The coronavirus pandemic’s impact on mineral mining and trading across the globe has thrown into stark relief the EU’s extreme vulnerability when it comes to the supply of strategic raw materials. Meanwhile the EU’s plans for a carbon-neutral and digital economy depend on a reliable supply of sustainably sourced raw materials and rare earths. H+K’s Wout Gevaert maps the challenges for the EU in building more resilience in its supply chains of these strategic raw materials.

The severe production disruptions caused by global lockdowns have laid bare the EU’s dependency on far-flung countries for some of their most essential supplies. As Brussels draws lessons from the crisis, many EU officials will have scribbled the words ‘resilience building’, ‘open strategic autonomy’ and ‘revisiting supply chains’ into their notebooks.

While the delicate clockwork of globalisation started to falter, many voices called for a transition from a just-in-time to a just-in-case trade model. The race to ever greater efficiency given ever thinner margins should make way for robustness and resilience, they said. Others claim that bilateral agreements with like-minded countries are the way to less dependency. The tension between less or more trade liberalism to underpin the European Green Deal and digital ambitions was already palpable before the crisis. The pandemic has made it even greater.

This tension is particularly relevant for the supply chains of the minerals and rare earths of strategic importance to the EU’s recovery, climate neutrality and digital transition. Solar panels and wind turbines rely heavily on them. Cobalt, lithium and nickel are essential to the batteries that power our growing fleet of electric vehicles. Critical raw materials also underpin digital innovation, aerospace technology and defence applications.

Demand for these materials is expected to at least double by 2050, with demand for cobalt and lithium likely to see even more spectacular growth. The EU imports nearly all of these metals and minerals to which it will need to secure long-term access. Part of the solution will be greater recyclability within the single market, as well as the development of alternative technologies less dependent on these materials. But neither will be able to make a huge dent in Europe’s reliance on imports of these materials.

Australia, Chile and China alone produce 75% of the world’s lithium. The DRC alone controls the same percentage of global cobalt production. The EU acknowledged the risks in such a concentration of supply at the end of 2019 when it presented the European Green Deal, defining access to raw materials a ‘strategic security question’ for Europe. It has said that ‘the reliance on available fossil fuels could be replaced with reliance on non-energy raw materials’.

But it required the sharp shock of the sudden freezing of global trade for EU leaders to fully realise the pressing need for resilient trade flows in raw materials. The short-term effects of the pandemic have cast the long-term risks of raw material supply into sharper relief.

The European Commission’s Action Plan on Critical Raw Materials is due to be published later this year. It aims to plot a path towards secure and resilient supply. A new industrial partnership modelled on the European Battery Alliance has also been announced, grouping industry, trade and EU Commission policy officials.

Strengthening the EU’s position will revolve around the three core ideas of: a) reshoring part of the mining industry and exploring European domestic resources; b) diversifying supply chains to avoid extreme dependency on a single country, and c) increasing recycling capacity to create a European market for secondary raw materials. European self-sufficiency in these materials is a nonsense, and the Commission has made clear it is aiming for what it calls ‘open strategic autonomy’. This means ‘strengthening the EU’s capacity to pursue its own interests independently and assertively, while ‘continuing to work with partners […] to deliver global solutions to global challenges’.

Working with partners will be critical to the EU’s credibility. If it wants these raw materials to underpin a truly sustainable economy it also needs to address the many environmental, social and governance (ESG) concerns associated with precious earth and mineral mining. Similarly, scope-3 emissions (linked with transport of raw materials and semi-finished goods) could be calculated in their carbon footprint and push industries to engineer differently their supply chains or propose more recyclability.

Weak governance and high incidence or risk of human rights violations plague some producing countries like the DRC, where multiple incidences have been reported.[1] A solution could be to set up and push compliance for sustainability standards – the European Commission has already said it would propose transparency and traceability requirements to ensure the ethical sourcing of minerals in the revised EU Batteries Directive expected later this year. ESG criteria are also becoming more important for investors, who recognise the very real financial risks of poor ESG performance on long-term business prospects.

But it’s a valid question whether such standards go far enough or are respected on the ground. Too much ESG auditing has been a mere tick-box exercise. That may be partly why the EU’s justice commissioner Didier Reynders has announced legislation obliging businesses to carry out due diligence checks to assess the potential human rights and environmental impact of their operations and supply chains.

The Gordian knot the EU will have to unravel is ensuring that the complex supply chains of the precious earth and minerals needed to power to the green recovery are underpinned by the highest ESG criteria. Otherwise it risks losing all credibility. Indeed its very ambition to ‘strengthen the EU’s capacity to pursue its own interests independently and assertively’ may very much depend on it.


[1] The Guardian, Apple and Google named in US lawsuit over Congolese child cobalt mining deaths, 16 December 2019