In recent years, we have been observing more and more progress and development of technological innovations, for which it is necessary to use more and more chemical elements, in particular metals. In addition, the ecological transition, the abandonment of the use of fossil fuels, the transformation of energy systems with the REPowerEU plan, the ban on the sale of internal combustion engines, or the European Green Deal – mean that the demand for base metals, battery components and rare earth metals is growing. In view of the above, the European Union has decided to increase its capacity to monitor and mitigate the risk of disruptions in the sale of critical raw materials.
LIST OF CRITICAL RAW MATERIALS
Since 2011, the Commission has been analysing individual raw materials of high economic importance and high vulnerability to supply disruptions and classifying them as critical raw materials. Among the 34 critical raw materials listed, 17 of them are classified as strategic raw materials. This list is not finalised, as it is regularly reviewed and updated, on average every 3 years. The two metals in this group are not classified as critical, but only as strategic. These are: copper and nickel. Their global production is so diversified that it does not cause a large risk in the supply of raw materials, but their use is essential.
Currently, Europe is highly dependent on imports of critical raw materials. Many of them have only one source of raw material used in Europe. A huge part of the sourcing of raw materials is highly concentrated and provides 70-90% of the demand, often coming from a third country. This is a huge problem that needs to be worked on.
CRITICAL RAW MATERIALS ACT
In response to the growing demand and risk of raw material availability, in 2024 the European Union adopted the European Critical Raw Materials Act, which aims to:
- increase and diversify the supply of critical raw materials in the EU;
- strengthen circularity and recycling of critical raw materials,
- support research and innovation on substitutes and savings of critical raw materials.
To achieve this, ambitious goals were set and it was assumed that by 2030:
- 10% of the extraction of critical raw materials is to come from the EU,
- 40% of annual consumption is to come from processing,
- 25% is to come from recycling,
- Sourcing from one country must not exceed 65% of annual consumption of the substance.
Key elements resulting from the CRM Regulation:
- The introduction of Community purchases of critical raw materials aims to bring together stakeholders on a single platform and make joint purchases by stakeholders based in the European Union.
- Shortening permitting procedures for strategic projects to: 27 months for mining and 15 months for processing and recycling of critical raw materials.
- Determination of financial support in the form of qualification of strategic projects for EU funds.
- Monitoring threats in the supply chain of critical raw materials and trade flows between the EU and third countries.
- Keeping an inventory of companies and projects related to critical raw materials in a given EU country.
- Setting indicators for extraction, processing, recycling and diversification, through the implementation of national circular economy plans.
- Updating the list of critical and strategic raw materials once every 3 years.
The published regulation is only an outline of the general concept of the monitoring of critical raw materials. More detailed and targeted guidance will be published through delegated or implementing acts, as well as guidelines and guides from the European Commission.
Regulation – EU – 2024/1252 – EN – EUR-Lex
IMPACT ON THE CHEMICAL INDUSTRY
Entrepreneurs from the chemical industry and strategic sectors may have additional obligations resulting from the implementation of the CRM Regulation. These include i.e.:
- Preparation of a supply chain risk analysis – from May 2025, at least every 3 years, companies must carry out a supply chain risk analysis and vulnerability to threats with the availability of the raw materials used. The assessment includes: identification of CRM mining, processing and recycling sites; analysis of factors disrupting the supply of raw materials; vulnerability assessment. The obligation applies to large companies that employ more than 500 employees and the company’s revenues exceed EUR 150 million.
- Increasing the level of recycling – by May 2025, Member States should adopt waste collection, sorting and treatment. Entrepreneurs will have 2 years to implement and ensure the agreed level of recyclate in the product.
- Labelling of permanent magnets – every person placing products containing permanent magnets on the market is obliged to:
- appropriate product labelling – from 2028
- and publication of information on the content of a permanent magnet on the website – from 2029
In addition, before placing a product containing permanent magnets on the market, operators must ensure that they have complied with the conformity assessment procedure, that an EU declaration of conformity has been drawn up and that the product bears the CE marking.
- Calculation of the carbon footprint of the raw material – entrepreneurs are obliged to calculate the environmental footprint of critical raw materials placed on the market, which includes: information on extraction, processing, refining, recycling and environmental performance class.
Examples of strategic sectors affected by the requirements of the Critical Raw Materials Regulation:
battery production, e-mobility, hydrogen production and use, renewable energy generation, data transmission and storage, robotics, aircraft, traction motors, heat pumps, mobile electronic devices, drones, rocket launchers, satellites, advanced integrated circuits and others.
In addition to entrepreneurs, representatives of all EU countries are involved in the implementation of CRM principles. Each Member State must develop a national programme for critical raw materials and collect information on: the means of obtaining CRMs and the places where CRMs are found on its territory. In addition, EU countries need to collect data on: CRM projects, key national companies using CRM, and entire supply chains. National activities will also focus on establishing a list of mining waste treatment facilities and permits granted, as well as monitoring the content, recycling and recovery of raw materials from waste.
Regardless, strategic technology companies need to coordinate their critical raw material inventories and prepare for the risks associated with resource constraints.
More info:
Implementing the EU’s Critical Raw Materials Act
Securing Europe’s supply of critical raw materials
Global Critical Minerals Outlook 2024