Exclusive-EU-funded Agency Working With Metalshub on European Critical Minerals Trading Platform

EU Agency and Metalshub Collaborate on Independent Critical Minerals Platform

Establishing Regional Critical Mineral Prices and Market Transparency

By Eric Onstad

LONDON, April 22 (Reuters) - An agency partly funded by the EU and digital platform Metalshub told Reuters they are working to establish regional critical mineral prices independent from those in dominant producer China in order to enable the financing of new projects.

Western Efforts to Reduce Dependence on China

The European Union, the United States and other Western countries are striving to establish their own benchmark prices for critical minerals to cut their dependence on China, which accounts for about 90% of global output of processed rare earths, vital for clean energy, electronics and defence systems.

Challenges in Market Transparency and Investment

"Europe still lacks a deep and transparent spot market and EU relevant benchmarks for critical minerals...the absence of transparency is an absolute deal breaker for many investments," Bernd Schaefer, CEO of EIT RawMaterials, said.

Several new critical mineral mines and processing facilities struggle for financing due to an uncertain outlook for prices, which are largely set in China and have fluctuated wildly.

Public-Private Partnership Initiatives

Public-private partnership EIT RawMaterials, with more than 300 companies, academics and others involved in the sector, is working with Metalshub to expand the privately held German group's platform by adding spot trading for rare earths and other critical minerals and developing reliable price indexes.

Regulatory Approval and Stakeholder Engagement

Technically, Metalshub could launch trading immediately, but the venture needs approval from policymakers and regulators, Metalshub Managing Director Frank Jackel said.

Discussions have been held with a wide range of stakeholders, including traders, companies and policymakers, Schaefer said, declining to provide names of the companies spoken to or feedback received.

Schaefer said they aimed to have a pilot for the project operating within 12 months.

Liquidity and Market Functionality

Metalshub’s Trading Capabilities

LIQUIDITY QUESTION

Metalshub offers trading for materials used in the steel sector, raw materials for aluminium such as alumina and nickel. It has also been used for online lithium and graphite auctions.

Jackel said Metalshub is able to host transactions, but a price index would be outsourced to ensure credibility and meet regulatory frameworks.  

Market Fragmentation and Data Collection

"Critical minerals markets remain fragmented, opaque, and heavily dependent on bilateral negotiations and price assessments that rely on limited and manually collected data," he said.

EU Demand Aggregation Platform

An EU demand aggregation platform for critical materials launched last week is not set up to establish regional prices, which are key to underpinning local output, Schaefer said.

The EU launched the critical minerals section of its Energy and Raw Materials Platform on April 13. This aims to connect buyers of 17 EU strategic raw materials with suppliers, but leaves the two sides to finalise trades.  

Prospects for European Benchmark Prices

While some point to thin liquidity in critical minerals trading outside China, Schaefer and Jackel said there was enough to create benchmark prices in Europe.

"There are enough data points from transactions currently in Europe to build a representative market price, for example, in rare earths," Schaefer said.

Schaefer and Jackel said the initiative would begin in Europe, but would ideally include other Western countries.

(Reporting by Eric Onstad, Editing by Veronica Brown and Alexander Smith)