Raw deal? Tackling materials and minerals shortages
Concerns about materials and minerals shortages are rife in the EU. Martin Parley chats to Mattia Pellegrini, Member of the European Commission Cabinet responsible for Industry and Entrepreneurship, on the subject.
Q: Why and how did the EU Raw Materials initiative come about?
The EU is dependent on imports of many raw materials, which are increasingly affected by market distortions. Where there is still potential in Europe, the exploration and extraction of raw materials are facing increased competition from different land uses and a highly regulated environment.
In 2008, the Commission launched the European Raw Materials Initiative (RMI), which is an integrated strategy in response to the different challenges related to access to non-energy raw materials. The strategy is based on three pillars –
- Ensuring sustainable supply of raw materials from international markets to EU industry at the same conditions as other third country industrial competitors.
- Setting the right framework conditions within the EU in order to foster sustainable supply of raw materials from European sources.
- Boost overall resource efficiency and promote recycling to reduce the EU’s consumption of primary raw materials.
The European Council has shown full support for the overall thrust and objectives of the RMI in its Conclusions of 28 May and 4 December 2009, and 1 March 2010. The European Commission believes that the three pillar-based strategy should be further pursued and strengthened. [It] intends to adopt a new Communication in 2011 that will outline recent developments in the global markets, the main achievements regarding the implementation of the RMI, and the way forward.
Q: How low do supplies need to drop for a mineral to be included on the critical list?
The Commission published an expert report in June 2010 which identified a list of 14 critical raw materials. The report sets out a pragmatic and transparent methodology that takes into account a time horizon of 10 years. Raw materials are labelled ‘critical’ when the risks for supply shortage and their impacts on the economy are higher compared with most of the other raw materials. The supply risk takes into account the political-economic stability of the producing countries, the level of concentration of production, the potential for substitution and the recycling rate.
Q: What are the most critical raw materials and why?
The 14 critical raw materials are – antimony, beryllium, cobalt, fluorspar, gallium, germanium, graphite, indium, magnesium, niobium, platinum group metals, rare earths, tantalum and tungsten. The report underlines that ‘criticality’ is not an issue of geological scarcity within the next decade. Of greater relevance are changes in the geopolitical-economic framework that impact on the supply and demand of raw materials. These changes relate to the growing demand for raw materials, which, in turn, is driven by the growth of developing economies and emerging technologies.
Moreover, many emerging economies are pursuing industrial development strategies by means of trade, taxation and investment instruments aimed at reserving their resource base for their exclusive use. This trend has become apparent through an increasing number of government measures, such as export taxes, quotas and subsidies. In some cases, the situation is further compounded by a high level of concentration of production in a few countries.
The launch of a World Trade Organisation (WTO) case against Chinese export restrictions has demonstrated the EU’s resolve in challenging unjustified trade distortive measures. On 23 June 2009, the EU, jointly with the USA and Mexico, requested formal WTO consultations. As this failed to lead to an amicable solution, a dispute settlement panel at the WTO was established in early 2010. A first batch covered nine key raw materials. The measures in place, including, quotas, export duties and minimal export prices, appear to be in violation, not only of general WTO rules, but also of specific commitments that China signed up to as part of its WTO Accession Protocol. The case is still ongoing. At the same time, the EU has also launched a dialogue on raw materials with China.
As far as other countries are concerned, the EU addresses raw materials issues either at a multilateral level, for example through WTO, or through bilateral negotiations and agreements, such as Free Trade Agreements.
Q: Which industries will be hit hardest?
The critical raw materials are particularly important for the development of emerging technologies, such as fuel cells and photovoltaics.
Q: What steps are being/need to be taken to help the situation?
The new Communication will take into account the findings and recommendations of the above mentioned report on critical raw materials, along with many other important inputs, including the feedback received through a public consultation. It is important to underline that it will not focus solely on a list of critical raw materials, but will contain recommendations and proposals relevant to a whole range of non-energy raw materials.
Q: Can recycling fill the hole in supply?
Europe’s urban mines represent a significant material supply potential, especially for waste streams such as the Waste Electrical and Electronic Equipment Directive, which have relatively low recycling rates at present. Nonetheless, given the fact that worldwide consumption of materials is growing, secondary raw material supply from recycling products in circulation can only supply a percentage of our supply needs. This varies considerably at the material level, with some metals having greater recycling rates than others.
These rates vary for a number of economic and technical reasons, including, some materials being technically difficult to recycle, such as rare earths, while, for some, the costs of recycling are prohibitive, even if recycling is technically possible. These costs may occur at many levels, including collection and treatment costs, which vary considerably. Increasing recycling rates requires a better understanding of material flows and the costs of recycling.
In addition, recycling is strongly influenced by the lifetime of the product in which the material is used. For materials used in buildings, the recycling timescale of materials in stock is long compared with, for example, packaging waste. Finally, there needs to be a level playing field in the recycling market – if there are ways to circumvent the waste shipment and treatment rules, then recovery of waste products and resulting recycling rates will decrease. This is the case today, where a considerable amount of waste is illegally exported and treated in sub-standard facilities outside the EU, where rates of material recovery and environmental standards can be lower.
Whereas recycling is important, it is part of an holistic approach in the context of the RMI, which also mobilises trade, development, and research policies.
Q: What materials will benefit from increased recycling and which ones would not and why?
Recycling policy is aimed primarily at the level of the product, including vehicles, and not at the level of materials. As the EU has a waste hierarchy, the aim of the Commission is to avoid landfill of waste, regardless of the material contained. However, it is true that for many rare metals, which are critical for the EU’s economy, recycling rates should be improved.
Q: Will ‘fair access’ to materials work and how will it be controlled?
The first pillar of the RMI is about ensuring access to raw materials on global markets at undistorted conditions. The trade strategy in this respect is, (a) challenging unjustified trade restrictions, (b) including the raw materials issue in bilateral and multilateral agreements and (c) raising awareness internationally.
Charlotte Arwidi, Spokesperson for Industry and Entrepreneurship – European Commission. Tel: +32 (0)2 298 77 97. Email: Charlotte.ARWIDI@ec.europa.eu