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 and batteries to data chips, fighter jets, and solar panels.
But this could also create new business opportunities for Swedish companies in or around the energy industry. That's the opinion of Jakob Way, CEO of Nordic Bio-Graphite, a company focusing on domestic production of graphite, a basic ingredient in batteries, solar panels, and heat exchangers.
They are one of several Swedish companies with the ambition to reduce Europe's dependence on China when it comes to 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 Energy Loop.
According to him, the situation is not really new – but the latest move regarding rare earth metals could shine even more light on the need for companies like his own.
"China uses this as a weapon all the time. The cold shower – 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 up domestic capacity, but the fact is that China is still by far the best at producing raw materials," he says.
He is backed by Adam Podgórski, founder of the green silicon company Green 14. Silicon is used in solar cells, and here too China is a major dominant player in the market.
"A major change is underway. There is enormous value in the processing of critical minerals, and the more this makes the news, the clearer it becomes. It raises awareness of how crucial this is," says Adam Podgórski.
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 especially 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, efforts are underway to reduce dependence: LKAB is exploring the possibility of extracting rare earth elements as a by-product of iron ore mining.
The EU has simultaneously set high goals. According to the Critical Raw Materials Act, at least 10 per cent of the critical raw materials used in the EU must be mined within the union by 2030.
"There are many fine 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 side, they have since the start highlighted the EU's new laws and goals as important for their ability to realise their plans to produce their green silicon.
"It is very ambitious legislation – the 2030 target is a huge commitment for many materials. To achieve it, public and private capital in Europe must go hand in hand," says Adam Podgórski.
In the US, the government has responded to China's increased tariffs and other trade barriers. The announcement of the new export regulations sent American mining stocks soaring, reports CNBC.
Jakob Way sees major differences between how the US and EU are acting.
"In the US, there are other types of support – direct government investments and tax breaks. For example, car manufacturers get incentives if they use materials that don't come from China, Russia, or Iran. That affects the entire value chain," he says.
New report highlights strong potential
Despite US tariffs, the Industrial Economic Council (IER) in a recent report assesses that Swedish industry has strong productivity growth and good potential to adapt to new market conditions, especially through investments in research and innovation.
The report was authored by Professor Ola Bergström at the University of Gothenburg, Göran Hjelm, PhD in Economics at the Swedish Fiscal Policy Council, Kristina Nyström, Professor of Economics at KTH and Lena Sellgren, Chief Economist and Head of Analysis at Business Sweden. The report also highlights the importance of access to energy at competitive prices as a crucial factor for the long-term strength of Swedish industry and investments in new technology.