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  • Writer's pictureJuliana Hechanova

The Critical Raw Materials Act Explained

This article provides an overview of the Critical Raw Materials (CRM) Act, a strategic initiative by the European Union aiming to secure a sustainable supply of essential raw materials crucial for innovation, renewable energy, and defense industries. We delve into the significance of Critical Raw Materials, its applications, and the Act's outlined goals. 





What are Critical Raw Materials? 

 

Critical Raw Materials (CRMs) are materials such as metals, minerals, and natural substances that are economically vital and prone to supply disruptions due to their concentrated sources. The EU has identified 34 CRMs, with 17 classified as strategic due to anticipated demand growth and complex production requirements. This strategic raw materials list undergoes regular reviews to adapt to changing circumstances. 


Image Source: Critical Raw Materials Act - Consilium, www.consilium.europa.eu/en/infographics/critical-raw-materials/. Accessed 18 Dec. 2023.

Why are Critical Raw Materials important for the EU? 

CRMs are integral to various sectors, crucial for industrial ecosystems, and present in everyday devices. Examples include lithium, cobalt, and nickel in electric vehicles, silicon metal in semiconductors, and boron in wind turbines. They play a pivotal role in industrial value chains, technological progress, and advancements in space and defense. In the context of climate, energy, and the environment, these materials are indispensable for clean technology, being irreplaceable components in essential products such as solar panels, wind turbines, electric vehicles, and energy-efficient lighting.


Where are Critical Raw Materials sourced? 

Most Critical Raw Materials are acquired outside the EU. While the EU acknowledges that achieving complete self-sufficiency is unlikely, it is committed to enhancing supply diversification. Current dependencies on specific countries include: 

  • China supplies 100% of the EU's heavy rare earth elements

  • Turkey supplies 98% of the EU's boron needs

  • South Africa supplies 71% of the EU's platinum requirements



Image Source: “Critical, Strategic and Advanced Materials.” RMIS, rmis.jrc.ec.europa.eu/eu-critical-raw-materials. Accessed 18 Dec. 2023.


The Need for Action: Navigating the Green Transition  

As the EU transitions to clean energy systems, there is an increased demand for base metals, battery materials, and rare earths. This surge is essential for achieving the EU's green objectives, necessitating a robust supply chain for CRMs. 


What is the Critical Raw Materials Act? 

The Critical Raw Materials Act (CRM Act) is a strategic initiative to secure access and gain a sustainable supply of essential raw materials crucial for industries such as renewable energy, digital technology, space, and defense. 


The Act also strives to secure the EU's access to raw materials crucial for achieving its objective of transitioning to a state of net-zero greenhouse gas emissions by the year 2050. 

Recognizing the vulnerability of Critical Raw Materials to global demand and potential disruptions, the Act also aims to reduce dependencies on single third-country sources by proposing comprehensive regulations to strengthen the entire value chain, emphasizing import diversification, risk monitoring, and circularity.


1. Creating secure supply chains 

The Act streamlines permitting procedures and reduces the administrative burden for CRM projects within the EU. Strategic Projects, which refer to initiatives that contribute to developing capacities for strategic raw materials at all stages of the value chain, whether inside or outside the EU,  will receive support for access to finance and shorter permitting timeframes. Additionally, Member States are mandated to develop national programs for exploring geological resources, further contributing to a resilient supply chain. 


2. Mitigating supply risks 

The legislation oversees supply chains and coordinates strategic raw materials stocks among Member States. Large corporations must conduct audits of their supply chains for strategic raw materials, including a stress test.


3. Improving circularity and sustainability to protect the environment 

Regarding circularity and sustainability, countries should enact and enforce national measures to enhance the collection of waste rich in Critical Raw Materials, ensuring recycling into secondary Critical Raw Materials. Member States and private entities are obligated to explore the potential for extracting Critical Raw materials from waste generated in both current mining activities and historical mining sites.


4. International engagement to diversify supply

The EU advocates global engagement and proposes initiatives such as the Critical Raw Materials Club, reinforcing the World Trade Organization, expanding Sustainable Investment Facilitation Agreements, and developing strategic partnerships.


What are the benchmarks under the Critical Raw Materials Act? 

To lessen reliance on external nations for Critical Raw Materials, the EU defined the following objectives to achieve by 2030:

  • At least 10% of the EU’s annual consumption from EU extraction

  • At least 40% of the EU’s annual consumption from EU processing

  • At least 15% of the EU’s annual consumption from domestic recycling

  • No more than 65% of the EU’s annual consumption from a single third country


Conclusion 

In summary, the Critical Raw Materials (CRM) Act represents a strategic initiative by the EU, making pivotal strides towards securing a sustainable supply of raw materials essential for various industries and reaching environmental goals. 


As discussions on the proposed Regulation unfold in the European Parliament and Council of the European Union, businesses should proactively embrace the Act's implications, and strategically plan their adaptation to the outlined practices. 


You can find more information about the Critical Raw Materials Act in these links:


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