China’s Domination of Raw Materials Export – Can the EU Find an Alternative Source?

  • It is imperative for the EU to find raw material sourcing outside of China.
  • China controls 93% of the global raw material export market.
  • The EU can start looking into Africa for the raw materials.

The European Union (EU) members will hold discussions on the November 19 in Brussels, Belgium on measures needed to stop China’s domination in the area of rare earth elements and other critical resources. The issue is relevant due to the US-China trade war and security issues. It does not help that Russia recently decided to send over 82 tones of monazite to China in the near future. Monazite is a reddish-brown phosphate mineral containing rare earth metals.

The EU is expected to unveil a green plan. Since 2011, the European Union has made a list of the critical resources. The 2017 list includes nine more new materials than the 2014 list: baryte, bismuth, hafnium, helium, natural rubber, phosphorus, scandium, tantalum, vanadium.

The EU Commissioner Marosh Shevchovich is planning to offer additional support to the EU members to locally source if possible, or find other sources besides China.

One of the main issues is related to the defense sector and its requirement of specific raw supplies. Especially now that the French and Germans are leading discussions on creating their own European Union defense force.

The creation of an EU defense force would create opportunities for European defense firms to have exclusive contracts supplying defense equipment for any unified force and will create new jobs. This in turn will increase the demand for raw supplies.

In 2014, the World Trade Organization started a case against China. The WTO is an intergovernmental organization concerned with the regulation of international trade between nations. The WTO officially commenced on January 1, 1995 under the Marrakesh Agreement, signed by 123 nations on April 15, 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948.

The Canadian company Leading Edge Materials headquartered in Vancouver will be the first ever to be an observer in the upcoming discussions. The company is currently working on opening a raw materials operation in Sweden. Additionally, the company filed an exploration application in Romania.

It is a priority for the EU members to start having their own exploration sites that would lead to sourcing raw materials. The cost will remain one of the biggest obstacles, The licensing is very hard to obtain in Western Europe and due to the associated costs. China is also willing to ruin its own ecology for profit, while in Europe green energy is important. Climate change continues to be a serious issue in our time.

Another option for the EU is to start looking into Africa for sourcing and making tangible investments in the region, instead of just taking a colonization tax, which France unfairly continues to collect from its former colonies.

In conclusion, there is a real need to find solutions outside of China, but also to be vigilant about the effect on the environment and atmosphere and invest more in green initiatives and reusable energy.

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Christina Kitova

I spent most of my professional life in finance, insurance risk management litigation.

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