The EU’s looming mismatch between climate ambition and minerals supply
The EU has long looked to take a global lead on climate, and its 2030 goal to reduce net greenhouse gas emissions by 55 per is a benchmark for decisive global action.
But Brussels has not shown the same boldness in its industrial policy for securing the sustainable upstream metals supply needed to deliver that target. Its ever-growing metals dependencies threaten to derail the development of new clean energy value chains.
The International Energy Agency this year warned of a “looming mismatch” between climate ambition and minerals availability. Europe has a long list of serious metal supply challenges on its radar over the next decade unless it quickly and radically changes course.
First up is magnesium, of which Europe risks completely running out of supply later this month, leading to an imminent stop to aluminium alloy production. This means Europe will not be able to make its lightweight cars, aerospace components and so much more.
The back-story is one of avoidable dependency. Despite Europe having a big magnesium industry until the early 2000s, past industrial policy decisions meant production was lost to more polluting Chinese imports.
Fast-forward to today: China has a near-monopoly on global magnesium production, providing 95 per cent of Europe’s supply. Its recent production curbs have led to a rapid halving of magnesium output, creating a global supply crunch.
Europe today faces a similar dependence on China for other energy transition metals, such as the rare earths used in electric cars and wind turbines, and the germanium, gallium and indium needed for a restart of solar panel production. It is also powerless to address the major environmental and social impacts from their production.
The second metals challenge is looming five years from now, after which Europe risks a supply deficit for lithium and other battery materials.
According to Wood Mackenzie, the world in 2030 will need eight times more lithium than today to supply electric vehicle batteries. Yet currently announced global extraction projects only cover about a third of this massive demand.
There is no quick fix, because it can take up to 10 years to open a new mine. Unsurprisingly, today’s lithium market is already experiencing shortages, and electric vehicle batteries have become more expensive after years of decline.
Europe woke up to this danger last year with the launch of its European Raw Materials Alliance to spark domestic investment and global partnerships. China, however, is at least a decade ahead, holding 80 per cent of the world’s refining capacity for battery metals, and investing more than any other country into securing supply from the world’s mines.
Europe’s third metals challenge is the risk of new dependencies by the end of this decade. Take aluminium. According to the World Bank, the energy transition will need more tonnes of aluminium than any other strategic metal — for lightweight vehicles, electrifying the grid and solar panels.
Yet, alarmingly, over the same period, Europe has lost one-third of its primary aluminium production. Today, European producers are battling Chinese overcapacity, high-carbon dumping, and high power prices while at the same time investing heavily in decarbonisation.
This May, Brussels introduced anti-dumping duties for semi-finished aluminium products in a belated attempt to equalise the playing field with Chinese competitors. Then, in September, these very same anti-dumping duties were suspended for nine months despite clear evidence of significant injury.
Short-term decisions such as this risk repeating past mistakes that have been made at the expense of the region’s upstream industries. Aluminium cannot become Europe’s next magnesium.
Nothing less than a massive shift in industrial policy is needed to solve Europe’s growing metals problems, across three areas of action.
First, Europe needs to accept that more mining and refining of strategic metals is urgently needed under the right environmental and social conditions. This must be backed up with a clear strategy for sourcing and financing sustainable minerals both at home and abroad.
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Second, the continent needs to confront its dependence on Chinese monopolies and evaluate alternative paths forward — from supply diversification to reshoring of production — while keeping strong, consistent trade defence instruments to prevent further production leakage.
Third, Brussels needs to recognise that the energy transition will massively challenge power-intensive metals producers as they themselves decarbonise. The EU must safeguard its industries from debilitating energy price rises, while delivering affordable carbon-free electricity in the massive volumes required for producing the sustainable metals of Europe’s future.
The metals industry is a willing, enabling partner in Europe’s ambitious plans to decarbonise its economy. We now need Brussels to deliver an effective industrial policy that will help us realise that ambition.
Guy Thiran is director-general of Europe’s metals association, Eurometaux
The Commodities Note is an online commentary on the industry from the Financial Times
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