Europe’s increasing dependency on foreign countries for strategic resources comes at its own peril © Bloomberg

The Covid-19 pandemic has hit Europe’s metals industry hard. Demand has been reduced, supplies disrupted and the continent’s producers have lost more ground to foreign peers, jeopardising the domestic sector’s ambition to supply the EU’s green and digital transitions.

Yet there is a way for Europe to come out of this health crisis on top, but it requires leaders to address some simmering issues.

Europe’s producers have been falling behind for years. Since the 2008 financial crisis, the continent has lost a third of its primary aluminium production while China has seized 60 per cent of the world’s market. Europe has lost market share for other base metals, too, and missed the early boat for securing the cobalt, lithium and rare earths that are used in the assembly of electric cars.

These trends should alarm anyone who has waited for masks, gowns and ventilators to arrive from overseas during this pandemic. Europe’s increasing dependency on foreign countries for strategic resources comes at its own peril — so warns EU industry commissioner Thierry Breton: “The era of a conciliatory or naive Europe that relies on others to look after its interests is over.”

How did this happen? The regulatory environment certainly has not helped. Europe’s metals sector is competing with subsidised imports from China and other regions. While their metals may be produced more cheaply, they come with significantly higher carbon and environmental costs, which the world ultimately pays for with climate change. Continental companies need a fair framework to compete.

European companies have an abundance of knowledge to draw on. They have truly awe-inspiring, world-leading technology and incredible expertise that allows groups to match — and even exceed — the region’s high environmental and social standards. Mining and refining in Europe is simply no longer the dirty, polluting industry of the past. Its industry has slashed its collective carbon footprint by more than 60 per cent in the past two decades — a standout among energy-intensive sectors.

Yet, hardly any metal mines or refineries have opened in Europe in the past decade, despite growing demand and their strategic role in fuelling Europe’s zero-carbon future. Yes, the Green Deal has set Europe on an ambitious path towards carbon neutrality by 2050, but metals remain unexploited in the Nordics, the Iberian peninsula, the Balkans and other areas.

Meanwhile, the circular economy beckons. There is an untapped metals “urban mine” of products sitting around homes. If all the smartphones in our drawers globally were recycled, there would be enough cobalt to manufacture batteries for 1.5m electric cars, according to industry estimates. And that’s just the start.

So, what can Europe do about this “metals malaise” during a pandemic? A whole lot.

First, the EU must reignite demand through delivering stimulus packages for its automotive and aerospace sectors, initiating a renovation wave, and pushing forward the Green Deal with support for batteries, renewable energy and zero-carbon vehicles.

Then it’s high time for the EU to really champion the metal sector’s major asset: its world-leading environmental performance. Metals supplied from European companies offer manufacturers the guarantee of world-class environmental stewardship. Each ton of metal Europe produces emits up to eight times less carbon than its equivalent from China.

And producers are not standing still. I recently led 24 metals company chief executive officers and leaders in declaring our ambition to invest in supplying Europe’s climate goals, and to tackle regulatory and financial challenges through the EU’s new Raw Materials Alliance.

But Europe’s metal producers can only capitalise on this potential if the EU establishes a coherent regulatory framework and fair competition with other regions. The EU needs to ensure globally competitive energy prices, accelerate permitting for sustainable projects, and deliver predictable environmental policies that allow companies to make new investments

If EU leaders do not take these bold steps, Europe’s metal industry will fall further behind overseas peers. That is an outcome no one should want or accept.

Mikael Staffas is president of Eurometaux, the European Association of non-ferrous metals producers, and chief executive of Boliden.

The Commodities Note is an online commentary on the industry from the Financial Times

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