Why the Proposed Brussels Buyers Club To Procure Critical Minerals Is a Bad Idea



Cullen S. Hendrix | Peterson Institute for International Economics

The European Commission has announced draft legislation that would establish a centralized purchasing mechanism for critical minerals (“critical raw materials,”in European Union [EU] parlance), such as bauxite, cobalt, lithium, and nickel. These materials are critical inputs to green energy infrastructure, electric vehicles, and military technology. Their availability and cost will determine in large part how rapidly crucial climate change mitigation technologies can be adopted. The European Union is deeply dependent on imports of both raw and processed critical minerals and materials and thus highly exposed to global prices and price volatility.

The door appears to be open for the United States or other EU trading partners and like-minded countries to join, although the term club is also being applied to negotiations over trade deals—such as the limited US-Japan free trade agreement—designed to manage trade between major economies that are also critical mineral importers. But many of the top producers of critical minerals are not developed economies. Countries like Bolivia, the Democratic Republic of the Congo, Guinea, and Indonesia are key exporters and/or have massive exportable mineral resources.

Decarbonization is not the only impetus behind the proposed Brussels buyers club. Both the European Union and United States view China’s dominance of critical mineral supply chains as a national security issue, because these minerals are key inputs to modern military technology. Access to strategic resources—the resources necessary to field modern militaries and the economies that sustain them—has always informed national security strategy; the issue has been given increased urgency by disruptions of energy supply chains stemming from Russia’s invasion of Ukraine and weaponization of its oil and gas exports and reports that China is considering banning certain rare earth mineral and magnet exports in response to US and Dutch export controls on leading-edge semiconductors and fabrication equipment to China.

The proposed buyers club could yield several benefits for the European Union, including preventing outbidding between EU-based purchasers, sending more accurate and transparent demand signals, and facilitating coordination with broader economic and security priorities. But for reasons ranging from intra-EU politics to challenges inherent to running cartels, such a buyers club may be politically and economically unworkable. And if successful, it would shift an important share of the economic benefits of green energy transitions from mostly developing and middle-income economies to the European Union, undermining putative commitments to just energy transitions at the global level.

Supply chains for critical minerals desperately need widening to meet projected global demand and tackle climate change mitigation. A purchasers club would not be a step in the right direction.


Cullen S. Hendrix is senior fellow at the Peterson Institute for International Economics (PIIE), nonresident senior research fellow at the Center for Climate & Security, and a specially appointed research professor with the Network for Education and Research on Peace and Sustainability (NERPS) at Hiroshima University.

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