The revival of Europe’s domestic mining sector could reduce the continent’s dependence on Chinese rare earth minerals, as well as risks such as price volatility and loss of competitiveness.
Europe’s mining sector has been on the decline for several decades now, due to a variety of factors: At the beginning of the last century, Europe accounted for about 40% of global mining output. Now, that’s down to 3%.
China’s growing dominance of the battery and rare earth minerals production and supply chain has been an ongoing threat to Europe, as it significantly contributes to China’s electric vehicle sector and makes the continent, and indeed other parts of the world, heavily dependent upon China for these metals and minerals.
Russia’s full-scale invasion of Ukraine, which prompted a whole raft of EU sanctions on Russian oil and gas, made policymakers realise just how dependent the EU has been on Moscow for energy and sent them scrambling to find more diverse suppliers.
As such, the European Commission is now hoping to avoid a similar situation with lithium and other rare earth minerals, which are vital for the green transition. Reviving the European mining sector, therefore, has now become more important than ever.
As European Commission President Ursula von der Leyen said while announcing the European Critical Raw Materials Act during her 2022 State of the Union speech: “Never before has this parliament debated the state of our union with war raging on European soil.
“Lithium and rare earths will soon be more important than oil and gas. Our demand for rare earths alone will increase fivefold by 2030,” she said. “We must avoid becoming dependent again, as we did with oil and gas.”
The Critical Raw Materials Act targets 30 raw materials that the European Union has classified as critical because of their supply risk and economic importance.
Why has Europe’s mining sector declined over the years?
Europe’s mining sector has slumped in the past few decades primarily due to a decrease in coal mining, especially when the continent started moving towards more sustainable sources of energy. Poland, Germany, Ukraine and the Czech Republic have traditionally been some of the highest coal producers in Europe.
However, since 2012, coal power generation in the EU has dropped by about a third, leading to the closure of several power plants and coal mines that are no longer needed.
The EU in 2022 produced about 55 million tonnes of hard coal, which was a plunge of 80% compared to 1990 levels, according to the European Commission.
With the advancement of the green transition, more EU investment has also been diverted towards green projects and infrastructure, such as wind turbines, solar panels and more. On the other hand, fossil fuel investment, both by the government and by private companies, has reduced drastically.
The COVID-19 pandemic and Russia’s war in Ukraine also sparked a worsening energy crisis in Europe. It caused several smelters to close down, negatively impacting energy-intensive metals such as aluminium and steel. In turn, this also led to less bauxite mining and alumina production in Europe.
According to the International Aluminium Institute, Europe, including Russia, produced about 6.50 million tonnes of alumina in 2023, which was about 20.92% down from 2022’s 8.22 million tonnes.
Furthermore, Europe has considerable red-tapism regarding mining licences and approvals: it can take well over a decade to receive a mining permit.
This is several times longer than countries such as China, which can also discourage mining companies from relocating to Europe or increasing their investments in the continent’s mining sector.
Additionally, Europe has very strict environmental and conservation laws, with locals protesting strongly over new mines or the expansion of existing ones. Since several critical metal and mineral deposits also happen to be near conservation or ecologically sensitive areas, governments have to proceed with caution when it comes to new mines.
This has been more difficult since Europe decided to keep its net zero 2030 goals front and centre in recent years: it has become increasingly tricky to justify approving new mines or continuing support for existing ones.
“Especially in light of the climate crisis and the high rate of biodiversity loss, the priority cannot simply be: more mining, more mining,” said Michael Reckordt, section head for raw materials at the NGO PowerShift, according to Politico.
How can Europe boost mining?
The Critical Raw Materials Act is one of the more decisive pieces of legislation that Europe has rolled out for domestic mining and the production of rare earth minerals in the past few years.
Essentially, it seeks to significantly reduce red tape and…
Read More: Here’s why Europe needs to revive its mining sector