Your Visual Story on “Can Europe go green without China?” (Report, September 21) contains much useful information on the technical background on how rare earth elements are mined and used. Curiously absent from your analysis is any data on trade in rare earths, which would have shown that the fears of a dependency for the EU are vastly overblown and that it would be easy to eliminate the risk.
In 2021, the EU imported rare earths worth $121mn, amounting to barely one half of 1 per cent of overall EU imports. The attention devoted to rare earths by political leaders and geo-strategists is thus out of proportion with the economic significance of the trade in the minerals themselves.
Moreover, this low value of imports implies that the EU could easily eliminate the risk of supply disruptions by stockpiling several years’ worth of imports. This would require an investment of only a few hundreds of millions instead of the billions needed to start mines in high-cost Europe.
The real surprise from trade data is that the value of EU exports of rare earths is $160mn higher than the value of imports. How is this possible?
The EU is of course a net importer of rare earths in quantity terms, importing 17,000 tonnes and exporting less than half of that amount. But the unit value of EU exports is about three times higher than the unit value of its imports, thus leading to the surprising result that the value of EU exports exceeds that of EU imports.
This trade pattern means that the EU imports “raw” rare earths that are then upgraded and exported at much higher prices.
The higher value-added rare earths the EU is exporting to the rest of the world, including China, are presumably more difficult to substitute than the “raw material” from China. The EU has thus a surprisingly strong position in the overall supply chain.
Daniel Gros
Director, Institute for European Policymaking, Bocconi University
Milan, Italy
