US and EU looking to create 'critical minerals club' to ensure their own supplies
Euro players unhappy about American green tech subsidies... and everybody's worried about China
The US and Europe could be moving towards another area of cooperation, this time over critical minerals needed for electric vehicles and other technologies, with the creation of a de facto free-trade status for such resources.
Representatives from France and Germany have met with key US officials during a visit to Washington, and reports say a proposal was floated of a “critical minerals club” to include America and Europe, amid concerns that the US Inflation Reduction Act could penalize non-US companies developing green technologies.
Benchmark Mineral Intelligence chief operating officer Andrew Miller told us efforts to nationalize or regionalize supply chains are a priority for all western economies today. He said: "The sustainable transition to clear energy is a target that will only be achievable with more diverse supply chains.
The Inflation Reduction Act aims to give a boost to US industry and bring down inflation by investing in domestic energy production, especially clean energy. But it has sparked fears that it will disadvantage European companies developing green technology. For example, it requires that a certain amount of components or critical minerals for electric vehicles be sourced in the US or from countries that have a free trade agreement with it, which does not currently include Europe.
"The Inflation Reduction Act has fuelled a lot of momentum around US ambitions and is arguably the biggest legislative milestone the western world has seen to date to support electrification," Miller told The Register.
"This has of course raised concerns in European economies, particularly those with large, established automotive sectors which will increasingly be required to compete in the field of electrification. Europe is now playing catch-up to the US, and while a more international collaboration may be good for diversity of supply, the US will be keen to ensure the supply chain security of its own automotive sector as a priority.
The meeting in Washington was officially to reinforce the United States’ commitment to the transatlantic economic partnership, and saw US Secretary of Commerce Gina Raimondo and Secretary of the Treasury Janet Yellen hosting German Vice Chancellor and Minister of Economic Affairs and Climate Change Robert Habeck, plus France's Minister of Economy, Finance, and Industrial and Digital Sovereignty Bruno Le Maire.
As reported by the Wall Street Journal, it was Habeck who proposed creating a “critical minerals club” with the US, with the goal of diversifying supplies of critical minerals and finding ways to reduce reliance on countries such as China, which is a key supplier of some minerals such as lithium, cobalt, nickel and graphite that are used in high-tech industries.
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Another goal appears to be to have European companies given regulatory equivalence with US manufacturers when it comes to green technologies, so they are not excluded from Inflation Reduction Act subsidy spending.
'Lithium and rare earths will soon be more important than oil and gas'
According to the Financial Times, Le Maire said the aim was to ensure “as many European components as possible are included in the framework of the IRA, so they can benefit from the tax credits and subsidies that will be given to American products.” Adding, “I am thinking of electric vehicles, batteries, critical materials.”
The EU’s executive body, the European Commission last year proposed the European Critical Raw Material Act to address the issue of key minerals in many high-tech industries.
“Lithium and rare earths will soon be more important than oil and gas,” EC president Ursula von der Leyen said at the time. “Our demand for rare earths alone will increase fivefold by 2030…we must avoid becoming dependent again, as we did with oil and gas.”
She pointed to China, with its “quasi-monopoly on rare earths and permanent magnets” while other nations such as the USA Japan and South Korea were deploying sizable investments to lessen their dependence on such sources.
The goal of the European Critical Raw Material Act is to create a European network of raw materials agencies, and take steps to meet as much as possible of European demand for critical minerals from local sources. At least 30 percent of the EU's demand for refined lithium should originate from the EU by 2030, Von der Leyen said.
Meanwhile, Indonesia is looking to exploit its position as the nickel capital of the world to set up a cartel with other like-minded mining empires, similar to the way OPEC joins forces to control the global crude oil market, as The Register reported last year.
Also discussed at the Washington meeting was the importance of the US-EU Trade and Technology Council (TTC), a forum set up to coordinate transatlantic approaches to global trade, economic, and technology issues between the two.
Raimondo commented on the progress made through the TTC on semiconductor supply chains, according to a Commerce Department statement, citing arrangements on to promote transparency on incentives to the private sector and to exchange information on potential disruptions of shared concern in the semiconductor supply chain. ®