U.S. Leaves Europe Behind in Critical Minerals Race

The United States is forging ahead with its critical minerals ambitions, investing billions in securing non-Chinese supply, while in Europe, the central EU government “hesitate, over-administrate, talk and lose time.” The EU was already behind the U.S. on critical minerals. Now, it has fallen further behind, which means a lot more work would need to be done to catch up.The quote above comes from the head of a Europe-wide organization representing critical minerals companies. Bernd Schaefer spoke to the Financial Times this month, lamenting the slow pace of investment in those minerals from European countries as coordinated by the EU authorities in Brussels.‘‘I really admire the Americans because they take an idea and they run with it, while we Europeans hesitate, over-administrate, talk and lose time,’’ Schaefer also said. That is a stance that politicians and administrators in Brussels are unlikely to agree with. On the contrary, for the EU political circles, the U.S. has basically betrayed the alliance between Washington and Brussels by pursuing its own critical minerals interests with no regard for the EU’s interests in the same area. Not only this, but the U.S. is more generous with investment and offtake commitments—at the EU’s expense. A number of publications have in recent months covered the Trump administration’s rush to build a critical mineral supply chain that does not rely on Chinese supply or processing technology. Billions of dollars have been poured into both U.S. production and processing tech and supply contracts with other countries, notably in Latin America. Americans, in other words, have gone to countries with critical mineral resources with deep pockets, which, unfortunately, the EU member states lack for a number of reasons such as commitments for other initiatives and a less adventurous fiscal policy.The FT noted in its report that the EU is now trying an alternative path to building a whole new critical mineral supply chain from scratch: by designating certain projects in mining, processing, and recycling as strategic so they can get fast-tracked for permitting. Even with fast-track approval, however, new mining projects take up to a decade to start commercial production, some even more, and it would be naïve to believe the strong green lobby in the EU would accept new mining on the continent with no opposition.It is not only the green activists, either. The Serbian Jadar lithium project is a case in point. The EU has designated Jadar as a critical project, even though it is not in the European Union. However, local communities are opposing the project and they are doing it loudly and publicly. There is no reason to believe any other mining projects in European countries would receive different treatment from local communities given the nature of the mining industry. Europe has a serious case of NIMBY.Abroad, there’s the U.S. with its deep pockets and, of course, China. The EU has signaled repeatedly it would like to reduce its dependence on Chinese everything, and it has done it quite openly, only to assure Beijing it also wants to co-operate in key areas after China understandably protested the rhetoric. The irony is that the EU risks becoming just as reliant on the U.S. for critical minerals as it is now reliant on China. In other words, just like in energy, the import-dependent EU risks swapping one main supplier with another—and neither is its true friend because there are no true friends in geopolitics.“Whether you agree or disagree with the way in which the Trump administration is going about securing their critical raw materials supply chains, in 18 months, they’ve certainly done more deals than Europe has done in the past decade,” an advisor on critical mineral projects in Europe told the FT.Indeed, President Trump has prioritized expansion in critical minerals as a matter of national security, which is clear enough seeing how many critical elements are used in electronics and the defense industry. Yet not all is smooth sailing for the U.S., either. In domestic developments, for instance, progress has been slow because of environmentalist opposition and, in one fascinating instance, opposition from NASA. The agency is opposing a much-needed tungsten project because its location would interfere with its satellite-tracking activities.Even with such setbacks, however, money talks and the U.S. has been clinching supply deals across the world—while the European Union was busy regulating methane emission reduction and packaging, with both of these regulations dead in the water because compliance is well-nigh impossible. The abundance of red tape has been repeatedly noted as a major vulnerability for the trade bloc in the global arena. Yet despite this well-deserved criticism, Brussels has continued to over-regulate, often in a bid to reduce regulation. No wonder, then, that when the U.S. went to Brazil and “put money on the table” for a critical minerals project, the EU got dropped from the short list and lost the deal. If Brussels wants to have even a small chance to catch up with the U.S., it really needs to start moving faster.By Irina Slav for Oilprice.comMore Top Reads From Oilprice.comEurope Dodges a Rhine Crisis for the Worst Possible ReasonOil Nears $100 as Trump’s ‘Economic D-Day’ Raises the StakesChina's Renewables Boom Faces Record Clean Power Curtailments