The Critical Raw Materials Act, proposed by the European Commission on March 16th, 2023, and reaching provisional agreement in November, 2023 is a comprehensive initiative aimed at securing the European Union's access to critical raw materials, which are essential for various strategic sectors. These materials, including rare earth elements, platinum group metals, and others, play a crucial role in industries such as renewable energy, digital, space, and defense. The Act responds to the growing demand for these materials, the scarcity of domestic sources, and the risks associated with reliance on imports from single third-country suppliers.
Objectives of the Critical Raw Materials Act
Today most critical raw materials are sourced from outside the EU. China provides 100% of heavy rare earth elements, Turkey sources 98% of EU’s supply of boron and South Africa provides 71% of EU’s need for platinum.
To reduce dependencies like these the Act sets ambitious targets to enhance the EU's resilience and autonomy in critical raw material supply chains by 2030. These targets include:
· At least 10% of the EU's annual consumption for extraction
· At least 40% of the EU's annual consumption for processing
· At least 15% of the EU's annual consumption for recycling
· Not more than 65% of the Union's annual consumption of each strategic raw material at any relevant stage of processing from a single third country.
Key measures of the Critical Raw Materials Act
To achieve the goal set out in the regulation the EU plans to introduce an array of measures that include;
Setting Clear Priorities: The Act establishes a list of strategic raw materials and sets specific targets for their extraction, processing, and recycling to drive action and achieve tangible outcomes. It also prioritizes the development of domestic capacities to reduce dependence on imports.
Creating Resilient Supply Chains: Identifying Strategic Projects and streamlining permitting procedures aim to expedite project approvals and facilitate access to financing, enhancing the EU's raw material supply capabilities. Permitting procedures for these projects are streamlined, reducing permitting time to 2years for extraction permits and 1 year for processing and recycling permits.
Mitigating Supply Risks: Measures for monitoring critical raw material supply chains, coordinating member states' strategic stocks, and requiring large companies to conduct supply chain audits are introduced to identify vulnerabilities and ensure continuity.
Recovering and Recycling Raw Materials: Member states and private operators are mandated to assess opportunities for improved recovery and recycling of critical raw materials. Circular requirements for products containing permanent magnets further promote sustainability.
Diversifying Imports: Strengthening trade activities with reliable partners, establishing a Critical Raw Materials Club, and addressing unfair trade practices aim to diversify imports and reduce reliance on single external sources.
Critical and Strategical Materials Covered by the Act
The Act presently comprises a list of 34 Critical Raw Materials vital for the entirety of the EU economy, confronting significant supply risks attributed to scarcity and geopolitics. Among these, 17 are further classified as strategic, signifying their pivotal role in fulfilling strategic objectives associated with key industries in the EU: renewable energy, digital technology, space, and defense. Raw materials utilized in these sectors are anticipated to encounter supply and demand imbalances, compounded by the challenges of increasing production.
Conclusion
In conclusion, the Critical Raw Materials Act (CRMA) represents a significant step towards securing the EU's access to critical raw materials while promoting sustainability and resilience in global supply chains. By setting clear priorities, enhancing domestic production and recycling, and diversifying imports, the CRMA aims to mitigate supply risks and ensure the EU's strategic autonomy. However, the Act also brings forth challenges, notably an increased need for traceability and transparency throughout the value chains of critical raw materials. This necessitates heightened audits and reporting requirements, signalling the shift towards greater accountability and sustainability in resource management practices.
Increased need for traceability and increased reporting needs underscores the importance of proactive measures to address environmental and social impacts while fostering a resilient and sustainable economy for future generations. Is CRMA one of many regulatory initiatives that can affect your organization? Curious about how ChainTraced supports traceability in the metallic value chain? Request an introduction meeting to learn more.
