A temporary solution, but better than nothing. Thus China suspended restrictions on the export of rare earths to the European Union for 12 months, opening a real trade truce involving chip producers and making the automotive sector breathe a sigh of relief. At least for now. The agreement was reached after days of negotiations between Brussels and Beijing, immediately following the summit between Xi Jinping and Donald Trump in South Korea.
The agreement between China and Europe allows the latter to avoid a block on the supplies of critical raw materials, indispensable for the automotive sector, but also for defense and the green transition. However, it remains a temporary solution. The European Union still imports over 85% of rare earths directly from China and is also dependent on the Dragon for other sectors, such as the energy sector. At the moment the agreement does not involve the export of 7 of the 17 elements that were blocked last April. These are fundamental materials for batteries, magnets and semiconductors.
Temporary truce between China and the European Union
The agreement between China and Europe comes at a critical time for several sectors. In fact, this is a phase of great tension for European car manufacturers, which risked blocking production within two weeks due to a lack of materials. The suspension of the blockade was welcomed with enthusiasm, for example by the European Trade Commissioner, who called it “a responsible step to ensure stable global trade flows”.
Beijing’s decision also follows the reopening of shipments of Nexperia chips, which have been stopped for weeks after the diplomatic crisis between China, the United States and the Netherlands.
Of course, the postponement of the measures does not erase Europe’s dependence on other fundamental elements imported from China. Europe, for example, is heavily dependent on Beijing for the import of wind turbines, solar panels, military components and electric cars.
Europe aims for industrial autonomy
The 12-month pause for the rare earth block makes the full extent of the crisis clear. If the suspension is not extended, what will happen to European industry? Hence the need to invest to become more autonomous.
The European Commission has already launched 47 strategic projects, including four in Italy, to reduce dependence on China. These include:
- platinum recovery
- the production of magnets
- the recycling of lithium batteries
- the recovery of copper, nickel and platinum group metals.
Alongside this, a supply diversification plan is underway: Brussels is looking at Australia, Greenland and new investments in Sweden and Estonia, although with still a long timescale.
At the same time, individual states are also moving to guarantee autonomy. In Italy, the government has entrusted Ispra with a mine valorization plan which includes 14 projects, for a total value of 3.5 million euros in initial investments.
