U.S. and EU present memorandum of understanding and action plan on critical raw materials
The United States and the European Union intend to significantly expand their cooperation on critical raw materials. To this end, both sides signed a memorandum of understanding in Washington, D.C. on Friday. The agreement envisages cooperation across the entire value chain, from exploration to recycling. EU Commissioner for Trade and Economic Security Maroš Šefčovič and U.S. Secretary of State Marco Rubio also presented an action plan that will examine additional measures to strengthen supply chains. These include subsidies to offset price differences, offtake agreements, and the development of standardized markets.
The initiative comes amid the West’s growing dependence on China for raw materials such as rare earth elements and germanium. China not only dominates mining but, more importantly, processing, giving it substantial influence over both pricing and availability.
The new partnership should therefore be understood as an effort to create a counterbalance to China and enhance economic security. However, building new supply chains and increasing resilience are likely to result in higher costs, as noted this week by U.S. Trade Representative Jamieson Greer. These costs must be weighed against the potential impact on Western industry if Beijing were to further restrict exports of rare earths. According to a recent study by the International Energy Agency (IEA), such disruptions could amount to losses of up to 6.5 trillion U.S. dollars.
In February, the U.S. government had already presented its ambitions to reshape the global market for critical raw materials to representatives from 54 countries and the European Union.
