The Critical Raw Materials Act is the EU strategy to reduce dependencies on the essential raw materials of the future

  circular economy | March 16, 2023

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Eunews

The EU Commission has presented its proposal to ensure that by 2030 no third country controls more than 65 percent of the annual consumption of each critical raw material for the Union. Reduction of administrative burdens, diversification and international partner clubs

“It's time for action, not proclamations, naivety is over.” The European Commissioner for the Internal Market, Thierry Breton, took care to clarify the spirit that animates the Critical Raw Materials Act, the proposal for EU legislation on critical raw materials presented today (16 March) by the community executive. An overall strategy with a series of actions for the Twenty-Seven at internal and international relations level, to ensure a "safe, diversified and sustainable" supply of the raw materials necessary for the digital and green transition, in particular for the zero-emission industry , the digital industry, the aerospace and defense sectors. “This law will bring us closer to our climate ambitions, significantly improve the refining, processing and recycling of critical raw materials in Europe,” is the signature of President Ursula von der Leyen.

The target cannot be clearer: “By 2030, no more than 65 percent of the Union's annual consumption of each strategic raw material at each relevant processing stage must come from a single third country,” the Commission makes clear. in its proposed regulation. To do this, three priority lines of action must be followed, according to benchmarks for national capabilities along the entire supply chain. In the coming years, the European Union must be able to set up a system capable of extracting at least 10 percent of its annual consumption of critical raw materials, processing at least 40 percent of them and recycling at least 15 percent: “If these levels were achieved, they would significantly contribute to the required diversification efforts.”

It is assumed that the demand for rare earth metals will increase 4.5 times by 2030 and 5.5 times by 2050 respectively, while for batteries that power electric vehicles, an increase in demand for lithium is expected respectively 11 times by 2030 and 17 times by 2050. However, production is highly concentrated in a few suppliers and the EU is “largely” dependent on imports: “Excessive dependence could disrupt entire supply chains”, is the warning contained in the Commission communication, which highlights how “export restrictions and other trade restrictive measures are increasingly used in a context of intensifying global competition”. Commissioner Breton himself clarified the current risks: "We must face reality, for many critical raw materials we depend on a single third country." The explicit reference is to Turkey ("It supplies us with 97 percent of boron, which is important for electronics"), but above all to China, on which the EU depends "97 percent for magnesium and 90 percent for the important magnets in computers and wind turbines.”

Hence the need to create a regulatory environment favorable to zero-emission industries and the competitiveness of European industry, combining the new Critical Raw Materials Act with the electricity market reform on Tuesday (14 March) and the Net-Zero Industry Act presented today by the EU Commission. “Raw materials are crucial for the production of key technologies for our dual transition, such as wind power generation, hydrogen storage or batteries,” President von der Leyen pointed out. In an effort to reduce its dependencies, the Union is strengthening cooperation "with reliable trading partners at a global level", but is also embarking on a path to "increase production in a sustainable way and at the same time guarantee the maximum level of diversification of chains of supply for our European companies".

What are Critical and Strategic Raw Materials

“Critical raw materials are everywhere: smartphones, electric cars, semiconductors, pharmaceutical products, heat pumps”, the owner of the Internal Market reminded us of the importance of these engines of present and future technology: “There cannot be batteries without lithium, there can be no wind without rare earths and no ammunition without tungsten”. The evaluation of "more than 80 materials used in the EU economy based on supply risk and economic importance" arises from this awareness, but above all the need to include in Community law both the list of critical raw materials in general is the list of those considered strategic, which must be "reviewed and, if necessary, updated at least every four years".

If the critical raw materials identified are 34 (from bauxite to helium, from arsenic to strontium), the document attached to the proposed regulation highlights 16 strategic ones in particular, "and we will focus on these", confirmed Commissioner Breton. Specifically, these are bismuth, boron (metallurgical grade), cobalt, copper, gallium, germanium, lithium (battery grade), metallic magnesium, manganese (battery grade), natural graphite (battery grade), nickel (battery grade), metals of the platinum group, silicon metal, titanium metal, tungsten and rare earth elements for magnets: neodymium (Nd), praseodymium (Pr), terbium (Tb), dysprosium (Dy), gadolinium (Gd), samarium (Sm) and cerium (Ce).

Internal and global EU actions

As regards the specific actions to be implemented on an internal and global level, everything starts from the awareness that "the EU will never be self-sufficient in the supply of critical raw materials and will continue to depend on imports for the majority of its consumption" , is what the community executive itself puts down in black and white. For this reason, a global strengthening in the diversification of investments, production and trade is necessary, which in practice translates into "mutually beneficial partnerships" with third countries both to push "sustainable" economic development and to create value chains “safe, resilient, accessible and sufficiently diverse”. In particular, we will focus on bilateral strategic partnerships with countries such as Chile, New Zealand, Australia, Congo and Canada, also in the context of the Global Gateway, the EU strategy for sustainable infrastructure at a global level.

Above all, details were awaited on the Critical Raw Materials Club, "which will bring together consumer and resource-rich countries to promote safe and sustainable supply". Its establishment will be based on the sharing of commercial criteria, transparency and respect for the environment and will be open to those willing to develop a series of agreed actions on monitoring market development, joint exploration efforts and sustainable investments. It will be the EU Commission that will initiate discussions with potential interested partners, as in the case of the announcement last Friday (10 March) of negotiations between the European Union and the United States for a targeted agreement on critical minerals. The promotion of labor rights and "socially responsible" practices in the supply chains of critical raw materials will also be central, as will the promotion of a circular and sustainable economy "that operates across borders" and the strengthening of recycling capabilities “high quality”.

In this regard, on an internal Union level the Commission is pushing for the improvement of the security and accessibility of supplies of essential raw materials to go hand in hand with greater efforts to mitigate "any negative impact, both within the EU and in third countries”, regarding labor rights, human rights and environmental protection. In this sense, EU Member States will have to adopt and implement national measures to improve the collection of waste rich in critical raw materials and ensure its recycling into secondary critical raw materials. Studies will also need to be conducted on the potential for recovery from mining waste, while products containing permanent magnets will need to meet circularity requirements.

The Critical Raw Materials Act will also focus on reducing administrative burdens and simplifying authorization procedures for critical raw materials projects in the EU: strategic ones will be guaranteed support for access to finance and shorter authorization times (24 months for extraction permits and 12 months for processing and recycling permits). As regards the mitigation of risks to the functioning of the Single Market, the establishment of a mechanism for coordinating the monitoring of supply chains of critical raw materials and strategic stocks with stress tests for large companies is envisaged. In terms of the adoption and diffusion of innovative technologies, the establishment of a Raw Materials Academy "which will promote the skills of the workforce" is planned.