Time to stop Europe’s climate policy reliance on China and Russia

Citizens of the European Union demand climate actions. They recycle, they want to drive electric cars and to use sustainably-generated electricity and heating in their buildings.

These preferences of the Europeans translated into rushed political moves – getting natural gas and nuclear fuel from Russia, while lithium for electric car batteries in China.

With Russia’s full-scale invasion of Ukraine, the overreliance on the Russian gas transpired as an apparent mistake that can’t be corrected overnight. But the reliance of China for lithium batteries is as terrible and consequential.

Benchmark Mineral Intelligence estimates that in 2030, 0.55 million metric tonnes of lithium per year will be needed while only 0.22 million metric tonnes will be produced in the EU countries.

RUSSIA. The EU imported Russian goods worth $186 billion from March 2022 to January 2023. The EU’s trade deficit with Russia was still over $6 billion as of December 2022.

The biggest share was LNG (liquefied natural gas), 22 billion cubic meters, and the imports increased by over 35 percent in comparison to the previous period. Notably, LNG hasn’t been under the EU sanctions, unlike the Russian coal and oil. GazPromBank is not under the EU sanctions either.

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Nuclear supplies, the uranium to generate nuclear power, also accounted for a significant share and amounted to $0.8 billion. Neither nuclear supplies, nor Rosatom itself are under sanctions either.

CHINA. Today lithium prices surge to over $60k per tonne. China enjoys this seller’s market just like Russia enjoyed high gas prices. Instead of selling lithium to European car makers, China wants to sell its cars in the EU.

China controls 60 percent of global lithium that goes into batteries. EU lured investors from the US and Australia, including Albemarle and Vulcan Energy Resources to mine and refine lithium.

French mining group Imerys plans on extracting lithium from underneath a kaolin mine in France.These mines have been the backbone of the famous French ceramics since the 19th century.

In 2030, Vulcan and Imerys may be able to cover a bit more than 10 percent of the required 0.55 million metric tonnes of lithium.

While production cost of $17k per tonnes has been a world reference, Vuclan’s cost of mining and refining in the EU will be $30k, given the technology that is needed to be applied. Vulcan’s technology is to pump up hot lithium-rich brines from underground wells, a somewhat similar concept to geothermal energy.

The EU Critical Raw Materials Act determines that the domestic raw materials for climate smart technologies such as EV are a priority. But the lessons with Russian gas should make the mining of critical raw materials an urgent matter paramount to the national security.

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