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A massive and rapid deployment of renewable energy is crucial for Europe to end its dependence on Russian fossil fuels. According to the European Commission, solar energy will be “the linchpin of this effort.”

The only problem is that the global solar supply chain is currently dominated by China, a dependence that will only grow if Europe continues to lose industrial metal production capacity at current rates.

High electricity prices have already forced the closure of aluminum and zinc smelters and pose an “existential threat” to the entire European metals supply chain.

The message seems to be getting through, so much so that European Commission President Ursula von der Leyen today promised a law on critical raw materials to increase the bloc’s metal self-sufficiency.

European aluminum smelters were among the first to close because they are energy-intensive plants that use electrolysis to convert alumina into metal.

But aluminum is one of the key metals for decarbonization. One of its uses is in solar panels: one megawatt of photovoltaic capacity requires an average of 21 tons of this metal, according to the European Aluminium Association.

Europe is now at the heart of this paradox: it needs more aluminum to achieve its solar capacity ambitions, but it does not have the energy available to produce enough aluminum.

Western Europe’s annual aluminum production has fallen below three million tons for the first time this century and is set to decline further. The Dunkirk smelter in France, one of Europe’s largest, is the latest to announce a partial reduction in production.

The regional supply crisis has sent physical premiums soaring: European buyers currently pay about $440 per ton over the London Metal Exchange cash price to obtain the metal.

Imports have inevitably increased, including raw metal from China, or at least from China’s bonded warehousing areas. The country exported about 60,000 tons to the Netherlands in the first half of this year, an unprecedented change in normal trade patterns.

The aluminum paradox has spilled over into the European zinc sector, where two large smelters have been shut down and others are adjusting production rates in an effort to weather peak energy periods.

In fact, all industrial metal production uses significant amounts of energy, more in the primary metal phase than in the product production phase. But all links in the chain, from the smelter to the manufacturer, are somewhat harmed by the change in European energy prices.

The Critical Materials Act aims to accelerate the creation of national metal capacity, from mine to processing plant to recycling.

The key question, however, is which metals are considered “critical”?

So far, much of the European Commission’s attention has focused on battery inputs for electric vehicles.

According to Šefčovič (vice president of the European Commission), the European Battery Alliance, launched in 2017, has generated 110 major battery projects across Europe. The Alliance for Critical Raw Materials, launched in 2020, is an extension of the policy to secure metal supplies for new gigafactories.

As a result, the European Union’s list of critical minerals is heavily focused on battery components, such as lithium, cobalt and graphite, and esoteric members of the rare earth family used in electric motors.

Bauxite, from which aluminum is made, was added to the list in 2020, but the inclusion does not seem to have focused policymakers’ minds on the fate of the aluminum smelters needed to produce the metal.

The European Aluminum Association has lobbied intensively against the carbon border adjustment mechanism, arguing that in its current form it will lead to the extinction of European production capacity and increase dependence on imports from the bloc.

This suggests a lack of common thinking within the Commission. If the bauxite value chain is indeed a critical resource for Europe, it should include both smelters and producers, who have their own reasons against EU import tariffs.

Copper, nickel and zinc do not appear on the European list, although the United States considers all three metals critical.

The European Commission’s focus on forward-looking metals seems to have blinded it to older metals that are also needed for decarbonization.

Silicon is on the EU minerals list, but photovoltaic cells will not work without aluminum panels or copper to connect power to the grid.

The European Union needs to follow the United States and take a broader view of the metals it needs to meet its green ambitions, especially after Russia’s invasion of Ukraine.

Russia has historically been an important supplier of aluminum, copper, and nickel to Europe, but now it is a high-risk source after what is being called a “special military operation.”

The new supply instability is all the more reason for the European Union to strengthen its internal capacity.

To do so, it should start by protecting what it already has, rather than focusing exclusively on creating entirely new supply chains in the battery metals sector.

The review of the European energy sector, announced by von der Leyen, should help, but further emergency action is needed to avoid more metal closures in the coming winter months.

Because aluminum has another lesson for European policymakers. Temporary smelter reductions in the past have often become permanent closures as the costs of reopening increase over time.