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27 January 2011 EurActiv with Reuters

EU considers stockpiling raw materials

The European Union will consider stockpiling raw materials and will confront any country that restricts supplies, according to a European Commission strategy document.

"The EU will continue to pursue barriers hampering the sustainable supply of raw materials to the EU economy," said a draft paper seen by Reuters on Tuesday (25 January), which will feed into a strategy review to be launched before April.

Shortages of rare earth minerals, used in high-tech and defence production, have sent jitters around the world since dominant producer China restricted exports.

The strategy includes examining whether to propose a stockpiling programme for the most critical raw materials.

Fourteen such materials are already listed by the Commission, including rare earths such as germanium, which is used in military fibre-optic systems and infrared optics, and gallium, which is used in LED lighting.

"The Commission will suspend - totally or partially - from the General System of Preferences (GSP) countries that apply unjustified restrictions to raw materials," it added, referring to the EU's list of preferred trading partners.

Development campaigners Traidcraft said the EU stance threatened the development of minerals that African countries need to pull themselves out of poverty.

"In its bid to get access to cheap raw materials, the EU is threatening to undermine the very basis for countries' future development," said Traidcraft's Liz May. "It is critical that developing countries are able to use all necessary policy tools to add value to their raw materials."

Launch delay

The Commission, the executive for the 27-member bloc and the initiator of EU policy, had intended to launch the strategy alongside one for food commodities on Wednesday (26 January).

It has now delayed the launch to settle a dispute over the role of speculation on food prices, after French President Nicolas Sarkozy called on Monday for new rules to curb commodity price volatility.

The draft gives an insight into the Commission's plans for metals and minerals, although one official said it was likely to change in the weeks ahead.

It highlights possible shortages of wood, paper, leather and rubber, but its main focus is a looming shortage of rare earths, which could hamper Europe's progress in strategic technologies such as electric cars and military surveillance.

"Demand emanating from foreseeable technical innovations may for example increase more than 20 times for gallium between 2006 and 2030 and eight times for indium and germanium," said the draft strategy paper. It foresaw a seven-fold increase in demand for neodymium, which is used in glass, lasers and magnets, during the same period.

"Materials which have not been labelled critical today, for example lithium, may potentially be considered 'critical' in the future, driven for instance by market developments and technological innovations," the paper added.

Lithium is used in batteries for many hybrid electric cars, a market that is expected to start booming a decade from now.

The draft also called on the 27-nation EU to improve its recycling technologies and stop millions of tonnes of raw materials from leaving Europe each year in the form of scrap electronics and cars.

Source: EurActiv with Reuters /...

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