[News] EU passes new critical raw materials strategy

The EU adopted on 18 March a new Critical Raw Materials (CRMs) strategy designed to secure a sustainable supply of raw materials deemed essential for manufacturing goods central to the green transition. The new regulation, dubbed the Critical Raw Materials Act (CRMA), is a key instrument of the EU’s Gren Industrial Plan and aims to reduce the EU’s reliance on third countries for materials such as lithium for battery making or rare earth elements critical for electronics production.  

It is important to note, however, that the UK has a low volume of use of critical raw materials (emphasis added). Demand is often for processed minerals, those embedded in manufactured products, and intermediate materials containing critical minerals for manufacturing, rather than raw minerals themselves.

As such, the UK set out its first supply chain and import strategy earlier this year to help build resilient supply chains, safeguard its critical imports, and make the UK a leader in supply chain risk analysis.

The need to diversify supply chains and sources of CRMs puts the UK and EU in direct competition and could impact the UK’s ability to source CRMs from other producing nations. This could open the door for more pragmatic alignment and coordination in the future if the UK is unable to find other sources to manufacture new green technologies. 

The CRMA lists 34 critical materials, such as cobalt and nickel, and 17 strategic raw materials, like copper, and sets ambitious goals for the supply of the latter type. By 2030, the EU aims to consume at least 10% of locally extracted minerals, 40% of elements processed within the EU, and 25% from recycled materials annually. The CRMA limits any third country supplies to less than 65% of the bloc’s annual consumption of critical materials.

It also makes it easier for companies to obtain permits for extraction and processing projects by limiting the number of months they have to wait to 27 months and 15 months, respectively.   

Since publishing its Critical Minerals Strategy in 2022 and subsequent refresh in 2023, the UK has been engaging with industry to accelerate domestic capabilities, increase collaboration with international partners, and enhance the responsiveness, transparency, and responsibility of international markets to improve the resilience of UK critical minerals supply chains.  

Critical Raw Materials have always been subject to complex, lengthy, and oftentimes opaque supply chains, and countries’ reliance on them is not necessarily new. What has changed in the EU and UK is their importance and scale needed for new technologies required for climate action. A recent report commissioned by the UK Government, tasked with identifying supply risks of CRMs and the dependencies and vulnerabilities of key industrial sectors, found that the UK is at risk of high reliance on imports from countries that could make supply unreliable, is vulnerable to market volatilities, and suffers from poor material recycling rates, similar issues to those faced by the EU.  

Photo by Curioso Photography on Pexels

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