EU to Mull Stockpiling Strategic Raws Materials

The European Union will decide in the coming months whether to start stockpiling raw materials that are critical for the bloc's industrial and high-tech production, an EU spokesman said on Friday.

We are in the process of assessing what steps to take, said Carlo Corazza, spokesman for EU Industry Commissioner Antonio Tajani.

The bloc's executive plans to unveil possible responses to the raw material concerns in October, another EU official told Reuters. These will then be discussed by national governments and the European Parliament.

A commission spokesman previously said the building of reserves of rare earth minerals - crucial components in catalytic converters, magnets and car batteries - had begun.

Debate on how to amass raw materials comes as Europe struggles to protect its industry against soaring input costs triggered by increasing export restrictions by big foreign suppliers.

Of particular concern are rare earths, whose global demand is expected to double by 2016 and whose supply is currently dominated by China, which is the source of more than 95 percent of global supply.

Beijing is restricting exports, citing resource depletion and environmental degradation and pointing to existing reserves in countries such as Canada, Australia and Greenland.

The restrictions have alarmed its overseas customers, not only because of the higher costs, but also because some rare earths have energy production and military uses. Europium, for example, is used in lasers.

But national policymakers are divided over how to tackle dependence on reluctant exporters, and environmental concerns over mining pollution clash with industries' priorities. That means the commission's findings could lead to lengthy debate.

PRELIMINARY STUDY

Options, according to the EU official, include do nothing; create a dedicated EU body responsible for raw material stockpiling; and a specific legal framework for member states to stockpile.

The options would be based partly on an ongoing study of the impact of stockpiling programmes in the United States, South Korea, Japan and China, the official said.

The raw material shortage has produced calls to mine mineral-rich areas of Europe such as the Balkan states, Romania, Sweden and Austria. Another way to secure scarce raw materials is the encouragement of urban mines of minerals and metals from defunct electronic devices.

Stockpiling would be complicated by the volatile and secretive nature of raw materials pricing, as many rare earth minerals are traded privately.

Industry Commissioner Tajani has vowed to clinch raw material deals with countries including Chile, Australia and Canada. He will travel to Sweden in the coming months to discuss raw material supplies with policymakers there, an EU official said.