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The European Union is considering proposals and ideas to support manufacturers of rare earth magnets—key elements in electric vehicles—as the EU looks to reduce supply chain dependence on China and reach net-zero emissions by 2050, sources familiar with the plan told Reuters.
Permanent rare earth magnets are critical to the energy transition because they are used in electric vehicles (EVs) and wind turbines. They contain rare earth minerals, a sector in which China currently dominates the global market and supply chains. Europe, as well as the United States, has made steps to ensure local supply of rare earths or from sources other than China, in order to reduce the dependence on Beijing for their green energy targets.
Chinese firms, which receive subsidies for their production of rare earth magnets, currently supply around 90 percent of the world’s market for those magnets, according to Reuters. The EU depends on China for 98 percent of its demand for rare earth magnets.
European firms told Reuters they cannot compete with the Chinese companies and back ideas of public-private cooperation to help develop the sector in the EU.
So, the EU is now considering support to European production of rare earth magnets, with recommendations expected to be announced in September, Reuters’ sources said.
Last year, the EU created the European Raw Materials Alliance (ERMA), which aims to make Europe economically more resilient by diversifying its supply chains. The EU hopes that by 2030, ERMA’s activities will increase the production of raw and advanced materials and address the Circular Economy by boosting the recovery and recycling of Critical Raw Materials.
Regarding rare earth permanent magnets, ERMA says that Europe has “world-class” deposits in Sweden, Greenland, Finland, and Spain. In addition, rare earth permanent magnets can be extracted as a by-product of phosphate production, for example in Finland, and regained from end-of-life products through various different recycling schemes, according to ERMA.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com