EU Prioritizes Rare Earth Access Amid Global Supply Chain Reshuffle

The European Union is making access to rare earth elements a top priority at an upcoming summit with China, amidst growing concerns over supply chain stability and China's near-monopoly on these critical minerals. This strategic focus comes as Western nations, including the U.S., are actively seeking to diversify their mineral sources and reduce reliance on China.

EU Prioritizes Rare Earth Access at China Summit

European Union leaders are set to engage with China next month, with a primary objective of securing better access to Chinese rare earths and critical minerals. This move is driven by the EU's desire to stabilize its supply chains, which have been rattled by China's increasing export controls on strategic minerals. The summit, marking 50 years of EU-Chinese relations, will see European Commission President Ursula von der Leyen and European Council President Antonio Costa pressing their case with President Xi Jinping and Premier Li Qiang.

Key Takeaways

• Supply Chain Vulnerability: China's dominance in rare earth production and its recent export restrictions have highlighted the vulnerability of Western supply chains, impacting industries from automotive to defense.
• EU's Diplomatic Push: The EU is seeking clearer and more reliable access to rare earths, including longer-term licenses or the removal of export restrictions for the bloc.
• Global Diversification Efforts: Beyond the EU, countries like the U.S. are actively exploring new partnerships, such as with Saudi Arabia, to secure critical mineral supplies and reduce dependence on China.
• Increased Inventory: Concerns over supply disruptions have led companies like Daimler Truck to increase their rare earth inventories.

Global Scramble for Critical Minerals

China's trade restrictions on strategic minerals, including antimony, gallium, and germanium, have caused significant disruptions for Western companies. For instance, German chemicals giant Henkel faced force majeure on adhesive deliveries due to Chinese antimony export curbs. This has spurred a global scramble to rejig critical mineral supply chains.

Diversification Strategies

In response to these challenges, Western nations and companies are pursuing various diversification strategies:

• Developing New Mines: Companies like Perpetua Resources are developing new antimony mines with government funding.
• Boosting Domestic Processing: United States Antimony (USAC) is ramping up production at its Montana smelter, while ReElement Technologies is encouraging U.S. miners to sell byproducts containing critical minerals domestically instead of exporting them to China.
• International Partnerships: Saudi Arabia is emerging as a key player, with discussions underway for a mining and mineral resources agreement with the U.S. The kingdom has significantly increased its estimated mineral reserves, including rare earths, and its mining company Ma'aden is considering partnerships with international firms like MP Materials and Lynas Rare Earths.

Impact on Industries

The instability in rare earth supply chains has direct implications for various industries. Automakers, for example, have expressed concerns that China's export restrictions on rare earth alloys, mixtures, and magnets could lead to production delays. This has prompted companies to re-evaluate their sourcing strategies and build up more resilient supply chains.

Sources

• Saudi Arabia eyes key role in critical minerals as U.S. rethinks China strategy, KITCO.
• Unstable supply chains are in no one's interest - DOE's Jigar Shah and $215 billion in IRA loans, KITCO.
• Rattled by China, West scrambles to rejig critical minerals supply chains, KITCO.
• Saudi Arabia, US to discuss deal in mining, mineral resources, cabinet says, KITCO.
• Rare earth access is the European Union’s priority at China summit, KITCO.