The discovery of rare metals in northern Sweden could have far-reaching geopolitical consequences

He doesn’t know exactly what has been found yet, told the CEO of the Swedish mining company LKAB on Thursday at a press conference, but that it is a record that offers new perspective for Europe’s independence in the field of raw materials. Right next to LKAB’s existing Kiruna iron ore mine in Lapland, the company discovered a reserve of rare earth metals, said to be “by far the largest” on the continent at at least 1 million tonnes.

The seventeen rare earth metals (with names such as neodymium, lanthanum and dysprosium) play a crucial role in the energy transition, for example in the batteries of electric cars or in the magnets in wind turbines. The demand for it is therefore rising explosively, while production is largely in the hands of one country: China. Currently, no rare earth metals are mined at all within the European Union. Lithium, the main metal in batteries, is also fully imported. China is not the largest lithium miner in the world, but it is dominant in refining.

Because the global extraction of these metals cannot keep up with demand, not only are prices rising, but there is also a growing dependence on China, a geopolitical aspect of commodity chains that, according to Ebba Busch, Sweden’s Minister of Energy, Economic Affairs and Industry, “is not cannot be emphasized enough”. The fear is that China may, for political reasons, hinder the supply of critical raw materials to Europe or, for example, may decide not to supply raw materials or semi-finished products, but only complete Chinese electric cars. This would have major consequences for the European car industry.

Precious time

LKAB director Jan Moström was unable or unwilling to say exactly which elements were found in the deposit under investigation. He does think that the production can be profitable, because it is associated with the extraction of iron ore. Permits must first be applied for for further exploration of the deposit. If LKAB then wants to proceed to exploitation, it must also go through a licensing process that takes years. With current procedures, it can easily take ten or fifteen years before rare earth metals can actually be extracted, Moström explained.

That’s precious time, considering it decision of the European Union that from 2035 every new car must be electric. In the Netherlands, the goal is even to achieve this in 2030. In the short term, Europe will be raw material suppliers from all over the world need to search, Busch said at the press conference at the Kiruna mine, but in the longer term it needs to mine its own resources. “The entire value chain must become more robust,” said the minister, so that Europe can not only go through the energy transition properly, but also improve its competitive position.

If we really want the green transition, we need to find ways to substantially speed up the permitting process

Jan Moström CEO mining company LKAB

Strict European environmental requirements

The Dutch cabinet also sees that global economic competition for raw materials goes hand in hand with geopolitical struggles. “There is a global race to become a technological leader and to acquire a strategic position in the energy transition”, wrote the cabinet last month in its National Raw Materials Strategy. While Sweden focuses on the extraction of raw materials and the production of batteries, the Netherlands wants to invest in the recycling of critical metals, among other things.

The European Commission, at the invitation of EU President Sweden in recent days met in Kiruna, is working on a Critical Raw Materials Act that should improve the European position in the field of raw materials. An important part of this will be the permit process for new mines. Europe sets stricter environmental requirements than, for example, China, which, partly for this reason, has managed to build up a major lead in the extraction of rare earth metals.

The extraction process is potentially very polluting, because the various elements must be separated from each other by chemical processing. The hope is now that the licensing process can be shortened without compromising due diligence, as proved possible during the corona pandemic with the approval of vaccines. LKAB CEO Moström hopes for a reduction of about 50 to 60 percent. “If we really want the green transition, we need to find ways to substantially accelerate this process,” he says.