Jan Moström is the President of Euromines, the European Association of Mining Industries, Metal Ores and Industrial Minerals, and CEO and President of LKAB, one of the EU’s largest mining companies. On 11 February in Antwerp, on the eve of the informal ‘retreat’ at Alden Biesen (see EUROPE 13807/1), he explained to Agence Europe the main challenges and expectations, including the need to accelerate permitting procedures and address energy and critical raw material prices. (Interview by Solenn Paulic).
Agence Europe - Euromines has also joined the Antwerp call to boost competitiveness and address electricity prices. What are your challenges?
Jan Moström - Our industry has long been based on two pillars: the massive export of final products and the import of fossil fuels and relatively cheap raw materials (metal concentrates, metals, and minerals). This has allowed us to develop a very successful European industry.
But the concentration and sometimes manipulation of global supply and prices on several of these raw materials, including critical raw materials, has become a problem. In addition, the war in Ukraine has driven up energy costs.
At the same time, the United States, a close ally and trading partner, has imposed customs duties on us. The situation has therefore changed radically. The internal market is undergoing a profound transformation. Market manipulation and the lack of a level playing field exposes European industry to unfair competition and security of supply issues in a world where trade is instrumentalised for geopolitical reasons.
The challenge for the EU is therefore to derisk and ensure resilient value chains within the internal market, covering the entire process, from raw materials to finished products.
One possible solution is “Made in Europe”, or more precisely, “sourcing in Europe”, but without letting it become a scapegoat for protectionism. When it comes to critical minerals and mining, action needs to be taken if we want to break our current dependencies.
But to facilitate mining operations, several problems must first be addressed with the first being the permitting procedures. European legislation has become increasingly complex and, in many cases, Member States have even over-enforced it. The procedures are neither predictable nor transparent, which means that when operators start applying for a permit, they do not know if it will take one year, five years, 10 years, 15 years, or even if the project will ever get the permit! And, of course, if you want to invest heavily — because mining requires enormous capital — you need predictability, the solid foundation for investments.
This is not about lowering our environmental ambitions, but we need to address complexity and bureaucratic procedures.
The second aspect is pricing. For certain critical materials, as I mentioned, the global market price can be heavily manipulated by China, and the United States is pouring public money into building competing value chains.
There is no free market and there will not be one for decades, no matter what we want. We see the same phenomenon with other manufacturing sectors.
Transition to green materials and technologies will lead to increased production costs. How can we ensure a level playing field when monopolistic producers are controlling price-setting for raw materials and components that we need? That is precisely what we are pressing the Commission on.
We must find a pricing mechanism for critical materials to secure sustainable and due diligence-compliant investments.
Would a ‘European preference’ be beneficial in the European mining sector?
There is a very simple example to compare with. Carbon-free iron has the same atomic structure as iron produced in a classical blast furnace using coke. Therefore, the final product cannot be distinguished. You can differentiate an electric car from a car with an internal combustion engine, but that is not the case here.
That is why it is urgent to find a way to differentiate green steel, or carbon-free steel, from other kinds of steel and to secure investments into green production.
For European raw materials production, we want to attract more investors. One option is to guarantee the origin. This is where “made in Europe”, local content, and minimum prices have come into play: as mechanisms to protect and guarantee sustainable investments that meet sustainability criteria.
No one wants to invest private money into a sector where you have the Chinese state and the US state backing your competitors. These will be sectors that are governed by security policy and geopolitics for decades.
Either we play the game and drop the “free-market” textbook or we continue to put our trust in European industry always having access to, for example, the rare earths that China dominates today.
There has been some improvement for our sector in recent months, particularly with RESourceEU. It is a good start, but it is still far too slow. China is laps ahead of us and the US has gone into 3rd gear. We are just getting out of the starting blocks.
The Commission is planning a new strategic partnership with the United States and Japan in the field of critical materials. Do you have a specific interest in this future global alliance on minerals?
Japan has learned the hard way in the past how dependent its automotive industry is on Chinese materials and has worked to address this. And the United States is now acting very forcefully to secure its own supply of these materials. We must therefore be careful not to replace one dependency with another, as the EU has done with gas.
We must not, so to speak, shift our dependence on China for critical raw materials to the United States. More actors would be much better.
Europe must also develop some own production to ensure resilient value chains in this respect. The spirit of this new partnership is good, even if it is not yet very concrete. We already have 14 raw materials partnerships worldwide. But if the intention is to find alternative markets and combat monopolistic dominance, then that would be positive.