to diversify its sources of these materials.

    Since the conflict between Russia and Ukraine exposed the EU’s overreliance on Russian gas imports, European politicians and businesses have been actively seeking alternative suppliers for key minerals. Markus Beyrer, the head of the industry lobby group BusinessEurope, acknowledged the European Parliament’s recognition of the importance of securing and diversifying the supply of critical raw materials. He particularly welcomed the support for streamlined permitting processes, reduced bureaucratic obstacles, and the focus on strengthening partnerships with trading partners.

    However, some environmentalists have raised concerns regarding the act, fearing that it may lead to poorly regulated mines in countries like Finland, which is rich in critical minerals, thereby posing risks to the environment. They have criticized the proposal for expediting the issuance of permits without adequately raising the environmental standards that mining companies must adhere to.

    Satu Jaatinen, a board member of MiningWatch Finland, an environmental nonprofit organization, emphasized that mines and the battery industry can be made sustainable by adopting existing technologies. She expressed disappointment that the industry is unwilling to make the additional investments required for sustainability, asserting that mines should reflect their true costs.

    The negotiations and implementation of this act will play a significant role in shaping the EU’s approach to securing critical raw materials while balancing environmental concerns and sustainability.

  • Norwegian Mineral Strategy to ramp up production of materials crucial to global industry

    Norwegian Mineral Strategy to ramp up production of materials crucial to global industry

    In 2021, Norway was revealed to be the location of another large deposit of critical raw materials (CRM),1 as 240 million MT of phosphate, vanadium, and titanium were estimated to be in Storeknuten. This would already be a vast resource of three of the 30 critical raw materials, but since then has been shown by drilling operations to be as much as 910 million MT. The global economy, industry, and the current state of world politics mean that Norway has been presented with an opportunity to take a more prominent role in supplying much of the world’s industrial innovations. This includes the EU and the US, and stands to give Norway a lot more political and economic power in the coming years via developing green industries, increasing exports and growing the number of jobs in the Norwegian industry.

    As the name suggests, the EU defines critical raw materials as materials that are critical to industry. Generally speaking, this includes metals and minerals that cannot be replaced by a more common material, that have a significant supply risk, and if there is a disruption of supply, will have economic consequences. For Norway, this will include aluminium, copper, cobalt, zinc, and much more. With the EU moving towards less dependence on China, Russia and other countries for importing, Norway has become a key player in supplying these materials.

    CRM in Europe

    The shift towards greater production of CRMs comes from a variety of factors, and the EU plan, known as the Critical Raw Materials Act, has a number of objectives. This act, introduced in March 2023, seeks to strengthen the EU’s CRM capacity, reduce dependency, increase preparedness, and promote supply chain sustainability and circularity.2 The reduction of dependency essentially means the diversification of Europe’s supply of materials. Ideally, no more than 65% of one critical material is to be imported from one source. This would lead to several advantages, including the facilitation of manufacturing more green energy solutions, as well as the political advantages of not relying too much on one country’s source. With political tensions in China and the war in Ukraine with Russia, this would be a significant development for the EU and is a key cause of the Critical Raw Materials Act’s existence.

    Similarly, and since Norway is not an EU Member State, Norway has its own Green Industrial Initiative. This roadmap aims to increase investment and create jobs within green industries, as well as cutting pollution as it turns towards low-to-no emissions. Vital to this are critical metals and materials. Norway currently has a lot of these materials for not only themselves but also Europe.

    The Norwegian Mineral Strategy

    As such, Norway has had to change its strategy in terms of mining and processing these materials in order to keep up with the demand from the EU and themselves. In June, the Norwegian government unveiled the Norwegian Mineral Strategy. This strategy is a five-pillar process that aims to improve the Norwegian mineral industry and is a first step towards ‘the world’s most sustainable mineral industry.’3 Within this strategy are five key areas of focus.

    Faster implementation of mineral projects

    This is primarily concerned with the mapping of critical raw materials as well as reducing the time taken to process the mined materials. Obviously, this will reduce the time from mining the material or mineral to using it or exporting it for use, which in turn will reduce the time taken to develop green industries and grow profit for the economy.

    The mineral industry must contribute to the circular economy

    A circular economy is designed to minimise both the materials put in as well as the waste materials or pollution outputted. Norway’s circular economy is relatively low at 2.4% as of writing this, so an increase would be beneficial for green plans as well as profits. This will also decrease the cost of construction as material is recycled for use.

    A more sustainable mineral industry

    Similar to many countries and companies, Norway is aiming for its mineral industry to be zero emission or net zero by 2030. This will also specifically target the use of non-environmentally friendly chemicals in manufacturing processes. This will not only develop new industries as methods and constructions need to be updated or replaced, and therefore create new jobs, it will also benefit the planet and make the industry as a whole much more appealing to people conscious of the effects of industry on the planet.

    Private capital is a must

    Private capital will be key to funding these endeavours. Furthermore, all options will be explored to increase the profitability of mineral mining and processing, as well as increase the opportunities for communities, i.e. creating jobs. Altogether this aims to greatly stimulate the Norwegian economy.

    Norway will continue to supply international partnerships with green value chains

    This new strategy aims to change Norway’s global image to being a mineral nation and to further strengthen the ties between Norway and the rest of Europe in terms of trading critical materials. The mining industry has frequently overlooked value chains, leading to wasted resources and isolated operations, leading to miscommunication and bogged-down production.

    These five points constitute the Norwegian Mineral Strategy and are an excellent vision of Norway’s hope for its future in mining and processing critical raw materials. With these coming to fruition, Norway will occupy a spot of increasing power on the world stage.

    Europe’s position and Norway’s future

    As mentioned earlier, Europe currently has a tenuous relationship with China. The political issues in China under EU criticism range from the mistreatment of Uighur Muslims to China’s continued alliance with Russia after their invasion and sustained war in Ukraine. Yet, China is currently able to mine two-thirds of the 30 raw materials, giving them a dominating position in industrial endeavours.

    Similarly, Russia was a very contentious country even before the invasion of Ukraine, and most of Europe is on edge regarding a future with Russia. Still, Russia is in the top three countries for mining critical raw materials, with China at the top and the US between them. The EU being strong allies with just one of these three is a weak position, and one that they have started looking to rectify in recent years. Norway has an abundance of these materials and so it is easy to see how this will not only benefit the EU but Europe as a whole and especially Norway. With the EU diversifying their sources of critical raw materials, Norway stands to profit greatly from exporting to Europe, as well as its own industry developing both in economic terms and green industrial terms.

    All of these factors, along with the new Norwegian Mineral Strategy, mean that Norway may well be catapulted up in the ranks of top critical raw material exporters, and Norway itself will only benefit from this in profit and political power. The benefits to industry will also give the country a swathe of new jobs and the ability to develop green solutions and industries to benefit the world and humanity as a whole.

     

  • The geopolitical dimension of the Jadar Lithium project in Serbia

    The geopolitical dimension of the Jadar Lithium project in Serbia

    On March 16, the European Commission published a proposal for a new Law on Critical Raw Materials. EU wants to compete with China and the USA in the production of green technologies, as well as to reduce the emission of harmful gases by 2050. Critical raw materials are primarily rare metals necessary for modern green technologies, and lithium is among them. EU members are obliged to carry out geological research and mapping of new deposits in order to reduce import dependence on China through the exploitation of critical raw materials. It is also planned to form a Committee for Critical Raw Materials, which will have the right to declare certain exploitation projects as strategic and reduce the maximum period for issuing permits for the operation of such mines to 24 months. Serbia is not mentioned in the new law, but cooperation with exporters such as Namibia, Chile and Canada is announced. As Serbia is home to one of the largest lithium deposits in Europe, it is not excluded that the Jadar project will also have a geopolitical dimension. Especially since Serbia opened negotiation chapter 15 on energy on December 14, 2021, in the midst of protests against amendments to the Law on Referendum and the Law on Expropriation, which, it was believed, served to speed up the implementation of the Jadar project. Meanwhile, BIRN obtained a report from the meeting between the representatives of the Rio Tinto company and the head of the EU Delegation in Serbia, Emanuel Gioffre, held on March 25, 2022, two months after the end of the project was allegedly put on hold. The company’s representatives then said that they support the local one, but that they are afraid of the results of the national referendum.

    A fairy tale of accelerated growth

    With its GDP per capita of 7,803 euros, Serbia is 2.6 times behind a medium-developed country such as Slovakia, and even 4.7 times behind the EU average. In other words, the GDP per inhabitant of Serbia would have to grow by 10 percent per year on average over the entire decade just for Serbia to reach today’s Slovakia. Or 13 percent per year to be similar to what it was then (or only slightly less if we take into account the Balasa-Samuelson effect that would act on the appreciation of the dinar and which would eventually help to equalize the GDP per capita faster), assuming that Slovakia in that period grows a modest 2.5 percent. It is immediately clear that this kind of growth is simply not possible – neither without the Jadar project, nor with ten such projects in the next ten years. The President of Serbia has repeatedly said that the exploitation of lithium would contribute to GDP growth of 3.5 to 4 percent. “We would have 3.5-4 percent higher growth on an annual basis,” he literally said. Growth higher by 3.5-4 percentage points per year means that, say in 2022, growth would be around 6.05 percent (actual growth of 2.3 percent plus 3.75 percentage points), and growth higher by 3.5-4 percent would mean that it would be 2.39 percent (2.3 percent times 1.0375). I reasonably assume that the president meant percentage points, not percentages, as he said, for two reasons. First, the difference in economic growth between 2.3 and 2.39 percent, although welcome and many times closer to the real effects, is far from the economic miracle needed for Serbia to catch up with the middle developed European countries. Second, politicians – even when they know the difference between a percentage and a percentage point – almost always use a percentage in both cases to be more “understandable”. And now let’s demystify the claim that the opening of one company, no matter how big it is, could accelerate economic growth by 3.5-4 percentage points and thus enable Serbia to catch up with the mentioned countries. Admittedly, not to catch up with them, because Serbia needs growth of 10 or more percent for 10 years in a row. And Serbia has never achieved such a growth rate. Not during one year, let alone continuously. In fact, such rates can only be achieved by extremely underdeveloped countries with a growing and young population, such as China (two decades ago) or African countries. In addition, history is dominated by examples that show that through the direct exploitation of mineral raw materials, few countries, and even fewer populations, developed (became happy), and that instead of economy, corruption mostly develops. This is also shown by the countries of South America, which are incomparably richer in ores.

    Having shown that even an increase in growth by 3.5-4 percentage points alone is insufficient to fulfill the fairy tale, we will now show to what extent it is impossible and improbable to achieve it through the Jadar project. First, the information that this project would increase growth by so much is not even in the study on economic effects, prepared by Rio Tinto. The study evaluates the economic effects significantly more modestly – the project would increase the GDP by 2.8 percent in the phase of full realization – that is how much it would participate in the formation of the GDP. Therefore, if the Jadar project were to be realized, and everything else in Serbia remained unchanged, the GDP per inhabitant would increase from 7,800 to 8,029 euros. The opening of the mine would help, therefore, to cross only one-eightieth of the way to the “then Slovakia”! At the same time, all these assumptions in the Rio Tinto study refer not only to direct, but also to indirect (development of domestic suppliers and subcontractors) and induced effects of the project (generation of GDP through spending of income generated in the company). Assumed indirect effects (not directly dependent on the project) actually make up most of the assumed effects – out of 5,120 new jobs, only 1,170 are predicted to be created in the mine, and the remaining almost 4,000 are related to indirect and induced effects. This is not necessarily too optimistic, but, nevertheless, a project of this size must require serious planning – which new investments would it attract, which domestic suppliers could it hire, do they need support to increase capacity, acquire new equipment, and the like – otherwise these effects would be completely absent.

    Let’s take a step back, to the claim that the opening of one company can make up for Serbia’s 30-year lag by accelerating growth. The statement that the opening of one company could accelerate growth by 3.5-4 percentage points indicates economic illiteracy or deception. Because it would have to be a company with the economic strength and size of EPS, three Ziđina or six Michelin factories. And every year for the next ten years. At the same time, the business assets of EPS, together with Kolubar, are 4.5 times larger than the planned investments in the Jadar project, while the number of employees in EPS is 30 times larger! Considering the similarity of the industry, a convenient comparison with the Jadar project is China’s Zijin, as it had comparable investments and has six times more direct employees. At the macro level, Ziđin generates about one percent of Serbia’s GDP, and in the past, a record year for them, it participated in exports with 4.5 percent, and very similar effects are expected from the Jadar project. It is indisputable that the revitalization of the Bor mine was of great importance for the local economic activity – 20 percent of the employees and more than half of the wages paid in the Bor area. In the case of the Jadar project, the effects would be similar, but still somewhat smaller, since the surroundings of Loznica have a different economic structure and there would be a shutdown of certain economic, primarily agricultural, activities. By no means should we leave out the effect on the environment either – despite Ziđin’s alleged efforts to reduce pollution, Bor is the “black point of the Balkans”. The problem of growing pollution coincides with the start of work and increased production. Would it be the same in the case of Jadar, is one of the main questions to which there seems to be no credible answer.

    The fiscal moment is also important. As a major investor, Rio Tinto would effectively be exempt from paying corporate tax up to the amount it invested in the project – paradoxical but true, just like Ziđin. To conclude, the effects of those two investments would be comparable, they have positive sides – although not close to hyperbolic claims, for the fulfillment of which a clear strategy and a more meaningful fiscal policy are needed. Both investments, unfortunately, have negative effects, primarily on the environment. This analysis is neither for nor against the Jadar project per se. The situation in which Rio Tinto finances economic and environmental impact studies certainly has a negative effect on the credibility of the facts. Telling fairy tales has an equally negative impact. Maybe it would really have more significant economic effects, but there is no one to plan them and convince us of that. It might not have an irreparably negative impact on the environment, but no one can guarantee that. This is also the key development problem of Serbia. At this moment, I am closer to the point of view that Serbia is not institutionally mature for something like this.

    Economist Nebojša Katic also wrote about the economic effects of the Jadar project more than a year and a half ago. “If Rio Tinto start with exploit and export of ore from Serbia, export revenues will increase Serbian GDP, but these revenues belong to Rio Tinto and, as a rule, do not stay in Serbia.” Serbia will have mineral rent from that, maybe Rio Tinto will pay some taxes, and some will even get a salary working for Rio Tinto. This is where the financial benefits for Serbia will end and they will be incomparably less than the statistical growth of GDP,” Katic wrote in the author’s text, with the remark that “economists really like indirect effects because they can estimate, magnify and manipulate them as much as they want, or as much as they are paid”. The words of Luka Erceg, a native of Canada, originally from Loznica, master of law and economics and director of a company in the USA that manages investments, have even greater specific weight. All the more so since until 2013 he ran a company for the production of lithium in the USA, about which he also spoke to the leading world media, the New York Times, Bloomberg and CNN, and in 2012 he spoke about strategic minerals in the US Congress. “The Jadar project will never be able to compete economically with lithium extraction projects from salt water, which are being developed around the world.” I would recommend that Serbia explores old oil and gas sources, because in many of them, economically profitable amounts of lithium have been found,” Erceg claims for NIN.

    “Extraction from salt water is more economical and can withstand falling prices.” If we insist on the Jadar project, it will be shut down in a few years, because lithium from salt water will lower the price. More and more such will arrive from the “lithium triangle”, which consists of Argentina, Bolivia and Chile. Furthermore, lithium for car batteries is not obtained from rocks, because it has too many impurities,” explains Erceg, noting that everyone forgets that lithium batteries last for ten years, and that they can be recycled afterwards. “That’s why eventually we won’t need to produce as much lithium as we do today, because even after recycling it will be able to be used as if it had just been taken out of the mine.” It would therefore make more sense for Serbia to encourage factories for the production and assembly of lithium batteries, which are large and heavy, so local production has advantages. Such a technologically advanced industry would also be stimulating for students of engineering, electrical engineering, chemistry… and that is why it is better to deal with it than ores. I would praise the government for developing technological industries and in general I would recommend it to focus on “knowledge industries,” because the lithium mine will not create many new jobs,” Erceg points out. “After all, it is not impossible to have a lithium mine like the ones that exist in Australia.” But look at the pictures of the disasters those mines have created. At the same time, what exists in Australia does not exist in Serbia. Australian mines work because ore is sent to China for processing. When the ore is processed there, there are also battery manufacturers nearby. Where will Jadar send his ore or his lithium?” The already fantastic story of Serbian officials about lithium billions could hold water as much as possible while the demand and prices of that metal on the world market were breaking records month after month. Meanwhile, the situation has changed dramatically. On April 28, global media reported that the price of lithium carbonate had fallen to an 18-month low, from a record high of $86,170 to around $52,000 per metric ton. In March of this year, somehow just at the time when Vučić brought back to the public the story of the greatest missed opportunity, the price fell by 64.22 percent compared to March 2022. And at the same time, world agencies do not cite the key reason for such a price drop only a weak demand, but an abundant supply.

    At that time, experts estimated that the drop in lithium prices would be reflected in the drop in prices of electric cars, if their sales would not increase. And then, when the sale of electric cars increases, one could also expect a recovery in lithium prices… But that was obviously a long shot. Meanwhile, the decline continued on the first working day of this week, on September 4, a ton of lithium carbonate cost $27,861 on the world market, and just a month before that it was $37,612 or 35 percent more. The dramatic decline is even better evidenced by the fact that the price of lithium a little less than two years ago was almost three times higher than it is now. This time, lower demand contributed to the decline, not much higher than the lowest at the beginning of the pandemic, in April 2020. Despite this, Serbian officials have not changed their story, as if they are still basing their calculations on record lithium prices. It was as if time and everything else had stopped. Everything except an effort to revive the fairy tale about the economic effects that Serbia would have if the Government decided to change its position and still enable lithium mining. However, Minister Momirović was right when he said that “we will only see how this story unfolds in the coming period, but we cannot ignore the perspectives it opens up.”

  • European Green Metals: Unlocking Europe’s critical minerals with the Olserum rare earth element project

    European Green Metals: Unlocking Europe’s critical minerals with the Olserum rare earth element project

    It is increasingly apparent that Europe must develop its own supply chain of critical minerals to support its green energy strategy. European Green Metals Ltd (EGM) aims to help in this regard, developing a portfolio of critical minerals projects, including the Olserum rare earth element (REE) project in southern Sweden, which has the potential to be Europe’s first REE mine.

    Research suggests Europe needs to increase today’s critical minerals four-fold by 2040 for the deployment of clean energy technologies. Responsibly boosting global supply and avoiding critical mineral shortages is therefore paramount, no more so than in Europe, which has reached a critical juncture. As highlighted by European metals association Eurometaux, the next five years will decide whether the continent succeeds in recovering and growing its sustainable metals and minerals value chains, or whether other areas of the world push further ahead in the global resources race.

    European Commission President Ursula von der Leyen recognised this earlier in the year when she stated: “Lithium and rare earth elements will soon be more important than oil and gas. Our demand for rare earths alone will increase five-fold by 2030… we will identify strategic projects all along the supply chain, from extraction to refining, from processing to recycling. And we will build up strategic reserves where supply is at risk.”

    As a global hub for electric vehicles (EVs), gigafactories, wind turbines, solar, and battery storage, combined with world-class expertise in chemical industries, processing, and the refining of imported speciality metals, Europe should be in a stronger position than it is. Yet, there is a distinct lack of quality critical mineral projects on the horizon.

    Whilst there has been an absence of exploration in the region, the continent has the geological potential to host a variety of substantial critical metal deposit types. Indeed, many countries have long mining histories, including Sweden which has 12 operational mines, recognised geology, infrastructure, and supportive in-country legislation. With European economic policy at the forefront of maintaining its competitive advantages, and political support from the EU Green Transition lobby, projects such as Olserum need to be rapidly advanced through permitting.

    David Hall, CEO of EGM, said: “Critical mineral projects must be advanced quickly or we risk missing key environmental targets, which will have dire consequences on the world.”

    EGM, with its team of highly experienced geologists, scientists, and financiers, has the experience and knowledge to take projects like the Olserum rare earth element project forward. Having operated worldwide, it has successfully developed natural resource projects under coherent and encompassing mandates driven by environmental, social, and governance (ESG) principles. Its understanding of economic geology, in tandem with environmental considerations and continual stakeholder engagement, has enabled the team to advance projects from exploration through to production.

    Until recently, Hall was Chairman of Horizonte Minerals Plc – a company that has taken a Tier 1 nickel asset in Brazil from exploration through development to fully-financed construction. Other team members include the successful entrepreneur Cathal Friel, Co-Founder of Amryt Pharma Plc, which was acquired for $1.48bn in January 2023, and Michael Nolan, the former Finance Director and Founder of Cove Energy plc, which he guided through its £1.2bn sale to Thailand’s PTTEP.

    Olserum: Project of National Interest

    Since the REE mineralisation at the 6.5km2 Olserum licence (Fig. 1) was first identified in the 1990s by the Swedish Geological Survey (SGU), significant work has been undertaken at the project, resulting in the publishing of an initial 43-101 compliant Indicated Resource of 4.5Mt grading 0.6% Total Rare Earth Oxides (TREO) and an Inferred Resource of 3.3Mt grading 0.63% TREO using a 0.4% cut-off in 2013.

    location and licence area of the olserum rare earth element project
    Fig, 1: Olserum location and licence area

    The SGU designated Olserum as a project of National Interest for rare earths in May 2023. This establishes Olserum as a project of particular importance, which should hold priority over other land use where appropriate and protect it against measures that could complicate possible future extraction. The company is pleased with this recognition, even though the existing resource lies solely on commercial forestry lands well away from residential areas.

    EGM’s experienced technical team, led by consultant geologist Aiden Lavelle, relogged all the previous drill core and undertook new geological mapping, sampling, and modelling (Fig. 2). This has given the team a better understanding of the controls on the REE mineralisation, and more importantly shown the district potential for major REE mineralisation. The initial 400m strike has already been expanded, exceeding 4km. With this knowledge, the company has expanded its land position ten-fold, acquiring the ~71km2 Olserum 22 permit, which surrounds the original Olserum licence (Fig. 1). This gives EGM district-scale control of this rapidly emerging highly prospective REE region.

    geological modelling at olserum
    Fig. 2: Geological modelling at Olserum

    Work on the mineralogy and beneficiation of the ore has shown the REEs are hosted by xenotime and monazite – both REE-bearing phosphates which have well-established processing pathways. In addition, Olserum has a large contribution of the high-value critical REEs dysprosium (Dy), yttrium (Y), neodymium (Nd), terbium (Tb) and praseodymium (Pr) – a unique advantage for its ultimate development as a REE mine. The Olserum composite sample’s beneficiation flowsheet involved grinding, wet low intensity magnetic separation for magnetite removal, and a single stage of roughing and two stages of cleaning for flotation of the target phosphate minerals. The mineralisation’s strong continuity, potential for high-grade (>1% TREO) shoots, and promising recoveries using standard process routes suggest that Olserum could become Europe’s first REE mine, with its full potential yet to be determined.

    Hall said: “The excellent location and infrastructure (Fig. 3) of the Olserum deposit, along with available renewable power sources, add to our belief that this project will be a viable mining asset. We are planning infill drilling on the current resource area, to upgrade and expand the resource to Measured and Indicated status, and are undertaking further beneficiation testwork with GTK Mintek to increase recoveries from 80% to 85%. We have also started environmental baseline studies prior to drilling and will engage with and involve the local communities in our plans for the project.”

    The next steps for the Olserum rare earth element project

    The team has already initiated a defined development programme aimed at completing a bankable feasibility study to advance Olserum toward production. This is being enacted utilising EGM’s team, as well as dedicated consultants such as international consulting and engineering firm Geosyntec Consultants AB, which will undertake baseline environmental studies and deliver an Environmental Impact Assessment (EIA).

    The team is also lobbying for Olserum to be identified as a Strategic Project of European Interest, as defined in the EU Critical Raw Materials Act outlined in March 2023, to support fast-tracking the permitting process for the development of a mine. Additionally, as corporate end-users – including mineral processors, permanent magnet producers, EV battery suppliers, and automobile manufacturers – strive to ensure a stable stream of critical minerals, free from geopolitical constraints, the EGM team aims to forge partnerships with these entities through a collaborative co-development business model – one that is increasingly prevalent in the lithium sector, as highlighted by recent transactions. On a wider level, work at the new permit, Olserum 22, has yielded highly promising targets, which EGM aims to develop as it looks to deepen its understanding of the area and build a substantial REE resource inventory.

    Olserum location compared to local infrastructure
    Fig. 3: Olserum location compared to local infrastructure

    Pajala graphite potential: High-grade Swedish graphite

    EGM’s mission of developing critical mineral projects in Europe for Europe is not limited to the Olserum rare earth element project. The company also owns the Pajala graphite project in northern Sweden, discovered while working through its proprietary in-house database of available, defined areas with known graphite occurrences. Graphite, while often overlooked, is another key constituent in the energy transition, representing over 25% of the mineral component of an EV battery.

    Pajala comprises three granted concessions – Liviövaara 101, Lehtöslkä 101 and Lehtöslkä 102. Graphite in the area was initially defined in drilling by Sweden’s LKAB and, though only a few holes tested the horizon, combined with geophysics, a potential historic and non-compliant resource was outlined. The Liviövaara area has high-grade drill hole intercepts, including 4.7m grading 39.8% carbon (C) and 8.4m grading 29% C, values in line with Talga Group’s Vittangi project, which claims to be the highest-grade graphite in the world (19.4Mt grading 24% C). EGM plans to drill Pajala, aiming to twin the original holes then expand the drilling to rapidly define an initial resource. Large core will allow the company to undertake flake size distribution and purity to assess the quality of the graphite and the saleability of the product.

    Elsewhere in Europe: The Saxony opportunity

    In addition to Sweden, EGM is active in the Ore Mountains (Erzgebirge) of Saxony, Germany, which is host to multiple occurrences of critical metals, such as lithium, nickel, cobalt, gallium, germanium and indium. These metals occur in various styles of mineralisation, including veins, skarns, and lithium greisens.

    Saxony has a 1,000-year mining history and is currently experiencing advanced exploration primarily for lithium, tin, tungsten, silver, and fluorite. The area has excellent infrastructure, a year-round workable climate and respected academic institutions providing high-level access to research and staff. EGM currently has two projects: the 14km2 Eichigt licence; and the 381km2 Marienberg licence.

    The Eichigt licence, prospective for Li-Co-Ni-Mn-REE has been the focus of EGM’s exploration in 2023 and has been advanced to drill-target stage. Rock sample results identified elevated levels of multiple critical elements and mineralised structures on a NW-SE trend. 1km of strike was identified with workings continuing for a total of 1.7km, and grades were extremely promising. This included lithium up to 0.23%, cobalt up to 0.82%, and nickel up to 0.18% ppm and REE values higher than expected, the highest TREO value of 1.26% with four other samples greater than 0.5%. The next stage for EGM is to drill test this large poly-critical metals system in the heart of Europe to define its economic potential.

    The 381km2 Marienberg licence area was historically an area that produced silver and tin but is also highly prospective for critical minerals. The EGM team believe that the encountered geological signatures make it a perfect addition to its portfolio and is currently initiating an extensive evaluation programme to understand its potential.

    What does it all mean?

    Achieving the energy transition demands a vast supply of critical minerals. Companies and governments must co-operate to boost production on a massive scale, with ESG principles at the forefront of mineral development. As well as stakeholder engagement, further education of the general public is required. Miners, such as EGM, are not the destructive demons many perceive, but responsible developers of critical minerals, without which there can be no net zero.

    Projects, such as the Olserum rare earth element project, must be advanced. EGM has demonstrated the existence of critical mineral projects to progress within the European Union (EU) and others to explore and define. Industry names are eager to collaborate with EGM’s team. Now, EGM and the natural resource development sector need the backing of national and local governments to bring these promising projects to fruition.

  • UK is losing a crucial race with China for minerals used in electric cars and green energy, mining boss warns

    UK is losing a crucial race with China for minerals used in electric cars and green energy, mining boss warns

    Britain must rapidly reverse its culture of “non-existent” investment in exploration for key green energy metals on home soil or face a future of Chinese dominance in an area vital to future economic security, a mining company boss has warned.

    Galantas Gold Corporation, a Canadian company which holds exploration licences for some of the UK’s most promising geological deposits, is understood to have found a potential source of graphite, increasingly one of the world’s most sought-after materials for manufacturing electric vehicles, at a site it operates in Omagh, Northern Ireland.

    But the firm’s chief executive has fired a shot across the bows of ministers and British industry by warning that the UK and other European countries are under-investing and can no longer rely on the exploitation of resources in the developing world to deliver the critical raw materials needed for the transition to clean energy.

    The ability of the UK and allied countries to obtain their own longterm supplies of materials such as lithium or more obscure metals such as germanium, used in semiconductors, is at the core of a geo-political tussle with China in areas from electric vehicles to consumer electronics to wind power.

    Beijing is already expected to have a substantial lead in providing electric cars in the UK when a ban on new petrol and diesel cars comes into force in 2030, causing some within the Government to raise concerns about the use of those vehicles to harvest vast amounts of data about the movements of ordinary Britons.

    Galantas CEO, Mario Stifano, whose company is in the early stages of exploring metal deposits in a 217 square kilometre area of the Scottish Highlands, told  that Britain was at risk of failing to understand and successfully exploit its own resources because of a lack of interest in funding the groundwork needed to establish the exact location and quantity of what are believed to be sizable deposits of materials such as copper, vanadium, zinc and gold.

    In contrast to mining superpowers such as Australia and Canada, where large sums are spent to gain as full a picture as possible of unexploited deposits prior to mining, he said investors in the UK and other European countries tend to be interested only in mining projects which are close to going into production and otherwise tend to prioritise “buying shares in a Unilever or a Glaxo”.

    Mr Stifano said: “The amount of exploration that has occurred in Canada and the US looking for minerals is hundreds if not thousands of multiples more than what has been spent in the UK.

    “What is lacking is support for exploration companies in order to build knowledge about these kinds of deposits so they can get into production. We need zinc, copper, cobalt, lithium, graphite and so on. It’s all over Europe [and] a lot of it is in the United Kingdom and we think we know where a lot of that is.

    “Really what’s lacking is the ability to raise the funds to go and look for it. Funding for exploration in Europe is next to non-existent and yet it has some of the best geology in the world.”

    A number of companies in Cornwall have advanced projects aimed at extracting lithium from the region’s granite and clay beds with the aim of meeting demand from manufacturers including Tata Group’s new £4bn battery “giga factory” to be built in Somerset. But despite the release earlier this year of a study by the British Geological Survey pinpointing eight areas of the UK which have the right geology to yield 17 of the 18 metals identified by the Government as critical to economic stability, industry sources say there is a dearth of exploration activity.

    Mr Stifano pointed to the existence of tax-deductible exploration investment schemes in Canada as a potential way to kickstart projects in Britain, adding that public funding may be needed to spark wider interest in a sector where China, which recently announced export restrictions on germanium, is taking an increasingly muscular stance.

    He said: “In the early days, you may need something like [public funding] because the culture is lacking. In Canada, people talk about discoveries and opportunities and mining. You go to Europe or the UK and it’s not part of the natural culture – people would much rather invest in a Unilever or a Glaxo or any of the big companies.

    “China is slowly going to be putting more and more export restrictions on critical metals and it is going to put a lot of pressure on the Western world because we stopped looking for those same metals.”

    The mining executive highlighted the fact that it has taken Galantas two years to obtain permission to drill one-inch diametre core samples at its Omagh site – a permitting process that would generally take a month in Canada or Australia – as an example of the logistical and procedural difficulties facing the exploration industry in the UK. Environmental groups have previously raised concerns about the impact of drilling near water sources and aquifers.

    Mr Stifano said he recognised the need for any mining company to act sustainably and responsibly but added he believes it is “no longer fair” for Western countries to source their materials from “poor countries with no regulation” and they should instead focus strongly on building homegrown industries.

    He said: “What I am trying to push at is the minerals industry needs support in the early stages. If we are going to move to electric vehicles and clean energies we have to find these critical metals, or they are all going to come from China.”

    The Government said it was supporting Britain’s critical minerals industry following the unveiling last year of a national strategy to grow domestic capabilities and announcement this week of a £24m investment in Cornish Lithium. In a statement, the Department of Business and Trade said: “Government continues to work with industry and finance communities to support private sector investment in critical mineral projects along the value chain.”

  • Explained: The EU’s handicap in the global race for critical raw materials

    Explained: The EU’s handicap in the global race for critical raw materials

    The EU is highly dependent on third countries for the raw materials needed to engineer its energy transition and digital transformation.

    Russia’s war in Ukraine and the need to wean itself off fossil fuels in order to reach climate targets have prompted the EU to accelerate its green transition in recent months but also forced it to acknowledge its dependencies over access to critical raw materials.

    In the global race for raw materials, the EU faces multiple challenges.

    The first one is China, which recently started restricting exports of gallium and germanium, two metals essential for the production of semiconductors, in response to Western curbs on Beijing’s access to micro-processing technology.

    The EU considers both materials of high strategic importance. As well as semiconductors and other electronic devices, they are used for military applications such as missile defence and radar systems.

    Beijing’s restrictions come as a stark warning as the EU attempts to diversify and boost domestic supply of raw materials to reduce dependency on third countries.

    Reliance on ‘low-governance’ countries

    But diversifying supply chains could mean the EU has to source these materials from countries that don’t adhere to the same standards.

    Recent data suggests the EU’s supply is highly dependent on countries that have a low governance level, based on indicators including political stability, rule of law and corruption control.

    The EU’s Critical Raw Materials Act (CRMA), adopted in March this year, stipulates that EU strategic projects to scale up supply must be assessed taking into account all aspects of sustainability, including environmental protection, socially responsible practices and respect for human rights such as the rights of women.

    But many countries feeding EU supply are not aligned with European values. This raises concerns about the impact on the local communities where materials are mined, as well as the potential exploitation of natural resources.

    For example, the Democratic Republic of Congo, whose governance indicators are among the lowest in the world, supplies 63% of the EU’s cobalt, which is essential for manufacturing batteries for electrical vehicles.

    Diversifying supply a challenge

    The EU is also highly dependent on single countries for key materials such as Magnesium (China, 97%), Lithium (Chile, 97%), Iridium (South Africa, 93%) and Niobium (Brazil, 92%). These dependencies make supply chains vulnerable.

    The Critical Raw Materials Act aims to ensure no third country provides more than 65% of the Union’s annual consumption of any raw material.

    But diversifying supply is complex when refineries of many essential materials are monopolised by one or more global powers. China dominates the refining market for many critical raw materials.

    Russia’s invasion of Ukraine and the ensuing energy crisis has shown the acute dangers of over-reliance for supplies of raw materials. China’s increasingly antagonistic stance and the political instability in many African countries have also served as reminders of the fragility of the EU’s trading relationships.

    A spiralling global demand

    The demand for raw materials is growing steeply, as developed countries race to digitalise and decarbonise their economies. This can only happen with sufficient supply of raw materials, meaning countries must scale up extracting, refining and recycling operations.

    The global demand for lithium, for example, is set to increase a staggering 89-fold by 2050, according to the European Commission. Demand for gallium will multiply 17-fold during the same time.

    The Critical Raw Materials Act sets targets for the Union to extract 10%, process 40% and recycle 15% of its annual consumption of raw materials by 2030.

    To meet these targets and compete on the global stage, European Commission President Ursula von der Leyen has said the EU needs to speed up investments in research and development, recognising that the bloc’s global share of R&D expenditure has fallen 10% in the last 20 years.

  • Mineral-rich African states to explore new markets after EU changes its buying rules

    Mineral-rich African states to explore new markets after EU changes its buying rules

    The European Union, the world’s largest single market, has introduced new measures to reduce their “dependency” on mineral imports from outside the bloc.

    The European Council adopted the Critical Raw Materials Act on June 30, a regulation that seeks to utilise the bloc’s Common Market and partnerships to “diversify critical raw material supply chains, which currently rely on imports from a handful of third countries.”

    A spokesperson of the European Commission told The EastAfrican that the bloc has taken this route because of the lessons they have learnt from the recent supply-chain disruptions that significantly impacted their supply and consequently costs of products associated with the raw materials.

    “The urgency of such measures is made clear by the recent Covid-related supply disruptions, Russia’s war of aggression in Ukraine, disrupting, for example, nickel and titanium markets, and the Chinese export restrictions on gallium and germanium introduced last week,” the spokesperson said.

    Under the new regulations, EU will source up to 65 percent of its annual consumption of critical and strategic raw materials from within the bloc, dealing a blow to countries in the region that have been exporting to the region.

    At least 10 percent of the minerals used in the bloc will now be extracted from countries in the union, 40 percent will come from processing, and 15 percent will come from domestic recycling of the critical and strategic minerals.

    According to the spokesperson, domestic extraction of the minerals in the EU has been low due to a number of factors, including “long permitting procedures, local opposition, high energy costs, high labour costs, and high costs of regulatory compliance.”

    The Act now seeks to address most of these hurdles.

    “By prioritising strategic projects and setting binding timelines, domestic extraction projects should be approved more quickly; by requiring companies to engage with local communities, social acceptance should be improved, and by promoting supply diversification by private businesses, EU projects should be able to become competitive despite higher production costs,” the spokesperson told The EastAfrican.

    The Act also seeks to spur recycling of the critical raw materials by addressing the key barriers to that, which include the lack of awareness by users on when recyclable products have come to their end of life and higher costs associated with products made from recycled raw materials.

    Ebba Busch, Minister for Energy, Business, and Industry of Sweden – the current President of the EU – said with the Act, the EU will gain the much-needed freedom in the exploration and supply of critical raw materials and will no longer have to depend on any countries outside the bloc.

    “When it comes to raw materials, Europe’s destiny is mainly in the hands of a few third countries,” she said.

    “With the Raw Materials Act, we want to recover our autonomy in a truly European way: extracting our minerals sustainably; recycling as much as we can and working in partnership with like-minded third countries to promote their development and sustainability, while ensuring our supply chains.”

    Critical to manufacturing

    The list of 34 critical and 17 strategic raw materials that will be affected by the new regulations includes copper, cobalt, titanium, manganese, natural graphite, platinum group metals, nickel, tantalum, vanadium and niobium.

    The minerals are crucial in the manufacture of electric vehicles’ batteries, wind turbines, solar photovoltaic systems, aircraft and spacecraft parts, laptop and mobile phone parts.

    They are crucial export commodities, providing foreign exchange needed for importation of other goods and services and debt repayment, and source of employment for millions of people in the region.

    In the Democratic Republic of Congo, copper and cobalt and their related products account for about 93 percent of their annual exports, majority of which goes to China and Europe, making the extractive sector the primary source of foreign exchange in the country.

    According to the World Bank, DRC’s exports to Europe stood at $992,105 in 2020, coming after the country’s exports to Sub-Saharan Africa and East Asia, where China – Kinshasa’s largest export market – is.

    With about half a million people in the DRC directly employed in the mining industry, the loss of the European market as an export destination could lead to massive job losses, in addition to a drop in forex, which is crucial for imports.

    Tanzania also earns a significant amount of foreign exchange from these raw materials and has the European Union as a key export market. World Bank estimates that Dar’s exports of minerals, excluding gold, silver and diamond, amounted to $562,735 in 2020, making it their third-leading export.

    Some of the minerals Tanzania exports include nickel, graphite, coal, and uranium, which have also been affected by the new regulations. Data firm Statista estimates that Dar’s mining sector employs some 310,000 people, who might be affected by the EU move.

    Ambitious goals

    As Europe is Dar’s second largest export market after Sub-Saharan Africa, the plan to reduce mineral imports from outside the bloc could significantly affect their foreign exchange earnings.

    Kenya might also be affected by the changes, should they trickle down to African mineral exporters. Minerals and metals account for about 8.9 percent of Kenya’s exports, with the main one being titanium ores, which contributed $156,804 of foreign exchange in 2020, according to the World Bank.

    Rwanda and Burundi may also be significantly affected by the EU’s change in regulations, as mineral exports account for about 12 percent of their individual total exports. Kigali and Bujumbura are exporters of niobium, tantalum and vanadium ores.

    In Uganda, the mining sector, other than gold mining, is a small performer, accounting for just about 4.5 percent of exports, having brought in $185,238 in 2020, based on World Bank’s statistics.

    Patrick Kanyoro, Chairman of the Kenya Chamber of Mines, a Nairobi-based lobby group for the mining sector, however, believes that the new regulations in Europe will not have a “serious impact” on the revenues from Africa’s extractive industry and on jobs in the sector.

    Continental free trade

    “I do not think this will have any major impact on mining in Africa in the next ten years. Even if they reduce their demand, we will still have other markets, particularly under the Africa Continental Free Trade Area,” Dr Kanyoro told The EastAfrican.

    According to him, the plan to source at least 15 percent of critical minerals used in Europe from recycling is “quite ambitious” and may not be met in the next ten years, hence they will continue relying on raw materials imported from other countries.

    Besides spurring intra-African trade, Dr Kanyoro says should EU’s demand for African minerals fall as projected, it will also encourage industrialisation on the continent, to have the raw materials processed here, which will still be a win for Africa and will safeguard jobs.

    “The truth is, the EU is not buying much of our minerals, but even if that were to drop, we will focus on selling to Asia and on industrialising our countries and we will still be good to go regardless,” he said.

    China is currently the leading buyer of African minerals and most of the manufacturing in the Asian economic giant relies on raw materials drawn from the DRC and other African countries.

    In most mineral-rich African countries, Beijing is among the leading single country export market, if not the leading, as is the case in Kinshasa.