Rare Earth Exchanges

Europe’s Rare Earth Challenges, Heavy Dependence on China, and to a lesser Extent, Russia

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Highlights

  • The EU is critically dependent on China and Russia for rare earth materials.
  • Over 90% import reliance on these countries for key technological components.
  • The European Critical Raw Materials Act aims to:
    • Diversify sources of rare earth materials.
    • Increase recycling to 25% by 2030.
    • Reduce dependency on single-country imports.
  • Strategic vulnerability in raw material supply chains needs balanced approaches.
  • Approaches should involve domestic mining, recycling, and diversified international partnerships.

A recent working paper (opens in a new tab) “Prospects and Challenges for EU Rare Earth Imports from Russia: The Case of Germany, France, and Italy” by Dirk Kohnert (opens in a new tab) of the GIGA-Institute for African Affairs (opens in a new tab) examines Europe’s critical dependency on rare earth elements (REEs) and its reliance on imports, particularly from Russia. The hypothesis posits that geopolitical and environmental pressures, alongside the EU’s dependence on external sources, necessitate strategic action to secure supply chains and reduce reliance on countries like Russia and China. Using case studies of Germany, France, and Italy, the paper analyzes the supply challenges and opportunities arising from EU policy and global market dynamics.

What were Kohnert’s key findings?

First the EU depends heavily on China (90%) and Russia for critical raw materials (CRMs) such as palladium (41%), platinum (16%), and nickel (12%), all essential for technologies like electric vehicles and wind turbines.

Russia’s invasion of Ukraine exacerbated vulnerabilities in EU supply chains, raising concerns about over-reliance on Russian exports and the geopolitical risks of dependency.

The European Critical Raw Materials Act (opens in a new tab) (CRMA), introduced in 2023, aims to diversify CRM sources, increase recycling (target: 25% by 2030), and reduce imports from any single country to less than 65%.

Germany, France, and Italy face unique challenges. Germany lacks economically viable deposits but leads in recycling and technological investments. France’s deposits are small, with reliance on Russia and China, though innovation in REE separation techniques offers hope. Italy abandoned its mining decades ago, leaving it dependent on imports but exploring old mines and recycling to re-enter the CRM space.

Limitations and Biases

The study assumes that the CRMA will effectively address geopolitical risks but does not fully account for political discord within the EU or the time required for policy implementation. The report relies on historical data and projections, but ongoing geopolitical shifts, particularly with BRICS nations, may alter global supply chains unpredictably. Local resistance to mining projects in the EU, driven by environmental concerns, complicates efforts to develop domestic supplies.

Funding and Perspective

Kohnert’s analysis is supported by independent research, with seemingly no conflicts of interest noted. The work advocates for reducing EU dependency on external sources and highlights the need for balanced strategies involving domestic mining, recycling, and diversified partnerships with resource-rich nations beyond Russia and China.

In conclusion, while the EU’s initiatives are a step toward reducing strategic vulnerabilities, implementation challenges, environmental concerns, and geopolitical tensions remain significant obstacles. The analysis underscores the urgency of aligning policy, investment, and innovation to secure critical raw materials for Europe’s green transition.

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