Challenges for Europe and ramifications for NRW

AIA Fellow Cécile Pélaudeix met for a technical discussion with staff members of the Europe and Foreign Trade Group, led by Anna Haas, at the Ministry of Economic Affairs, Industry, Climate Protection, and Energy of the State of North Rhine-Westphalia. Chaired by Division Head Björn Schubert, Cécile Pélaudeix delivered, following a brief introduction of the academy by our director, Mayssoun Zein Al Din, a keynote presentation on the topic of critical and strategic raw materials. This topic is of particular importance because these raw materials are of great economic significance and also carry an enormous supply risk. They play a key role in the ecological and digital transition, in aerospace, and, not least, in the defense sector.

Global demand for critical raw materials and rare earths has risen enormously. By 2050, demand for rare earths is expected to increase up to 12-fold, and for lithium, for example, up to 60-fold. An international oligopoly has emerged in production, with the Congo, Indonesia, and, not least, China playing central roles. The CRM Act of 2024 marks a turning point at the EU level: By 2030, the EU aims to extract 10 percent of raw materials within its own territory, process 40 percent, and recycle 25 percent. No single third country may supply more than 65 percent of a given strategic raw material, and 47 strategic projects in the EU as well as thirteen others in third countries are to be supported. Cécile Pelaudeix emphasized in particular how crucial public acceptance of these policies is, as resistance to such support is already emerging, especially in countries like France, Portugal, and some Scandinavian nations. In light of this, she advocated moving away from “naive multilateralism” toward “geo-economic realism.”

Cécile Pelaudeix is exploring this issue as part of her project at the Academy. In discussions with ministry staff, there was naturally a particular focus on the role of North Rhine-Westphalia. The state published a report as early as 2021 on reducing dependence on raw materials by building a more circular industrial society. As the discussion on the CRM Act has shown, however, a purely circular strategy is not sufficient to achieve greater resilience in the area of critical and strategic raw materials. Other key topics of the exchange included the speed and scale of Chinese investments, the significance of the German-French-Italian axis, and the need to better communicate these interconnections to the broader public.