How Europe can win the battle for metals by promoting environmentally sustainable mining
The fight against climate change is being fought on all fronts. Minerals and metals constitute one of these fronts: they are an essential tool in our energy transition to a carbon-neutral economy. The batteries that will equip the electric vehicles of the future will require nickel, lithium and cobalt.
The most competitive deposits of these metals are almost all located outside Europe, whether it be in Indonesia, Latin America or the Democratic Republic of Congo. Only 9% of the world's production of critical raw materials comes from European – mainly Scandinavian – countries. China has already taken the lead by taking control of 35% of nickel mines and 50% of the lithium production capacity; it is expected that it will own 45% of the cobalt mines by 2025; this lead is even greater if we consider the refining capacity for these metals. This already overwhelming dependence on imports, particularly from China, is bound to increase with the inevitable rise in demand if Europe does not develop an ambitious strategy to secure the supply of these metals necessary for the energy transition. Some see this as an opportunity to revive mining in Europe. In reality, given the level of demand, such supplies will be of marginal importance: for the most part, Europe's mining potential is not of the requisite size to justify the huge investments needed to extract and process these raw materials. Another way lies in the development of "urban mining", i.e. the recycling of metals. While this should be encouraged as part of a circular economy approach, it will certainly not be sufficient for fast-growing sectors. It is estimated, for example, that recycling will only be able to meet 10% of European demand for cobalt in 2030.
The establishment of an isolated domestic market is therefore not a realistic solution. Europe must look beyond its borders and develop a strategy for securing supplies of these metals at the international level. As China, Japan, Korea and more recently the United States have done, Europe must put in place financial tools dedicated to supporting its mining companies. This is vital and it can be done. Numerous appropriate mechanisms could be employed to allow equity investments in projects outside Europe, as well as financing policies suited to the specificities of the sector, not to mention help with the setting up of public-private partnerships.
However, the securing of European supplies must go hand in hand with the development of a responsible value chain. Based on compliance with ambitious environmental and ethical standards, this industry is capable of contributing to the economy of the regions in which it operates and of restoring the confidence of end consumers. For this to happen, Europe must be proactive and define its own standards for entry to its markets. France should thus lend its strong support to the European Commission's efforts to ensure that batteries sold on the European market are labeled in terms of their CO2 footprint. Europe must also refuse entry to its market of batteries containing metals from mining facilities that do not meet the highest international environmental standards. For example, nickel from mines that dump their mine tailings into the open sea by a process known as deep sea tailings disposal must be banned. These measures have a cost that should not penalize the competitiveness of these ventures.
Supporting companies, safeguarding fair competition, enforcing environmental and social responsibility: there is nothing unrealistic about pursuing all three of these objectives. All that remains is for Europe to become convinced of the urgent need to act quickly and decisively if it is to hold its own in the battle for the transitional industries of the future.
This opinion column has been published in the paper edition of Les Echos of the 4th of February, 2020.