As Europe struggles to wean itself off Russian energy, another critical issue — the continent's almost total reliance on China for rare earths to power the clean energy transition — may have been solved by Turkey.
The Ankara government announced this month the discovery of a huge deposit of rare earth elements that when processed could be used to make electric vehicles, wind turbines and solar panels.
After drilling for more than a decade, Turkish geologists estimated that an area close to the northwestern city of Eskisehir has some 694 million tons of rare earth metals — second only to China's 800 million tons.
Rare earths aren't actually that scarce but they are attached to other metals, so refining them is a complicated process. The minerals often end up in magnets that have uses in commercial and military technology.
Turkey stays stumm over quality
While Turkey believes its new deposit is enough to meet the world's needs for 1,000 years, a lack of clarity about the grade or quality of the metal elements has left many analysts scratching their heads.
"If they're claiming such a big deposit, they would done a lot of drilling and would know what the grade was," Christopher Ecclestone, a principal and mining strategist at the UK research house Hallgarten & Company, told DW. "So where's the detail?"
David Merriman, research director Rare Earths at global consultancy firm Wood Mackensie told DW that the Turkish deposit likely contains the rare earth elements lanthanum and serum which are "currently in a significant oversupply" and not the "rarest type in demand for use in high-performance magnets."
British geologist Kathryn Goodenough recently told Wired magazine that Turkey's deposit is likely to translate to around 14 million tons of rare earth oxides, less than a third of China's estimated resource.China dominance risks EU, US security
China currently supplies around four-fifths of the world's rare earth material and is responsible for around 98% of the European Union's imports of rare earth magnets — some 16,000 tons per year.
The largest operators in China's supply chain are state-owned and/or heavily subsidized, which keeps the costs of Asian-made magnets around a third lower than their European equivalents.
China's monopoly has raised concerns in Brussels, Berlin and Washington that rare earths could be used as leverage by Beijing in trade and geopolitical disputes. In 2010, China banned the export of the metals to Japan in a territorial row.
US Treasury Secretary Janet Yellen this week said Washington was keen to reduce its "undue dependence" on Chinese rare earths, accusing Beijing of using "coercion to pressure a number of countries whose behavior they have disapproved of."Two years ago, the EU created the European Raw Materials Alliance to encourage member states to diversify sources of primary raw materials, including rare earth metals, from third countries. Efforts to strengthen regional supply chains are being stepped up in the wake of disruptions caused by the COVID-19 pandemic.
Turkey needs economic lift
If the deposit is as valuable as Ankara claims, it would give Turkish President Recep Tayyip Erdogan further leverage over his NATO allies and help boost the ailing Turkish economy, which has limped from one currency crisis to another since 2018.
However, it is not the first time one of Erdogan's proclamations has been met with skepticism. Two years ago, Ankara announced a huge natural gas discovery in the Black Sea, which the Turkish leader said would reduce the country's huge energy import bill.
Analysts doubt whether the reserve, some 320 billion cubic meters (11.3 trillion cubic feet), will be as large as initially predicted, or whether the gas field will come online by 2023 as promised.
Such is the strategic importance to the West that many other potential rare earth projects have overhyped their potential in recent years to try to boost investor interest.
Eccelstone noted that during the last rare earth boom a decade ago "many of the big deposits discovered were too low grade, too isolated or the metallurgy was wrong and that's why they stayed in the ground."Merriman said Wood Mackensie was currently tracking about 150 rare earth projects around the world which are at the mining stage. Out of those, 100 are at the refining stage.
"There is no shortage of rare earth projects," he told DW. "But those that are able to be developed commercially is a different story."
Europe currently has just one rare earth processing facility in Estonia and a very limited number of magnet makers, the largest of which is Germany's Vacuumschmelze.
The market is changing fast, however, and within a decade, China may not have the same stranglehold, Ecclestone predicted.
"China has already lost the advantage in heavy rare earths [which make up nearly half of the 17 rare earth metals], it now has to import those," he said.
Meanwhile, the country's biggest rare earth mine, Bayan Obo, in Inner Mongolia, may struggle to produce at today's level going forward.Merriman said despite efforts by the US, UK and Australia to bolster their investments in rare earth materials, China's dominance would likely remain because it has sewn up the extraction, processing and manufacturing of rare earth products like magnets.
"If you look at the magnet elements, you need to turn the raw earths into metal, then into magnet alloys and then into finished magnets. There's a huge number of points in the supply chain that need to be supported along that route, and there's still very limited capacity outside of China," he told DW.