Europe needs to refocus on raw materials, says EU
grain
(BRUSSELS) - Europe must totally rethink its raw materials and commodities strategy -- regulating markets, bartering with the likes of Africa and developing its own mining, even on protected land, the EU said Wednesday.
Materials traded globally, and not always on transparent exchanges, include everything from vital metals and industrial minerals, wood and natural rubber to core foodstuffs such as grain. China, Russia, Democratic Republic of Congo and Brazil are the biggest players.
Within that definition, the European Commission has listed 14 priority materials seen as crucial for industry and economic growth, but in risk of shortage and therefore steep price rises.
"Recent volatility in commodity prices threatens to increase inflation and global raw material markets are becoming increasingly distorted due to protectionist measures," the commission warned.
A 24-page report recommends integrating raw materials into EU diplomacy, negotiating strategic partnerships and attacking overseas barriers, if necessary via the World Trade Organization.
However, Oxfam suggested that trade and investment deals with developing countries designed to secure bountiful and reliable access in exchange for helping hands in other areas would only mean maintaining a historical squeeze.
"Promises about a better partnership with Africa still look like window dressing for a forceful diplomatic and trade strategy," said the NGO's David Hachfeld.
Among moves is a suggestion by Brussels for Europe to boost recycling and stockpiling of its own resources -- while opening up new extraction or wood harvesting.
The 14 critical raw materials identified are: antimony, beryllium, cobalt, fluorite, gallium, germanium, graphite, indium, magnesium, niobium, platinum metals, tantalum, tungsten and rare earths.
The last of these are a group of 17 hard-to-mine elements with special chemical or electromagnetic properties used to make everything from iPads to electric car batteries or solar panels.
The rare earths market is almost totally dominated by China, which has tightened its stranglehold by slashing quotas for overseas shipments by some 35 percent for the first half of 2011, hiking export taxes and raising environmental standards.
Employers federation BusinessEurope was just the latest to cry foul on raw materials Wednesday, citing prices up 20 percent since last year in a warning that "market distortions are on the rise with at least 1,250 export restriction measures in place, including by China and Russia."
The federation urged the EU to "forge an international consensus in support of undistorted trade in raw materials in the OECD, WTO and G20."
Among other demands, it also wants to "improve conditions for extraction of raw materials in Europe," which could mean deciding to override ecological protections.
"Exploitation of rare earths could re-start in Europe from 2015," EU industry commissioner Antonio Tajani told a joint press conference alongside financial services and agriculture counterparts Michel Barnier and Dacian Ciolos.
He said a network of environmentally-protected land called Natura 2000 could be opened up.
The network itself states governments "may authorise developments in cases where no viable alternatives are available and where an overriding public interest in the development is demonstrated."
Speculation blamed for sharply rising food prices must also be tamed, Brussels admitted in a U-turn that pleased France, which has made the issue a centerpiece of its G20 presidency this year.
The commission said "prices of commodity derivatives and underlying physical commodities are interlinked" and drew parallels between risks from developments in commodities markets and excesses in derivatives trading on credit that lay behind the economic crisis.
Institutional investors increased positions in commodities markets from 13 billion euros ($18 billion) in 2003 to between 170 billion and 205 billion euros in 2008, the EU calculated.
French farming minister Bruno Le Maire said he was "relieved to see that the commission's views have evolved... in the right direction," in particular attacking "speculation on hunger."
EC Communication on Commodity Markets and Raw Materials - guide