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The EU’s Critical Raw Materials Act

Learn more about Europe's race for resources

What is the EU’s Critical Raw Materials Act?

In March 2023, the EU proposed a set of actions to ensure the bloc’s continued access to the raw materials needed for the energy transition and strategic markets including aerospace and healthcare. Today, the EU relies heavily on imports from “quasi-monopolistic third-country suppliers”.

Through this Act, the European Commission sets out to mitigate risk by diversifying supply, including through the development of sources within the EU or close trading partners, and by increasing the resilience of supply chains.

The European Union’s Critical Raw Minerals Act (CRMA) is an important step to reduce the bloc’s dependency on external sources for critical raw materials through a combination of increased production, recycling, and refining of critical materials.

However, political, economic, scientific, operational and logistical hurdles to achieving the objectives set out in the CRMA mean that the pace and ultimate success of its implementation are still to be determined. Nonetheless, the act represents a significant step forward in the EU’s efforts to enhance its economic resilience and a greener future.

The Critical Raw Materials Act: Why now?

The race to secure the domestic supply of critical raw materials is heating up as governments worldwide scramble to meet the surging demand for electric vehicles and other renewable energy technologies. The EU is far behind China and falling behind the US due to its lack of abundance of critical minerals, sluggish development, and NIMBY-ism. China is an established processing hub for battery raw materials and has an extensive supply chain for imports. The US has become an attractive investment destination due to the Inflation Reduction Act (IRA) and free-trade agreements with resource-rich countries.

The European Union is looking to protect its strategic markets through the CRMA.

Read the press release from the European Commission here: “Critical Raw Materials: ensuring secure and sustainable supply chains for EU’s green and digital future“.

 

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Critical raw materials: which sectors they’re used in
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The Critical Raw Materials Act: What’s changing?

1. The European Union has set a goal of producing 10% of raw materials for its needs from mines within the EU
Fastmarkets estimates that the EU will need a minimum of 800 GWh of lithium-ion power in 2030 for electric vehicles, ESS, and other electronics which roughly corresponds to 540,000 metric tons of lithium, 418,000 metric tons of graphite, and 45,000 metric tons of cobalt. To achieve these goals, the EU will provide support and special treatment for strategic projects, allowing for the override of public interest and giving them priority in case of conflicts with other legislation. In addition, EU sets a limit for a maximum of two years for mining permits and one year for processing permits.
2. The EU also aims to increase the recycling of critical raw materials, with a goal of sourcing 15% of its critical material needs from recycled sources
Fastmarkets estimates that in 2030, Europe will recycle 117GWh of lithium batteries, that will result in approximately 161 tonnes of lithium carbonate. To achieve its recycling goals, the EU must make significant investments in research and development and enhance its recycling infrastructure. Additionally, the implementation of regulations prohibiting the export of second-hand vehicles outside of the EU will be crucial in ensuring that recyclable batteries remain within the bloc.
3. The EU aims to refine 40% of its annual consumption of critical raw materials within the bloc
Fastmarkets predicts that by 2030, refined production of battery grade lithium will be approximately 370,000 tonnes LCE. These facilities though will still be largely dependent on external lithium and will still depend on China for parts, especially crystallizers which are used in the refining process.
4. The EU aims to cap annual consumption of each strategic raw material at any relevant stage of processing from a single third country at 65%
Even if the European Union is able to meet the first three goals above, it would still be largely dependent on external sources for raw materials. Therefore, the EU aims to identify strategic projects in third countries and support them financially via the €300 billion Global Gateway Strategy. The law also includes a “China clause,” which sets a benchmark to not be dependent on one single third country for more than 65% of imports for any strategic raw material by 2030. To further strengthen the EU’s resilience to supply chain disruptions, the CRMA requires large companies to conduct supply chain audits and develop strategies to mitigate risks.
Learn more about the CRMA and other policies at our upcoming events
Fastmarkets Asian Battery Materials Conference
15th Lithium Supply and Battery Raw Materials
Fastmarkets European Battery Raw Materials Conference
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