EU Launches Critical Materials Initiative Amid China's Dominance
The European Union has launched a critical initiative to secure its supply of essential materials for energy transition and security. However, details on specific European countries involved in 47 urgent projects remain unclear. Meanwhile, China's dominance in key mineral markets is a growing concern.
The EU's Critical Raw Materials Act aims to boost extraction, processing, and recycling within the bloc and foster international partnerships. Potential allies include Canada and Brazil, which hold significant reserves of critical minerals. Canada, in particular, has identified 34 crucial minerals and metals, with Quebec being a rich source, accounting for nearly 38% of Canada's production in 2022.
China currently controls a near-monopoly on several key minerals, including rare earths, graphite, and gallium. It holds 70% of the market share in mining and a staggering 90% in separation and processing of rare earths. To counter this, G7 countries and the EU are exploring a price floor for rare earths. However, Canada faces obstacles such as regulatory delays, infrastructure gaps, and lack of government coordination in fully exploiting its potential.
The EU's push for secure critical material supply chains is crucial for its energy transition and security. While Canada and other countries hold promising reserves, China's dominance and potential trade manipulations pose significant challenges. International cooperation and investment, such as those encouraged by the EU's Critical Raw Materials Act, will be key to diversifying the global supply chain.
