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As the EU’s demand for critical raw materials such as lithium is unmet, the EU is signing agreements with like-minded Latin American countries to bridge the gap.
After Russia’s war on Ukraine prompted Europe to recognise its dependence on Moscow for gas supplies, growing geopolitical uncertainty has also forced the EU to reconsider where it sources the raw materials needed for its energy transition.
Although the EU’s overall demand is not fully met, a few member states still produce critical raw materials.
France produces 76% of hafnium used in the EU, while Belgium produces 59% of arsenic, Finland produces 38% of nickel, and Spain produces 31% of strontium.
Of the 34 critical raw materials on the EU’s list, 25 are extracted in Latin America.
While Brazil is overall the most important supplier of critical raw materials from Latin America to the EU, 79% of the EU’s supply of refined lithium originates in Chile.
EU demand for lithium is expected to increase 12-fold by 2030, and 21-fold by 2050, according to the European Commission.
A trade agreement with Chile is set to come into force in February, which will be the very first to contain a chapter dedicated solely to energy and raw materials.
In December 2024, the EU and the South American trade bloc Mercosur also reached an initial agreement to lower and remove various export tariffs as well as eliminate some export restrictions.
The challenges of exploiting critical raw materials
The booming demand for critical raw materials can offer enormous economic opportunities for Latin America.
However, the exploitation of these resources has led to significant challenges in terms of their environmental impact and the increase in socio-ecological conflicts.
According to a German Institute for International and Security Affairs study on environmental rights and conflicts over raw materials in Latin America, over 40% of environmental conflicts are linked to mineral extractions.
While the EU emphasises that the latest agreement has “provisions on sustainable mining and principles for environmental impact assessments,” concerns like the sustainability of water-intensive lithium mining still remain.
Video editor • Mert Can Yilmaz
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