EU may as well be ‘province of China’ due to reliance on imports, says

The EU may as well “apply to be a province of China” such is its inability to wean itself off that country’s supply of critical raw materials used in everything from electric vehicles to smartphones and wind turbines, a leading German industrialist has said.

As chief executive of AMG Lithium, the EU’s first factory to make the lithium hydroxide used in many car batteries, Stefan Scherer sits at the centre of what has been dubbed a new gold rush.

But the chemist said China will continue to dominate battery technology and undercut EU rivals unless temporary protections on components are put in place, arguing that current Brussels policy and laws are failing to deliver results on the ground.

“Europe has to become independent of China, otherwise it’s just blah blah blah,” said Scherer, speaking at the AMG plant in Bitterfeld-Wolfen, a town in the former east Germany.

The European Commission president, Ursula von der Leyen, promised as recently as March that the EU would “will promote domestic production to avoid strategic dependencies, especially for batteries”.

But the reality on the ground, Scherer said, is that many component manufacturers, known as other equipment manufacturers (OEMs), are faced with daily cheaper Chinese alternatives ranging from steel to whole batteries.

Unless the EU addresses this in a meaningful way, this will not change and will imperil the bloc’s climate goals, he said, adding: “It might be better to apply to be a province of China. It’s an interesting thought if you think it through. We are really at a tipping point and it has nothing to do with the war in Ukraine, it’s a complete change of global relationships.”

Scherer said the world economy had been “lifted on the backs of people working hard for Europe in China, in India” and the new balance in the global supply chain was the western leaders’ own creation.

Scherer said he was not pleading for special treatment and was confident AMG would succeed in the auto market’s green transition, but was not optimistic that Europe’s dependency on China would change.

AMG Lithium in Bitterfeld-Wolfen in former east Germany opened last year and aims to produce 20,000 tonnes of lithium hydroxide a year, enough to supply 500,000 EVs. It produced its first test batch last month and hopes to produce commercial quantities later this year.

Scherer said he has “no doubts that we will be able to sell this [product] within Europe”, but added: “I’m talking more about the long term; about strategic investment in European resources, European refineries, this has to happen now, because it takes you five years if you are lucky to get this far.”

It has taken the company five years and £150m to get to its current position, with no sign of a rival for two or three…