Competitiveness, sustainability and trade
By reducing costs and moving to higher segments of the market, the EU non-ferrous metals sector has remained competitive worldwide. It contributes to the EU’s sustainable production strategy by ensuring the recycling of metal and by helping to find technological solutions for energy savings (transport, aeronautics and construction).
An important policy document, adopted in February 2008, on the competitiveness of the metals industries, with annex, focuses on the issues of energy, trade, access to raw materials, climate change and overall environmental objectives as well as the role of research, development and innovation.
The sector is characterised by high capital intensity and thus low flexibility, due to high establishment and closure costs, high energy intensity (up to 37 % for primary aluminium and ferro-alloys) and medium/low labour intensity. The main factors in the (long-term) investment decisions by metal producers are access to raw materials and energy at competitive prices, as well as proximity to end-users.
The sector has established firm business relations with the main downstream users and can guarantee them high standards in terms of product quality and delivery conditions. The proximity and size of downstream industries remains the biggest incentive to keep certain activities in the EU.
However, the non-ferrous metals sector in Europe faces many challenges, e.g. the shift of production to other countries with lower energy prices and the lower social and environmental costs for production in some newly emerging countries.
Increasing dependency on these emerging countries for imported materials, trade restrictions, protection practices and/or state aid in some of these countries, are seen as other major challenges.
The future of the non-ferrous metals sector in the EU will depend on innovation, improving product quality, and looking for niche markets and new products to respond to market needs (e.g. using the antiseptic qualities of copper, new advanced alloys for conductors, etc.).
The cyclical nature of commodity prices, determined by global demand and supply, also affects the non-ferrous metals sector. Most non-ferrous metals are globally traded and their prices are determined by the London Metal Exchange (LME). This price mechanism limits the capacity of non-ferrous metals producers and processors to pass on their costs to their customers.
The economic crisis starting mid-2008 had a negative effect on the non-ferrous metals sector and the prices of non-ferrous metals fell by 50-60 %. The fall in demand led to an increase in stocks. The first signs of recovery appeared in 2010 with decreasing stocks and increasing prices.
A major study [3 MB] analysing in detail the issues affecting the competitiveness of the non-ferrous metals sector was finalised in 2011 by independent consultants, following a call for proposals under the Competitiveness and Innovation Programme (CIP).
Environmental regulations relevant to the non-ferrous metals sector are waste legislation, the climate change package, which includes the ETS (Emissions Trading Scheme), industrial emissions as well as REACH.
The recycling of scrap metals is key to sustainability in the sector. Better implementation of waste legislation, especially the Waste Shipment Regulation, is another challenge in view of irregularities and illegal shipments.
Under the revised ETS Directive , the non-ferrous metals sector will (from 2013) be covered by the EU’s emissions trading scheme. As the sector is generally energy-intensive, different sub-sectors such as aluminium, copper, zinc and other non-ferrous metals were subject to the assessment of energy-intensive sectors exposed to carbon leakage and on-going follow-up discussions.
The non-ferrous metals sector is covered by the IPPC/IED Directive (IPPC recast) . The Reference Document on Best Available Techniques (BAT) for the non-ferrous metals sector which is used to issue permits, is under revision.
The European Commission gives priority to establishing a level playing field for metals and raw materials in its trade policy.
The European Union is a net importer of refined non-ferrous metals, and its dependence on imported metals has grown in recent decades. In 2012, the value of EU exports to the rest of the world was EUR 29.7bn and that of imports into the EU EUR 38.6bn. Germany, the UK and Italy accounted for almost half of the exports and just over 40% of the imports.
A major concern relates to policies and practices put in place by some countries outside the EU to restrict their exports of minerals and scrap metal to the EU, putting European industry at a disadvantage.