The trade war between the US and China – between Donald Trump and Xi Jinping – continues. The latest move is that China is reportedly tightening its rules for exporting rare earth metals.
This is tough news for both the US and the EU, which need them for everything from household appliances to batteries, data chips and fighter jets.
But it could also be an opportunity for Swedish impact companies to step into the spotlight. That's the view of Jakob Way, CEO of Nordic Bio-Graphite, a company focused on domestic graphite production.
They're one of several Swedish companies aiming to reduce Europe's dependence on China for metals and materials.
"This needs to be seen as an awakening over time. This can be good for Europe, but it will get tougher before it gets better," he tells Impact Loop.
According to him, the situation isn't really new – but the latest move regarding rare earth metals could shed even more light on the need for companies like his own.
"China uses this as a weapon all the time. The cold shock – or awakening – for Europe is that we have been forced to ramp up our own production and start taking this seriously. The EU has supported companies to build domestic capacity, but the fact is that China is still by far the best at extracting raw materials," he tells Impact Loop.
He is supported by Adam Podgórski, founder of the green silicon company Green 14. Silicon is used in solar cells, and even there China is a major dominant in the market.
"A major change is underway. There is enormous value in the processing of critical minerals, and the more this appears in the news, the clearer it becomes. It increases awareness of how crucial this is," he tells Impact Loop.
Continued heavy reliance on China
Europe is heavily dependent on imports. China has a firm grip on access to critical raw materials – not only through its extraction but primarily through its dominance in processing. According to the U.S. agency United States Geological Survey, they account for over 70 percent of the global market.
In Sweden, work is underway to reduce dependence: LKAB is exploring the possibility of extracting rare earth metals as a by-product in iron ore mining.
The EU has simultaneously set high goals. According to the Critical Raw Materials Act, at least 10 percent of the critical raw materials used within the EU must be extracted within the union by 2030.
"There are many nice declarations of intent, but not much concrete yet," says Jakob Way.
He hopes it doesn't stop at goals and declarations. He wants to see greater public support from the EU.
"Someone has to make sure it actually happens. You can't expect venture capitalists or the companies themselves to take all the risk."
Public and private – hand in hand
From Green 14's perspective, they have highlighted the EU's new laws and targets as important for their ability to realise their plans to produce their green silicon.
"It's a very ambitious piece of legislation – the 2030 target is a huge commitment for many materials. To achieve this, public and private capital in Europe need to go hand in hand," says Adam Podgórski.
In the US, the government has reacted to China's increased tariffs and other trade barriers. And news of the new export regulations sent American mining stocks soaring, reports CNBC.
Jakob Way sees major differences between how the US and the EU are acting.
"In the US, there are other types of support – direct government investments and tax breaks. For example, car manufacturers receive incentives if they use materials that don't come from China, Russia, or Iran. This affects the entire value chain," he says.