The sleepy and tentative European Union has gotten wise (albeit years late) to the fact that the world is in a period of deglobalization, which hurts them more than any other economic power. EU leaders now recognize they’d better build a domestic system for the critical metals of the future… that is, if they want to lead the ‘green transition’ — a legal protocol and economic system they spearheaded.

Never Let a Crisis Pass You By

European leaders and citizens now know all too well just how reliant they are on adversarial nations to supply them with energy and critical minerals which power the continent’s sophisticated manufacturing and R&D institutions (and will continue to for the next 50-100 years). Moving forward, these essential raw materials and a reliable domestic supply chain that produces them are paramount for the EU to compete with the US and China for economic supremacy in the green energy transition. Soooo….

To combat the US’ Inflation Reduction Act (which focuses on incentivizing American companies to partake in ‘the green energy transition’) and China’s domination of control and production over essential ‘green’ minerals, Europe created their own platform and spending agenda, known as the Critical Raw Materials Act.

The Act is intended to help create a domestic supply chain for the EU, which ensures home-grown production of critical metals such as copper, nickel, lithium, cobalt and rare earths.

According to the European Commission,

“Lithium and rare earths will soon be more important than oil and gas. Our demand for rare earths alone will increase fivefold by 2030. […] We must avoid becoming dependent again, as we did with oil and gas.”

Context of how reliant the EU currently is on other countries for its energy, agricultural products, and minerals:

• About 60% of energy products are imported from outside the EU. Russia supplies nearly a third of the EU’s gas, with oil coming from several sources, namely Russia, Norway, and the Middle East.
• The EU imports 99% of its rare earth metals from China
• The majority (found different percentages from various sources) of agriculture-related products are imported from outside the EU

Preparedness is Key to All Success

When preparation and opportunity meet, good things happen. Europe may be late, but better late than never.

According to eurometaux.eu (mining industry advocate), the Critical Raw Materials Act,

“…must deliver 2030 headline goals and targeted market measures that will offer at least a comparable incentive for new investments building up sustainable European raw materials supply chains.

Focus on the right strategic materials: Put at the centre the metals & minerals most needed for the energy transition – as agreed by international authorities - including aluminium, copper, silicon, nickel, lithium, cobalt, graphite, high-purity manganese, rare earths - plus others the EU identifies through a detailed analysis.

Set 2030 headline goals for Europe’s strategic autonomy: Formalise 2030 targets for increasing Europe’s own supply of extracted/recycled and refined minerals, as well as its level of import diversification. We should aim that none of the targeted materials qualify as “critical” by 2030, through EU and preferred partner supply.”

EU leaders must demonstrate to the region’s citizenry that they are on top of this challenge. From my vantage point, that’s precisely what they tried to show with Sweden’s recent rare earth discovery, dubbed Europe’s largest by the media. The reality is, it’s a positive start for the EU, but woefully undersized, at least as it currently stands, to feed their rapidly growing consumption level.

I hope you enjoy my recent podcast on Sweden’s rare earth discovery and how it plays into geopolitics and the issues facing the European Union’s economy.

Wrapping Up

Much like technology opportunities from 2013-2021, I believe we are entering a long-term, bullish period for mining investment spurred by geopolitics and the desire to reach emissions-related goals set by politicians of the world’s leading economies. Investing in mining opportunities will be a long-term trend to which all investors should pay attention.

Stay hungry,

Aaron