De-risking and diversification remained key topics in 2024, at least when it comes to securing critical raw materials. From a European perspective, the adoption of the Critical Raw Materials Act (CRMA) in May established a legal framework for ensuring the industrial supply. It promises faster approval processes and brings hope that the urgency of this issue has made its way onto the political agenda. However, the CRMA does not provide additional funding for building domestic value chains, from extraction to processing and recycling. Instead, this responsibility is left to individual EU states, such as France, Italy, and Germany, which have set up their own raw materials funds. The German government has allocated one billion euros for this purpose, with budgets ranging from 50 to 150 million euros per project, provided they are approved by the Kreditanstalt für Wiederaufbau (KfW).
There is a set of non-energy, non-agricultural raw materials that are considered to be critical due to their high economic importance and their exposure to high supply risk, often caused by a high concentration of supply from a few third countries. Given the key role of many such critical raw materials in realising the green and digital transitions and in light of their use for defence and aerospace applications demand is likely to increase exponentially in the coming decades.
Introduction of the regulation EU-2024/1252 (Critical Raw Materials Act)
Another key element in raw material sovereignty is partnerships with countries rich in natural resources. In response to the call by EU Commission President Ursula von der Leyen in her 2022 State of the Union address, not only Germany but also France and the EU itself have taken action. The free trade agreement between the EU and the Mercosur countries, which was finalized in the last weeks of the year, also holds the potential to advance resource security. This includes future raw material superpowers like Argentina and Brazil, although the opposition from France and Italy may still jeopardize the preliminary agreement.
However, the European states are not alone in this pursuit, as high-tech hubs around the Pacific are also securing access to essential resources. This applies to Japan, South Korea, and the United States as well.
Like in the last year, germanium stood center stage in 2024. (Photo: TRADIUM GmbH)
China – the often unspoken yet targeted recipient of efforts aimed at greater autonomy – is, of course, not inactive. The expansion of the ‘New Silk Road,’ a colossal infrastructure and resource project, continues to progress. The inauguration of a cargo port in Peru in the fall demonstrated Beijing’s logistical ambitions in South America. Media coverage was impactful, though not groundbreaking, when highlighting the ownership of China’s resource wealth, particularly rare earths: it belongs to the state. This awareness of China’s market power, both domestically and globally, was further underscored by export restrictions imposed by Beijing. While restrictions on gallium and germanium marked their first anniversary in the summer of 2024, these were tightened in December. For the first time, the U.S. was specifically cut off from exports of gallium, germanium, and antimony. The reason for this – which industry experts seem to agree on – lies in the U.S. attempt to isolate China from access to the most advanced computer chips. This chip war has been simmering since October 2022 and continues to evolve with new developments.
Rare earth resources belong to the state, and no organization or individual may occupy or destroy rare earth resources.
Order of the State Council of the People’s Republic of China No. 785
Next year, no easing is expected, as even the incoming U.S. President, Donald Trump, has announced a tough stance against China, including high tariffs. Even before his inauguration in January 2025, the current administration has implemented new tariffs on a range of Chinese materials and minerals, such as tungsten. Additionally, there are reports that a reduction in subsidies for electric mobility is planned.
You see these empty, old, beautiful steel mills and factories that are empty and falling down. We’re going to bring the companies back. We’re going to lower taxes for companies that are going to make their products in the USA. And we’re going to protect those companies with strong tariffs.
President-elect of the United States Donald Trump
Throughout this year, tariffs have repeatedly been used as a regulatory tool, including by the EU. Since July, preliminary tariffs have been imposed on electric cars from China, which were made definitive in October. The measure was justified by the extensive subsidies provided by the Chinese government, which enabled manufacturers like BYD to offer their vehicles at significantly lower prices than Western companies. The European Commission has also launched investigations into state aid from Beijing for wind turbines and solar panels.
Given the growing polarization between East and West, will countries with close ties to both sides or those recalibrating their relationships with the U.S. or China benefit? In addition to India, which is also seeking secure raw material sources for its emerging economy, Saudi Arabia is positioning itself as a key player. The country aims to diversify its economy away from oil wealth, and in developing its own mineral resources, it is turning to Western partners like Australia. At the same time, the U.S. ally has recently been seeking closer ties with China. Other countries, like Brazil, are also positioning themselves as suppliers of critical raw materials.
The field of participants in the race for resource security is steadily growing, but in the long run, there is no way around China.
The EU is lacking a comprehensive strategy covering all stages of the supply chain (from exploration to recycling).
Mario Draghi: The future of European competitiveness – In-depth analysis and recommendations
Photo: Rawmaterials.net