Strategic changes under the EU’s Critical Raw Materials Act

🌱 Why was a new regulation needed?

Critical raw materials play a key role in “the net zero industry, the digital industry, aerospace, and defence sectors”. As the EU is not self-sufficient in these materials, it relies on imports. The European Commission therefore proposed a broader “set of actions to ensure the EU's access to a secure, diversified, affordable and sustainable supply of critical raw materials” on 16 March 2023. These measures included the Critical Raw Materials Act (CRMA) and a communication on critical raw materials. On 12 December 2023, after nine months of extensive negotiations, the European Parliament reached an agreement on the CRMA. The regulation is now scheduled to come into force in early 2024.

🌱 What changes are there in domestic policy?

The EU wants “to support the development of domestic capacities”. The CRMA therefore sets out measures to “improve the refining, processing and recycling of critical raw materials” in the EU. Measures to “reduce the administrative burden and simplify permitting procedures for critical raw materials projects in the EU” have been put into place. Moreover, EU Member States must “adopt and implement national measures to improve the collection of critical raw materials rich waste and ensure its recycling into secondary critical raw materials”. The EU also plans to invest more in research, innovation, and skills around technologies used in the critical raw materials sector.

🌱 What benchmarks does the regulation entail?

Through the act, the EU has identified “a list of strategic raw materials”. The act also sets out “clear benchmarks for domestic capacities along the […] supply chain”. Under these benchmarks, there must be domestic capacities for “[a]t least 10% of the EU's annual consumption for extraction, [a]t least 40% of the EU's annual consumption for processing, [and] [a]t least 15% of the EU's annual consumption for recycling” by 2030. Additionally, “[n]ot more than 65% of the Union's annual consumption of each strategic raw material at any relevant stage of processing [may come] from a single third country” by 2030.

🌱 What changes are planned in trade?

The EU hopes to strengthen its “cooperation with reliable trading partners globally to reduce the EU's current dependencies on just one or a few countries”. The EU is therefore actively seeking out “mutually beneficial partnerships with emerging markets and developing economies”.

🌱 What due diligence requirements are there?

Through the act, the EU hopes to improve the monitoring and auditing of critical raw materials supply chains, as well as its “capacity to monitor” developments in sustainability and circularity. As a part of this, the EU aims to also strengthen its efforts to mitigate adverse social and environmental impacts.