The EU will unveil an economic security strategy to reduce its reliance on raw materials from China

(Brussels, Reuters) The European Union will announce a series of measures this week to reduce its excessive reliance on key raw materials from China in response to fierce competition from the United States and Asia. It is expected that it will be more difficult for the EU to reduce its reliance on China than to break free from its reliance on Russian energy.

The European Union is scheduled to unveil its Economic Security Strategy on Wednesday (December 3rd), which aims to enhance the self-sufficiency of European industry. The strategy includes a key raw materials plan called "ResourceEU". This plan emulates the "RePowerEU" initiative launched by the European Union to reduce its reliance on Russian oil and gas.

However, key raw materials are not as easily substitutable as natural gas. China's prices are not only much lower than those of other countries, but it also holds a dominant position in terms of extraction and processing technologies. The EU will face the question of how to fund the development of its key raw materials and rare earth industries, a process that often has to start from scratch and covers multiple links from mining, extraction, processing to storage.

Eu officials disclosed that a quick solution would be to immediately allocate 3 billion euros (approximately 4.5 billion Singapore dollars) from the EU budget to the 25 most urgent rare earth and raw materials strategic projects listed by the European Commission.

However, long-term funds remain a major challenge. To ensure that investment returns, enterprises hope to obtain minimum price guarantees or other forms of guarantees. Currently, the European Commission is studying these options.

The European Union is seeking financial support from the European Investment Bank and is looking to invest in projects that benefit the EU and third countries through a "Global Gateway" program similar to China's "Belt and Road Initiative". The European Commission will also include key raw material projects within the eligible investment scope of the existing EU Innovation Fund.

These efforts of the European Union have been questioned by the industry. Mika Seitovirta, an executive of mining company Sibanye-Stillwater, told Reuters: "Time is against the EU. They are moving too slowly.

Industry executives have warned that the EU may lose out to the United States and other Western Allies such as Japan, Canada and Australia in the fierce global competition. These countries are investing billions of dollars to diversify their supply chains.

Although the EU is committed to obtaining resources from third countries such as Brazil and Central Asia, and has recently set its sights on South Africa and Australia, the relevant political agreements have not yet been translated into specific investments.

Recycling and reuse will be an important pillar for Europe to address the shortage of mineral resources and the long commissioning cycle of new mines. The European Commission has also launched a pilot reserve mechanism with some EU countries, aiming to obtain more favorable prices and stable supplies by jointly purchasing and storing key raw materials.