Kyiv will be invited on Tuesday (13 July) to join EU industrial alliances on batteries and raw materials, with a view to develop an entire value chain of the extraction, refining and recycling of minerals in Ukraine to supply the EU market for electric cars and digital equipment.
European Commission Vice-President Maroš Šefčovič has travelled to Ukraine, where he was expected to sign a new “strategic partnership” on raw materials with Prime Minister Denys Shmyhal.
“We decided that we should open a new chapter in our strategic relationship and this is a closer cooperation in raw materials, green and digital technologies,” Šefčovič told a group of journalists on Monday before boarding a plane to Kyiv.
The EU-Ukraine partnership on raw materials has a wider global significance. As Russia completes construction of the Nord Stream 2 pipeline to Germany, Kyiv is expected to lose out on gas transit revenues. And raw materials could provide a new source of income for Ukraine.
“We need to see the meetings and discussions we will have today and tomorrow also in a geopolitical context. Because Ukraine is becoming part of a European value chain which I think is of strategic importance,” Šefčovič said.
The landmark 🇪🇺🇺🇦 MoU on #rawmaterials & #batteries will kick-start our coop by:
🔹identifying business-2-business opportunities
🔹supporting modernisation of technologies
🔹paving the way for circular economy
— Maroš Šefčovič🇪🇺 (@MarosSefcovic) July 13, 2021
The Commission sees clear opportunities from forging closer ties with Ukraine. Europe is currently heavily dependent on imports of key raw materials, with China providing 98% of the EU’s supply of rare earth elements, a key component for magnets used in electric car batteries, smartphones and wind turbines.
The EU’s list of critical raw materials was last updated in September last year, and includes 30 materials, including rare earths, Bauxite, lithium, and titanium.
“There are 30 of them and 21 of these critical raw materials are in Ukraine, which is also extracting 117 out of 120 globally used minerals,” Šefčovič said. “We’re talking about lithium, cobalt, manganese, rare earths – all of them are in Ukraine,” he explained.
On Tuesday, Kyiv will be invited to join the EU’s industrial alliance on batteries as well as the bloc’s alliance on critical raw materials launched in September.
The alliance aims to strengthen the EU’s “strategic autonomy” on raw materials by identifying obstacles, and investment opportunities at all stages of the mineral value chain – ranging from mining to processing and waste recovery – while trying to minimise the environmental and social impacts, the Commission said.
“We think Ukraine can be a very valuable partner in the whole value chain in this new ecosystem that we are building across the European Union,” Šefčovič said. “We are going to help Ukraine to align its regulatory mining framework to that of the EU, committing to the highest environmental, social and governance standards.”
The Commission declined to speculate on the volume of trade in raw materials that the new partnership could bring.
“It’s very difficult to predict,” Šefčovič explained, saying this “will very much depend how the first months of this close cooperation will go.” Variables include the availability of business partners in Ukraine and how far they are ready to commit in terms of human rights, labour, and environmental standards.
The Commission tabled a battery regulation in 2020, saying Europe was aiming to build the “greenest” batteries on earth, with the highest environmental and social standards.
“Every single battery in the EU will have a digital passport, ensuring the origin of the raw materials has been ethically sourced,” Šefčovič said, adding this requirement will apply to Ukrainian businesses as well.
The new strategic partnership with Ukraine will also come with a financial package, including an additional €750,000 in technical assistance made available as of 2022. Ukrainian businesses and universities will be invited to apply directly for funding under the Horizon Europe funding programme for research and innovation, which has €125 million allocated for battery research and more than €1 billion allocated for hydrogen technologies.
Representatives from the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) are also invited to chip in by opening funding channels to Ukrainian businesses.
[Edited by Josie Le Blond]