When the European Union (EU) internal market commissioner Thierry Breton said last year that lithium and rare earths will soon be more important than oil and gas, he was referring to the increasing demand for the much sought after raw materials for the green transition. In her 2022 State of the European Union address, European Commission President Ursula von der Leyen had forecast that EU’s demand for rare earths alone will increase five fold by 2030. It is in this context that the latest news about the discovery in Sweden of Europe’s largest deposit of rare earths should be analysed. Rare earths, which are used in products as diverse as mobile phones, electric vehicles, wind turbines and missile guidance systems, are not mined in Europe at the moment.
A Swedish minister hailed the find as a way of reducing the EU’s dependence on China. Some 98% of rare earths used in the EU in 2021 were imported from China. Over one million tonnes are reported to have now been found in Sweden’s far north. Although significant, that is a fraction of the world’s 120-million-tonne reserves, according to a US estimate. The term rare earth refers to a group of 17 elements that are used to make a range of products and infrastructure which are increasingly important to everyday life. The flip side is extraction of rare earths is both difficult and potentially damaging to the environment.
Speaking at a press conference last Thursday, Swedish Energy Minister Ebba Busch said the EU was “way too dependent on other countries for these materials” and insisted a change was needed. “Electrification, the EU’s self-sufficiency and independence from Russia and China will begin in the mine”, she asserted referring to the new discovery. However, the newly discovered raw materials may not reach the market before 10-15 years’ time, the LKAB mining company’s CEO Jan Mostrom said. Permitting processes take time due to environmental risk evaluations.
The International Monetary Fund, in a document released last year had predicted that three billion tonnes of rare metals could be needed to make the energy transition a reality and suggested this demand may exceed current global supply. Demand for electric vehicles, for example, is expected to grow by at least 30 times by 2040, with each vehicle requiring batteries which use lithium as a crucial component. Plants producing renewable solar and wind power require minerals such as copper and cobalt in higher quantities than carbon or gas-based plants. In addition to these metals, nickel, manganese, graphite and aluminium are among many ‘critical minerals’ that have all been recognised as strategically important for a low-carbon future by countries around the world.
In 2016, China identified 24 strategic minerals needed to safeguard its future. In 2017, the EU published its own list of 27 critical raw materials “at risk of supply shortage”. In 2019, the US published a federal strategy to ensure secure and reliable supplies of critical minerals and Australia also published its own critical mineral strategy. These national strategies grapple with a common theme: supplies of rare metals are frequently concentrated in limited geographical areas. For example, 90% of global lithium production currently happens in Australia, Chile and China; 80% of cobalt in the Democratic Republic of Congo; 55% of nickel in Indonesia, the Philippines and Russia; and half the world’s copper is produced in Chile, Peru and China.
Since 2010 the average amount of rare minerals needed for one unit of power generation has increased by 50% due to increasing use of renewable technologies. Looking to the future this figure is likely to increase further, especially as countries strive to reach more ambitious climate goals. A collective and responsible approach is essential to ensuring these targets can be met.
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