The decision is being studied by the Commission and should follow a similar measure to the recently approved one in the United States. The aid would take the form of tax credits and should also be triggered in in case of a price increase of rare earths.
The aim is cutting the cord that binds Europe’s energy transition to the critical raw materials of which China is rich.
Brussels has been trying to patch things up for some time with initiatives such as the European Alliance for Raw Materials and the new recycling goals. A new strategic approach that unfortunately continues to stumble. Chinese competition is fierce due to the huge support provided by the State and distributed by Beijing to its companies.
Therefore, the European Commission has decided to take a step forward. A proposal is being worked on in Brussel to support European manufacturers of some permanent magnets, based on rare earths (especially neodymium) and essential for both electric cars and wind turbines.
According to some revelations collected by the Reuters agency, the new policy should closely follow the one approved by the United States. The hypothesis is that help will be provided to companies in the form of with tax credits and it should also be triggered in case of the critical increase of commodity prices. A market where China is hegemonic and can set the agenda.
This is a move that should help rebalancing the market and its dynamics. Beijing subsidies currently “drug” the sector. The Chinese one is on steroids thanks to help given to the manufacturing of basic renewable components and electric mobility, reaching up to 20% of the costs to be borne for the purchase of critical raw materials. In this way, the Dragon companies are entrenched in an impregnable fort from which they control something like 90% of the global market of magnets. The European dependence is at even higher levels. Out of 100 magnets used in our continent, 98 are made in China.
The global demand for critical minerals and rare earths used for this type of magnets is expected to increase by 10 times. The European short-term objective is to cover 60% of the needs by 2030 with local extraction and manufacturing capacity (including recycling).
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