EU shoots for greater mineral self-sufficiency

Brussels hails legislation as ‘securing the EU’s supply and sovereignty’

EU shoots for greater mineral self-sufficiency
The EU wants more domestic CRM mining, processing and recycling

The European Parliament has agreed on plans to boost the supply of critical raw materials (CRM) for EV value chains, in a bid to help bolster European automakers’ competitiveness against Chinese imports. With Parliament settling on the final version of the CRM Act, the law is now set to come into force in early 2024.

“The Critical Raw Materials Act is intended to make the EU more competitive and sovereign. It aims to cut red tape, promote innovation along the entire value chain, support SMEs  and boost research and the development of alternative materials and more environmentally friendly mining and production methods,” the Parliament says.

The legislation aims to incentivise investment in raw material extraction, processing, and recycling, and sets targets for the EU to extract 10pc of the 16 predefined “strategic raw materials” used by 2030, in addition to recycling 25pc and processing 40pc.

For example, the EU currently imports 78pc of its lithium, a vital metal in EV batteries, and will need 18x more lithium supply to meet demand levels expected in 2030, according to the European Commission.

Sweden, Finland, and Germany are earmarked as countries with potential for rare earth mineral mining, the Commission says, but currently in many cases, even minerals mined in the EU are shipped out of the bloc to be processed for industrial use.

The need for greater diversity and self-sufficiency in the EU’s mineral supply chain has become more acute as concerns have abounded in Brussels about Chinese state subsidies giving the country’s EV makers a competitive advantage over the bloc’s auto industry.

In September, the European Commission launched an investigation into Chinese state subsidies, and more recently China has announced that restrictions will come into force in 2024 on its exports of graphite, a material needed for battery anodes. Experts, however, say that the CRM Act is only the beginning of a long to-do list if the EU wishes to build out an EV value chain that is fully divorced from China. 

“The Act will not provide immediate solutions to any potential problems that might arise from the announced ban on graphite exports by China, because graphite recycling technologies in the EU are still to reach scale, which will take time,” says Patrick Schroeder of UK-based thinktank the Royal Institute for Foreign Affairs.

But he thinks that the legislation will aid much needed supply chain diversification within the EU, saying that “part of the CRM Act includes the development of new types of partnerships with producer countries to diversify supply”.

“In the case of graphite this could be Madagascar and Mozambique. But when it comes to opening new mines for extraction, this should be done with highest environmental and social standards to avoid negative impacts,” he says.

Circular economy

The new wording of the CRM act has increased the targets for critical mineral recycling from 15pc to 25pc. “In my opinion, this is a good policy approach to address long-term resilience of CRM supply chains,” says Schroeder.

“It is good to see that the benchmark for recycling of CRMs was increased to 25pc from the initial 15pr mentioned in the earlier version of the CRM Act. This shows that a circular economy is a key solution to achieving sustainable and resilient supply.”

“Recycling alone will not be enough on its own. More ambitious circular solutions can be pursued in the context of the EU’s Circular Economy Action Plan to further reduce demand and create more resilience,” wrote the UK-based Chatham House thinktank in April, when the EU legislation was first tabled.

“These include introducing strict eco-design requirements for products heavily reliant on CRMs to be more durable, repairable and recyclable, or incentivising their repair and remanufacture,” Chatham House says.

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