EU to unveil new plan to end dependence on China's rare earths • FRANCE 24 English

Key Concepts

• Rare Earths: A group of 17 chemical elements crucial for high-tech industries.
• EU Rare Earths Plan: A new initiative by the European Union to reduce dependence on China for rare earth minerals.
• Deforestation: The clearing of forests, a practice linked to economic growth in Indonesia but with severe environmental consequences.
• Supply Chain Dependence: The reliance of industries on specific countries or regions for essential materials.
• Joint Purchasing: A strategy for collective procurement to gain stronger negotiating power.
• Local Production & Recycling: Efforts to increase domestic supply and reuse of critical raw materials.
• Palm Oil: A major cash crop in Indonesia, a significant driver of deforestation.

EU Plan to End Dependence on Chinese Rare Earths

The European Union is introducing a new plan aimed at reducing its reliance on China for rare earth minerals. China currently dominates the global market, accounting for 59% of global mining in 2024 and, more critically, 91% of the world's refining of these minerals, according to the International Energy Agency. Europe's role in refining is described as negligible.

This dependence was highlighted in October when China imposed export restrictions on rare earths amidst a trade dispute with the US. These restrictions caused significant disruption to European and global supply chains. Although these restrictions have since been suspended for a year, with some exports requiring special licenses, the incident served as a "wake-up call" for Brussels.

The new EU plan proposes several key strategies:

• Accelerated Joint Purchasing: The 27 member states will engage in joint purchasing of critical raw materials, mirroring the successful template used for vaccine procurement during COVID-19. This aims to strengthen the EU's negotiating position.
• Boost Local Production and Recycling: The plan seeks to increase the local production of rare earths within Europe and enhance recycling efforts. While European deposits exist, Chinese suppliers have historically been more competitive.
• Diversify Supply Chains: Europe will collaborate with "reliable partners" for additional supply, specifically mentioning non-US producers and refiners such as Australia, Brazil, and South Africa.
• Establish a European Center for Critical Raw Materials: This proposed center will serve as the EU's supply hub for these vital materials.

EU industry chief Stefan Sigil has previously criticized China's practices, referring to them as "racketeering." He stated, "Increasingly, licenses are being granted in exchange for information that often and worryingly relates to industrial secrets. These requirements are also akin to racketeering if we consider all the demands made on our manufacturers in order to obtain these export licenses."

Airbus Supplier Quality Issue

In a separate business development, Airbus announced it is lowering its commercial plane delivery target for the year to approximately 790 aircraft, down from an initial target of around 820. This adjustment is due to a supplier quality issue affecting fuselage panels for its A320 line. Consequently, Airbus is preparing to inspect hundreds of its jets. This follows a previous incident where thousands of Airbus planes were grounded for a software update after it was discovered that intense solar radiation could interfere with flight control computers.

Market Overview

Major European stock markets opened with muted trading. This follows a recovery in Wall Street trading on Tuesday. Asian stock markets broadly rose, buoyed by tech stocks, including Nvidia. Bitcoin has also seen a recovery, trading above the $90,000 mark after experiencing its worst trading day since March.

Deforestation and Natural Disasters in Indonesia

The report shifts to a story linking rapid economic growth with natural disasters, focusing on Indonesia. Deadly flooding has devastated the country, resulting in over 700 fatalities. While tropical storms are a factor, suspicion has turned towards deforestation, which has exacerbated the disaster.

Locals have observed a significant increase in the amount of wood logs reaching the estuaries during floods compared to previous years. This is attributed to widespread deforestation, a practice central to Indonesia's economy for decades, which has destabilized the land, making it prone to erosion and less capable of absorbing heavy rainfall.

One local stated, "There's been floods like this before. Whenever it floods up river, the wood logs end up here. Didn't used to be this many. Usually just a few, but now there's more than ever."

Experts describe this as an "ecological disaster caused by the mismanagement of natural resources by the government." The forests, which should act as natural sponges, have lost their functionality, leading to increased log transport during deluges.

Despite efforts to reduce deforestation and logging, the rate has fallen sharply from a 2016 peak. The land cleared has often been converted to intensive farming for cash crops like palm oil, a major Indonesian export. Palm oil production accounts for 45 million tons annually and is responsible for a third of the country's forest loss.

Indonesia has lost 4.4 million hectares of forest between 2001 and the end of 2024. Once valuable timber is extracted, forests are often perceived as having no further economic value and are converted, primarily to palm oil plantations.

The Indonesian Attorney General's office is investigating whether illegal activities contributed to the scale of the disaster, with the president himself calling for environmental protection.

Conclusion

The EU's new plan to diversify its rare earth supply chain is a significant step towards reducing geopolitical vulnerabilities. Simultaneously, the situation in Indonesia serves as a stark reminder of the devastating consequences of unchecked deforestation, highlighting the critical need for sustainable resource management and the potential for economic activities to amplify natural disasters.