Europe Needs Transparent Rare Earths Pricing to Attract Investment, Says EIT Expert
Europe's Push for Critical Mineral Independence
By Julia Payne and Philip Blenkinsop
BRUSSELS, May 20 (Reuters) - Europe must build its own pricing system for specialty metals and rare earths to reduce reliance on China and unlock investment in mining and processing, industry expert Bernd Schaefer of the EIT told Reuters on Wednesday.
China's Dominance and the Challenge for Europe
China dominates critical mineral supply chains and sets prices through opaque domestic markets, leaving Western developers without clear benchmarks, complicating investment decisions and delaying already higher-cost projects in Europe.
EU Targets for Strategic Raw Materials
The EU has a target to mine at least 10% of its annual requirements of strategic raw materials by 2030 and rely on a single third country for no more than 65% of its annual needs.
Building a European Pricing Index
EIT Raw Materials, an agency partly funded by the EU, is collaborating with digital platform Metalshub, it said last month, to create a European index to foster innovation in new minerals mining, refining and recycling projects in the bloc.
Challenges in Creating Transparent Benchmarks
Schaefer said it would, however, take time to create an index with representative prices. The index would aim to provide transparent, market-based price benchmarks for critical minerals traded outside China, giving investors clearer signals on profitability and helping underpin financing for new projects.
Volume Requirements and Market Representation
"My understanding is that this would require trading a volume of a minimum 10% of the traded volume (non-China)...depending on the raw materials," Schaefer said. "What we are getting from China is neither representative nor, in strict microeconomic terms, a price," Schaefer said.
Potential for Broader International Collaboration
Schaefer said an index could be broader than just Europe, with collaboration from other traders, such as in the United States, Australia, Canada or Britain.
Obstacles to Meeting EU Diversification Goals
It was difficult to say whether the EU would meet its critical mineral diversification goals due to a lack of transparent data on volumes and growth expectations, he said.
EU Initiatives and Slow Progress
The EU announced its 3 billion euro RESourceEU action plan in December to speed up diversification of the bloc's supply chains and reduce its overreliance on China.
Pilot Joint EU Stockpile
Concrete action has been slow with the exception of a pilot joint EU stockpile led by Italy, France and Germany. The countries have shortlisted metals including tungsten and gallium as the first to go into storage.
Risks of Continued Dependence on China
Without building domestic processing and transparent pricing, Europe risks remaining dependent on Chinese benchmarks — and seeing any new raw material output flow straight back into China’s supply chain, Schaefer said.
(Reporting by Julia Payne;Editing by Elaine Hardcastle)
