China plays a prominent role when it comes to trade related issues As mentioned in Chapter 3 China is the largest producer and consumer of a number of nonferrous metals in particular rare earth metals China therefore not only impacts global nonferrous metals supply but also infuences global prices China s nonferrous sector is characterised by a large number of stateowned enterprises and national champions which receive signifcant government subsidies direct and indirect 259 Aluminium Corp of China for e xample has received more than EUR 60 million every single year between 2012 and 2014 allowing for a reduction of its total energy costs by nearly 3 260 A ccording to the OECD 261 85 of all support identifed in the global aluminium sector was received by just fve frms all of which were Chinese This breaches the WT O s principles of free fair trade These subsidies have fuelled the massive boom in China s global mark et share violating the WT O s principles of free fair trade and threatening the viability of the European aluminium sector due to in particular overproduction and subsequent dumping As a result China s e x cess aluminium capacity is 5 times that of EU aluminium annual production 262 Lik ewise in the case of silicon the overcapacity is even more acute with Chinese capacity around 7 million tons against world consumption of silicon around 29 million tons for 2019 263 China also has huge and chronic overcapacity in ferroalloy production with a capacity utilisation often below 50 264 Other direct interventions income subsidies come in early in the value chain in the form of pricing of capital labour land rawmaterials and basic inputs to the production process which impact global price signals There e xist other generous fnancial and nonmonetary support and other nonoperating income subsidies such as plant relocations green devel opment technology innovation industry revitalization trademark and patent development research development and so on The OECD calculated that for aluminium production alone Chinese government support to this sector amounted to USD 63 Bn over the period 20132017 see fgure 44 Moreover the Chinese government also utilizes instruments such as import and e xport du ties quotas licenses e xplicit restrictions and promotional subsidies tax es and tax rebates control crossborder fows Nonetheless import of raw materials ores scrap etc and ad vanced machinery required for industry operations as well as the e xport of processed metal products are promoted by the Chinese government Subsidies upstream confer signifcant support to downstream activities while distorting global value chains In particular access to cheap inputs has enabled Chinese producers to e xpand production and compete in global mark ets at lower cost which mean that e x cess capacity leads to depressed global prices which threatens the viability of producers worldwide 265 259 T aube 2017 pp 145151 260 Ibidem 261 OECD 2019 262 Source 263 Euroalliages internal data 264 AlloysConsult 2017 265 OECD 2019 7 3 T rade related issues T rade is a k ey factor in determining the competitiveness of Europe s nonferrous metals industry The EU metals industry faces a plethora of traderelated challenges Growing protectionism in third countries is a major concern in addition to subsidies there e xist im port and e xport tax es and duties Discriminatory public procurement policies in some major countries mean that EU companies lack a fair chance Moreover cheaper energy and lower environmental and social standards in third countries impact the overall price and demand in the global mark et 254 While the nonferrous metals industry in the EU has to achieve ever higher energy efciency standards and commitments those in third countries can prioritise production over energy efciency and environmental and labour standards The globalised nature of the world economy means that what happens in China and India their economic cycles impacts the cost of resources in Europe 255 The EU is a mature economy with a low growth rate Compared to the developing world the EU s low rate of urbanisation and industrialisation translate into a lower rate of demand for basic materials of which nonferrous metals On the other hand the transition to a lowcar bon economy is slowly but steadily generating a demand for nonferrous metals which are essential to their manufacture The EU has a high import dependency on raw materials 100 in the case of a number of precious speciality and rare earth metals as illustrated in Chapter 322 This means that the EU is not only a price tak er as concerns raw materials but must also compete for limited global supplies Geopolitical vulnerabilities in supplying countries in particular those which dominate the supply of a certain resource can moreover be a major hindrance to imports for instance confict minerals or mining practises which employ child labour given social pressures within the EU 256 Supply security is also e xacerbated by the illegal trade in scrap collection disassembly and reprocessing of scrap 257 As mentioned in Section 34 illegal trade in scrap includes 17 000 containers of illegally e xported ewaste annually from Europe or between 34 million endoflife vehicles or a third of all vehicles unaccounted for each year resulting in nearly 0 5 Mt roughly of EU aluminium scrap leaving the EU This scrap not only represents a loss of metals stock but also mostly ends up in countries which do not have the facilities or may not have the legal obligations to appropriately recycle Several countries on the other hand have put in place e xport restrictions on scrap metal One e xample is that of Russia one of the largest import partners of the EU which has in place as much as 50 e xport tax es for aluminium and copper scrap and has since 2000 virtually not e xported any copper scrap 258 254 JRC 2017b 255 Ibidem 256 Ibidem 257 Ecorys 2011 258 Ibidem MET ALS IN A CLIMA TE NEUTRAL EUROPE A 2050 BL 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