Securing a sustainable supply of raw materials and advanced materials – for Europe’s green future and competitiveness

The current COVID-19 pandemic has already by now caused profound effects at the global macroeconomic scale. In the automotive sector, for example, car manufacturers have announced a stop of production during the last weeks and just now start to gradually ramp up again. Tier 1 and Tier 2 suppliers and other market actors further upstream are similarly affected by this demand side shock and have consequently ramped down their production as well. In addition to these demand side shocks, supply chain steps located in countries strongly affected by the virus are hampered, too, leading to the breaking of entire international supply chains. This makes more clear than ever before that the security of the supply of strategic raw materials needed for the long-term competitiveness and job security of key industries is of prime importance for the European Union.

The European Green Deal, which was adopted on 11 December 2019 and targets 2050 climate neutrality, recognizes access to resources as a strategic security question to fulfil its ambition. The recently published new Industrial Strategy for Europe sees raw materials as one of the key enablers for a globally competitive, green and digital Europe. It envisions European competitiveness based on a new Alliance on Raw Materials and highlights the importance of industrial ecosystems for accelerating innovation and growth in Europe. A more resilient, more protective, more sovereign and more inclusive economic model that aligns with the Green Deal has also been prioritized by the recently launched Green Recovery Alliance.

EIT RawMaterials, funded by the European Institute of Innovation and Technology (EIT), has the vision to develop raw materials into a major strength for Europe. It is the world’s largest network in the raw materials sector connecting industry, research and education. This makes EIT RawMaterials a key contributor to secure sustainable access and supply of raw materials – for a green, digital and competitive Europe after COVID-19.

Case Study: The vulnerability of European industries to the supply of Rare Earth Elements

Among their various industrial uses, rare earth elements (REEs) are essential for manufacturing permanent magnets. Permanent magnets are critical components in most decarbonisation technologies underpinning the Green Deal such as electric vehicles, vehicles based on fuel cells and wind turbines. Recent studies have demonstrated that reaching the goals of the ‘2-degree scenario’ and the Green Deal is highly vulnerable to disruptions in the REEs supply chain.

Reliable and sustainable sources of REEs do exist within Europe and elsewhere, yet the supply chain of REEs for permanent magnets, as well as the magnet production itself, is almost exclusively controlled by China. Under current market conditions, it could take up to 15 years to establish a supply chain elsewhere.

Considering a continued growing demand after the COVID-19 crisis for REEs and other critical raw materials, Europe will also continue to compete with China on the sourcing of REEs – already today, China is increasingly importing Rare Earth Element Oxides, which are the necessary input to produce the metal and finally the permanent magnet.

EIT RawMaterials is using its extensive partner network consisting of major European industries in sectors of high relevance for a green, digital and competitive Europe to evaluate strategic opportunities ranging from risk sharing activities along the supply chain to collaborative R&D and large investments as well as the relocation of crucial supply chain steps, which can be considered as bottlenecks, into Europe.

European strategies to exit the COVID-19 crisis

To exit the COVID-19 crisis into an economically sound scenario, Europe not only has to tackle the supply side challenges as shown for the example of REEs, but also demand for sustainable end and intermediate products. National governments and the European Commission are taking serious measures to fuel the European economy again and restart the power engine of our welfare.

Europe is home to world-market leaders in the metals and minerals sector and leaders of excellence in innovation and education. EIT RawMaterials was established to address this type of challenges and has the credentials, drive and expertise to lead the establishment of new, post-COVID-19 supply chains. Solutions include, for example, R&D to make available both primary and secondary sources, circularity through industrial symbiosis and closing material loops as well as access to financing for critical value chain steps.

Raw materials are vital for the EU economy, the green transition and a successful exit from COVID-19 – EIT RawMaterials will fully support this.

EIT RawMaterials Position Paper on COVID-19