Products developed with critical raw materials (Critical Raw Materials – Crm) are crucial for achieving the digital transition but the EU lacks a procurement policy that reduces dependence on foreign countries, primarily China and Russia. It is what emerges in a working study of the European Parliament requested by the Industry Commission. “The strategic storage of products containing critical raw materials is a common policy in the United States, Japan, South Korea and Switzerland – reads the study – From these examples the principles for European storage can be drawn”.
The dependence on China
Overall, the main dependency country for imports of product groups, raw materials and components, necessary for the green and digital transition it is China, “the dominant player in the entire value chain of the so-called rare earths”, from extraction to refining up to the production of magnets.
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China is still relied upon for imports of batteries used for electric vehicles and energy storage.
But the geopolitical tensions that see Beijing as the protagonist make this supply fragile: from the case of Taiwan, one of the main chip producers in the world with the giant Tsmc, to the alarm over forced labor in Xinjiang, the Chinese province which is the world’s main supplier of panels sunscreens and raw materials used for their production.
Dependence on Russia
The European Union currently depends on Russia for a significant share of its imports for three critical raw materials: platinum, palladium and titanium. Indispensable materials for the development of hydrogen technology and for the production of fuel cells. But the war in Ukraine puts the supply chain at risk and it is necessary for the EU to look at other markets. “The EU must start a new season of relations with these countries”, underlines the Parliament’s work study, according to which, however, trade is not the way forward “since it offers a limited margin for increasing the diversity of European suppliers, given that tariffs on critical raw materials are already low and this limits the effectiveness of free trade agreements in stimulating supply diversification”.
Non-commercial policy instruments
Non-trade policy instruments such as development assistance and international cooperation appear to be more effective options. But above all, we need a real supply policy, hitherto lacking, for indispensable raw materials.
Storing products containing critical raw materials such as platinum, palladium and titanium takes weeks to months at most, while a successful green and digital transition takes decades to materialise.
Stockpiling action in the EU, the study continues, would cushion supply shocks for fledgling and strong manufacturing industries that are vital to the “twin transitions”. It is the belief of experts that if storage is introduced as a policy measure, the associated industrial ecosystem should also be established.
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Digital transition, European Parliament alarm: “Too much dependence on China and Russia” – CorCom