UPDATE 1-Europe's smelters need long-term price protection, Trafigura CEO says

The European Union and its Western allies are ‌racing to diversify their supply chains and reduce their over-reliance on China for minerals crucial in the tech and defence industries. The EU's existing smelters could be better harnessed to produce strategic minor metals such ‌as antimony needed in defence, Holtum said.

European smelters ​need "life support" such as long-term price ​protection or price floors to keep ‌operating and ​compete with top-end Chinese plants, Trafigura's CEO Richard Holtum told a conference on Wednesday. The European Union and its Western allies are ‌racing to diversify their supply chains and reduce their over-reliance on China for minerals crucial in the tech and defence industries.

The EU's existing smelters could be better harnessed to produce strategic minor metals such ‌as antimony needed in defence, Holtum said. "Europe today has an incredible advantage, because it has billions ‌and billions of dollars of sunk cost capital in the ground in these smelters, but Europe has lost 30% of its smelting capacity in the last decade," Holtum told the EIT Raw Materials Summit in Brussels.

"There is state ⁠support for ​smelters globally and ⁠not in Europe, where we are hampered by high energy prices, by carbon taxes, by high employment costs. And in ⁠order for us to compete, we need government support." For instance, Trafigura's smelting company Nyrstar already produces indium as ​a side product at its zinc smelter in France but the potential at other sites ⁠is not being exploited as it should be, Holtum said.

Some European funding is being allocated to smelters, such as to ⁠Greek ​alumina smelter Metlen, but the overall pace remains slow despite European Commission promises to accelerate it. Niche metals markets remain opaque and investors remain wary of China dumping cheap product to ⁠undercut the competition. The Group of Seven nations and allies are looking to come up with solutions ⁠to protect their ⁠diversification investments and financing remains a thorny issue.

"I hope the EU doesn't search for perfection and creates perfection in five years' time and the ‌smelting industry has gone," ‌Holtum said.