Mineral Security Critical to Europe’s Energy Transition

Europe has firmly set itself on a net zero emissions path and continues to embrace all available technologies and emission reducing options dictated by technology maturity, costs and market conditions. Bold policy ambition by governments is also positioning the future business landscape to function within strict emission parameters. The UK government for example, is powering towards decarbonising its entire car fleet by banning the sale of new petrol and diesel cars by 2030. France, despite ongoing push-back from the so called ‘yellow vest’ revolt, continues with plans to target greenhouse gas emissions from individual sectors. The present summer weather extremes in Europe give credence to what European policy makers wish to achieve, but what happens if the supply to the very minerals that underpin the technology required to drive this future economy is threatened?

The consequences of a vulnerable mineral supply chain would be catastrophic for Europe. Reconfiguring how European society operates, and then not being able to supply the essential resources to drive economic momentum forward, would not only risk climate change targets, but also potentially affect political stability. If Europe cannot secure long-term mineral supply chains, then it may indeed find itself up the proverbial ‘creek without a paddle’.

According to a recent report released by the International Energy Agency on critical minerals1, there are three supply challenges to be addressed to ensure the rapid and secure transfer of the energy transition. These are:

1. Keeping pace with the rapid demand growth in climate driven scenarios.
2. The need to diversify sources and,
3. Whether the volumes supplied are from clean and responsible sources.

Trade relations remain complex. In the future, the possibility of global conflict will potentially be driven not from differences in ideology, but from disparities in resources. The insatiable resource appetite of China and India, pitted against the West’s focus to transition to a green utopic economy, is going to dominate resource management and business trade in the decades to follow. International trade alliances continue to be drawn up, and the investment competition to secure mineral supply chains in regions such as Africa or South America continues to play out; offset by the risk appetite to venture into areas of political instability, corruption or conflict.

Against this backdrop, for Europe to realise its net zero ambitions and support the future energy economy being developed, the need to look inwards at every resource opportunity to meet demand and ensure security has to begin. By augmenting mineral supply chains from within Europe, a diversification of supply is also achieved, with automatic European standards of governance and oversight, and with a reduction in emission costs to get minerals imported into Europe.

According to the European Commission2, the European Union metallic minerals sector produces a wide range of ores yielding metals or metallic substances with active mines in Austria, Finland, Greece, Ireland and Poland. With contributions currently at only 1% of total global production, new investment opportunities in Europe that can deliver a secure supply of minerals will become hot property.

References:

1. https://www.iea.org/news/critical-minerals-market-sees-unprecedented-growth-as-clean-energy-demand-drives-strong-increase-in-investment
2. https://single-market-economy.ec.europa.eu/sectors/raw-materials/related-industries/minerals-and-non-energy-extractive-industries/metallic-minerals_en#:~:text=The%20EU%20is%20an%20important,Poland%2C%20Portugal%2C%20and%20Sweden.

Writer: Richard Dolamore

Writer Note: The views and opinions expressed in the above blog are those held solely by the writer and in no way reflect the views held by any other third party or company.

March 2023