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14/11/2024
Mining News

Norwegian discovery of 8.8 million tonnes of rare earths: A game-changer for Europe’s mineral security

Recently, a groundbreaking discovery of 8.8 million tonnes of rare earths was made in south-east Norway. This find could significantly impact Europe’s mineral security and autonomy, especially as China currently dominates the global rare earths market, accounting for nearly 69% of production. With the European Union heavily reliant on external supplies, this discovery presents an opportunity to shift the balance. Emmanuel Hache, Senior Research Fellow at IRIS and an expert in energy forecasting and natural resource economics, provides insight into the potential implications of this discovery.

Understanding rare earths

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Rare earth elements (REEs) consist of 17 chemical elements, including Scandium, Yttrium, Lanthanum, Cerium and Neodymium. Despite their name, rare earths are not actually rare in the Earth’s crust. Current production rates and global reserves suggest we have ample supplies for the foreseeable future. However, the market is characterized by environmental challenges and a heavy reliance on China, which controls a significant portion of production and processing. These elements are crucial for various high-tech applications, such as permanent magnets in wind turbines and electric vehicles, which are vital for the low-carbon and digital transitions.

Impact of the discovery

The discovery by Rare Earths Norway (REN) is the largest rare earth deposit found in continental Europe. This follows a similar discovery by Swedish mining group LKAB in January 2023, which identified a significant deposit in Swedish Lapland. The global production of rare earths, currently around 350,000 tonnes, is dominated by China. Other major players include the United States, Burma, Australia, and Thailand. Notably, the majority of global reserves are located in non-OECD countries, with OECD countries holding only a small fraction. The new deposit in Norway, estimated at 8.8 million tonnes, represents a substantial asset for Europe, potentially reducing reliance on external sources.

Strategic implications for Europe

The discovery in Norway aligns with the European Commission’s recognition of the importance of rare earths. In September 2022, Ursula von der Leyen highlighted the growing importance of these materials and Europe’s reliance on a single dominant supplier. The EU’s upcoming regulation on critical raw materials, set to be adopted in April 2024, aims to enhance Europe’s self-sufficiency by setting targets for domestic production, refining, and recycling.

However, there are challenges. Mining operations are capital-intensive and involve significant environmental considerations. REN estimates that the initial phase of production will require nearly 870 million euros and could supply up to 10% of European consumption by 2030. Moreover, the timeline for transitioning from discovery to production is long, and the environmental impact must be managed carefully.

Conclusion

The discovery of rare earths in Norway could bolster Europe’s mineral sovereignty and reduce dependency on China. Yet, realizing these benefits will require significant investment and strategic planning. The EU’s focus on developing a comprehensive strategy for critical raw materials is crucial as the continent aims to secure its position in the global market and support its green and digital transitions.

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