EU will have reserve of raw materials critical to China’s dependence

“ Cwe intend to have too many dangerous dependencies [for] we depend on China on more than 80% for many critical raw materials and, in some rare lands, this dependence reaches 90%”, warned the President of the European Commission, Ursula von der Leyen, speaking at the plenary session of the European Parliament, in the French city of Strasbourg, to deliver the second speech of the State of the Union of the new mandate.

In view of the fact that the EU urgently needs to guarantee supply and make reservations, the EU executive leader announced “a new European Body for Critical Matters”.

Such a project “will help to obtain and store what we need”, such as “for electric cars, semiconductors and batteries, clean technologies and defense and more,” he listed, in an allusion to the critical raw materials needed for strategic sectors of the European economy.

“ No country can do it alone, so we have to think differently”, he urged.

The announcement arises in a context of growing European concern at the concentration of the supply of critical raw materials and other strategic components in China, which are considered essential for industry and digital and energy transitions.

According to Ursula von der Leyen, the EU must strengthen its economic and industrial autonomy, given the high European trade deficit with China (which amounts to EUR 1 billion per day) and the need to balance trade relations between the two blocs.

“ We are engaged in a dialogue with China to rebalance our trade relations, but this dialogue must now produce results. [...] I want to be clear: we will use all the instruments within our reach to rebalance our relationship, [since] the words are important, but the acts are even more”, he said.

“ It is not only our industry that depends on it, but also our independence and security,” he said.

According to the European Commission, around 97% of the magnesium used in the EU comes from China, while rare earths used in permanent magnets are fully refined in China.

Brussels data further indicate that more than 90% of European rare earth demand is currently ensured by China, which also dominates the supply of several other strategic raw materials.

Brussels has launched a plan to reduce European dependencies on raw materials for batteries, rare earths and defence by 50% by 2029, including a coordinated approach to reserve building.

China is one of the main competitors of the EU, alongside the United States, which were not mentioned in this State of the Union speech.

Von der Leyen highlighted the EU's commitment to trade diversification and supply routes through new trade agreements and investment in the Media Corridor, which will link Central Asia and the South Caucasus to the European market with up to EUR 12 billion of planned investment.