EU Critical Raw Materials Act

EU Critical Raw Materials: Ensuring Secure and Sustainable Supply Chains for EU’s Green Future

The European Critical Raw Materials Act aims to ensure the security and sustainability of the supply of essential raw materials through identifying strategic projects and building strategic reserves.

EU announces proposal for Critical Raw Materials Act

Quick rundown

The European Commission unveiled a comprehensive plan that aims to secure a sustainable and diversified supply of critical raw materials, which are vital for various strategic sectors such as digital, net-zero, aerospace, and defense industries.

Quasi-monopolistic third country suppliers currently dominate Europe’s imports, posing risks to supply chains and economic resilience, despite projected growth in demand. Therefore, the EU adopted a regulation and communication on critical raw materials in response.

The new set of actions leverages the Single Market and external partnerships for diversification and resilience, as well as enhance mitigate risks while promoting sustainability. These measures, along with the reform of the electricity market and the Net Zero Industry Act, support the competitiveness of European industry and help achieve the goals of the Green Deal Industrial Plan.

Setting Priorities for Action

The Critical Raw Materials Act is a significant step for the EU towards a sustainable and reliable supply of critical raw materials. It outlines clear priorities for action that will enable the EU to meet its green and digital ambitions, as well as for defense and space applications.

The act includes an updated list of critical raw materials, along with a list of strategic raw materials that are critical to Europe’s technological advancements and are at risk of future supply chain disruptions. The regulation sets benchmarks for domestic capacities along the strategic raw material supply chain, which can diversify EU supply by 2030.

Creating Secure and Resilient EU Critical Raw Materials Supply Chains

The Critical Raw Materials Act sets a goal to reduce the administrative burden and simplify permitting procedures for critical raw material projects in the EU. Additionally the act will secure the EU critical raw materials supply chains by providing support for access to finance and enact shorter permitting timeframes for selected strategic projects. Member states are required to develop national programs to explore geological resources.

Ensuring Supply Chain Resilience

To ensure supply chain resilience, the act monitors critical raw materials supply chains and coordinates strategic raw materials stocks among member states, and requires large companies to conduct an audit of their strategic raw materials supply chains, including a company-level stress test.

Investing in Research, Innovation, and Skills

The act also focuses on investments for research, innovation, and skills. As the commission strengthens the uptake and deployment of breakthrough technologies in critical raw materials, a Raw Materials Academy will promote skills relevant to the workforce in critical raw materials supply chains. The Global Gateway will assist partner countries to develop their own extraction and processing capacities, including skills development.

Protecting the Environment

Efforts to improve sustainable development of critical raw materials value chains also help promote economic development in various countries. Efforts such as human rights, conflict-resolution, and regional stability. Member states will adopt and implement national measures to improve the collection of critical raw materials rich waste and ensure its recycling into secondary critical raw materials.

Diversifying Imports of Critical Raw Materials

The EU is not self-sufficient in supplying critical raw materials and will continue to rely on imports for a majority of its consumption. Therefore, international trade is essential to support global production and diversification of supply. The EU will seek mutually beneficial partnerships with reliable partners, notably in the framework of its Global Gateway strategy.

Strengthening Global Engagement

The EU will establish a Critical Raw Materials Club for all like-minded countries willing to strengthen global supply chains, strengthen the World Trade Organization (WTO), expand its network of Sustainable Investment Facilitation Agreements and Free Trade Agreements, and push harder on enforcement to combat unfair trade practices.

Developing Strategic Partnerships

As the EU works with reliable partners to promote their own economic development in a sustainable manner through value chain creation in their own countries, the EU will also promote secure, resilient, affordable, and sufficiently diverse value chains for the EU.

What’s Next?

The proposed Regulation will undergo discussions and agreements with the European Parliament and the Council of the European Union before it is adopted and put into effect.

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