New EU industrial strategy must have raw materials focus say MEPs

As the deadline for the European Commission's (EC) new industrial strategy to accompany the European Green Deal approaches, it is expected that foreign competition and access to raw materials are to top the agenda.

There is concern by MEPs however that there is too much focus on digital technology, overlooking manufacturing sectors such as steelmaking.

Last month, the EC began a public discourse about a European Climate Law which aims to  enshrine the bloc's 2050 climate neutral target in legislation.

In order to calm nerves among some industrial leaders that Europe's competitiveness would be reduced, other measures are also being considered.

Commission President Ursula von der Leyen has spoken of her desire for a carbon border tax applied to imports from countries that do not have the same strict climate protection legislation in place as the EU. The idea of the tax would be to shield EU companies from foreign competition from companies that can spend less to produce goods - a phenomenon known as 'carbon leakage'.

Expected in March, an industrial policy strategy is looking at allaying some of industry's concerns and to revitalise the industrial sector in a way compatible with the Green Deal's goals. An early draft of the strategy, leaked to EU news site EURACTIV found that the majority of the plan's focus was on digital issues.

However, during his appearance at the European Parliament’s industry committee, EU single market commissioner Thierry Breton found that concerns go way beyond reducing emissions and the digital transformation.

MEPs on the committee brought up the issue of raw materials scarcity, an increasingly worrying phenomenon that is both the bread and butter of traditional industry and the hardware behind the emerging digital economy.

Europe’s sourcing of the materials needed for the basic building blocks of the economy, such as steel, and new technology, such as smartphones, is growing precarious.

“In Europe our industry is extremely dependent on raw material from outside Europe,” Mauri Pekkarinen, a Liberal Finnish MEP, told Breton. “The so-called scarce metals, we’re 90% dependent on China, and we have wanted to promote electric vehicles on the European market. But we ourselves produce very little of those raw materials, cobalt and others, which we need for the batteries,” she said.

“European industry is faced with a huge stress test,” added Dan Nica, a centre-left Romanian MEP. “We need to meet our requirements under the Green Deal, and also make sure we are competitive. What worries those in the industrial sector is that: the very future of industry in Europe.”

“We’re getting steel imported from Turkey, the Ukraine, and more and more from China. That’s going to give rise to losses on the European steel market,” Nica said.

Jerzy Buzek, a centre-right Polish MEP and former chair of the Parliament’s industry committee, said the issue of resource scarcity has been particularly affecting the steel sector.

“Steel production requires coke,” he said in a reference to coking coal. “There is no technology today that can replace it. We are dependent in the EU, Germany, France, Romania, Poland. We have a big steel industry, and it’s necessary to import coke from Mozambique, China, and Russia,” Buzek said.

“So that is why it is crucial to keep coking coal on the critical raw materials list in 2020,” Buzek told Breton.

The EU’s list of critical raw materials is due to be updated in March alongside the industrial strategy. It is designed to identify which raw materials are both essential to the EU economy and face supply risks. Among the steel sector, concerns have been expressed that some materials, such as coking coal, could fall off the list.

Breton told the committee members that the list’s revision will be informed by what’s available in Europe.

“Industry is going to need critical materials, and it’s going to become more crucial in supply,” the commissioner said.

“We’ve defined this list, we’ve updated it, but in our geopolitical risk assessment, we need to see what we have available in Europe. We have a lot of critical materials in Europe that we haven’t found, and with the new generation of Copernicus satellites we’ll be able to develop these technologies which will enable us to get a better idea of what we have,” Breton said.

As industry across the continent awaits the publication of the Commission's industrial strategy, policymakers will find themselves having to perform a delicate balancing act between maintaining competitiveness in an era of climate goals, preparing for new digital technology and the security of Europe's basic industrial needs.

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